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General Electric’s vaunted Fort Point headquarters tower never materialized amid the company’s fall from corporate America’s loftiest heights. Image courtesy of Gensler
The all-out scramble to lure GE’s headquarters to Boston still sticks in my craw.
First, state and city officials tripped all over themselves in 2015 and 2016 to lavish an estimated $145 million on tax breaks on a corporate icon that had clearly lost its way.
Then there was the outright boosterism by some in the local press. All the breathless reporting about the campaign to woo GE by economic development poohbahs made Boston look positively Podunk.
That’s bad enough, but then there was the failure by both the media and state leaders to give a damn about GE’s tortured history of environmental degradation and pollution in Western Massachusetts, putting a lie to the once-cherished idea of our Bay State as a commonwealth.
In the end, all that bowing, scraping and kissing you-know-what was pretty much all for naught.
A little over a year after the much-ballyhooed deal was inked, GE CEO Jeff Immelt, who had orchestrated the deal, was out, while the company’s grand construction plans in Boston were unraveling.
Now, five years on, there’s a budding campaign to stop state and local officials from throwing away our hard-earned tax dollars on such dubious corporate recruiting campaigns.
And, better, yet, Massachusetts is one of 15 states where lawmakers have proposed bills that would put a curb to a practice
Let’s Do It Better
State Rep. Paul Mark, a Democrat, is leading the local charge from the tiny Berkshires town of Peru.
Mark, a former Verizon lineman and vice chair of the Committee on Telecommunications, Utilities and Energy, isn’t exactly a household name in state politics.
But there’s a power that comes from a righteous cause, and this lawmaker is more than onto something with a bill he’s pushing that takes aim at “corporate giveaways.”
Mark calls GE’s ill-fated headquarters deal a prime example of the kind of corporate poaching his bill would crack down on.
He noted that when Gov. Charlie Baker touted the then-freshly-inked GE pact during his annual address to the legislature in 2016, all but four lawmakers – all from the Berkshires – rose clapping.
“It’s a good example of a rush to attract a business that had proven itself in the past to have no commitment to the state or region,” he said. “It turned out exactly in the way we in the Berkshires expected.”
Mark’s bill would create a national Board for Best Practices in Economic Development that would work with state and local agencies to hammer out “best practices” and will assist state and local governments in escaping from the prisoners’ dilemma of company-specific incentive packages.
Each state that votes to take part would get three voting members on the board, which would meet with experts, conduct research and publish findings on what works and what doesn’t in the field of economic development.
No Poaching, Please
Better yet, though, is an “anti-poaching prohibition,” with each member state barred from offering any “company-specific tax incentive or company-specific grant” in bid to lure a company to relocate from one state to another.
Simply put, that means no more stealing from another state it’s prized corporate headquarters or its job-providing manufacturing plant.
Tax giveaways to GE and other corporations are draining state coffers around the country of $96 billion in desperately needed revenue each year. The bill in Massachusetts alone comes close to $2 billion a year, and it could very well be more given we have one of the least transparent state governments in the nation.
Let’s be clear, here: It’s not that Mark and other state lawmakers across the country are against economic development initiatives, but rather how they are conducted.
Instead of showering one favored company or another with tax dollars, state lawmakers should focus on leveling – and improving – the playing field for all businesses.
And GE’s decision to move its headquarters from Connecticut to Boston remains the poster child on the perils and pitfalls of this one-off, company-by-company approach to economic development.
Dirty Motives in GE Deal
Having wrangled its $145 million package in state and city tax incentives, GE announcing the region-shaking move in early 2016.
In its public pronouncements, the company talked about wanting to be among tech sector movers and shakers who had found a home near Boston’s booming waterfront.
But darker motives were also at play.
GE executives bragged to investors the deal would cost the company nothing, according to a book on GE’s fall from grace by Wall Street Journal reporters Thomas Gryta and Ted Mann, “Lights Out: Pride, Delusion, and The Fall of General Electric.”
Worse than that, GE’s corporate brass was also nursing a grudge against Connecticut’s elected leadership.
Scott Van Voorhis
The Nutmeg State’s congressional delegation apparently had the gall to help steer a coveted, exclusive supplier contract for a fighter jet engine to Pratt & Whitney – P&W would make the engines in Connecticut, but GE wouldn’t – according to Gryta and Mann.
When a newly elected Gov. Dan Malloy showed up at a victory party celebrating the Pratt & Whitney deal, it all but made up executives’ minds to leave Connecticut
The GE deal turned out to be a massive waste of time and effort on part of city and state officials in Massachusetts, and on behalf of a company looking to stick it to our sister state.
If it takes legislation to prevent state and local officials from making another blunder like this, so be it.
Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.
