GE to sell Boston HQ site, return Mass. incentives

General Electric CEO Larry Culp Jr. in a November 2018 appearance on CNBC. General Electric CEO Larry Culp Jr. in a November 2018 appearance on CNBC. Photo: Screenshot Via CNBC Buy photo Photo: Screenshot Via CNBC Image 1 of / 1 Caption Close GE to sell Boston HQ site, return Mass. incentives 1 / 1 Back to Gallery

More than two years after former General Electric CEO Jeff Immelt moved the company’s headquarters to Boston from Fairfield, GE announced Thursday that it has told Massachusetts officials it is not proceeding with a planned new headquarters and will fall about 550 jobs short of the 800 it had promised.

Under new CEO Larry Culp Jr., GE will return $87 million in incentives Massachusetts had awarded in exchange for the headquarters relocation.

GE said it was formally dropping plans to build a 12-story office tower on the city's waterfront. The company will keep its headquarters in downtown Boston in a pair of historic buildings that trace their heritage to the New England Confectionery Co.

The Boston Globe was the first to report about GE’s intentions.

It amounts to a bitter pill for both Massachusetts and Connecticut, with Immelt leaving GE the year after the move as the conglomerate braced for billions of dollars in losses. Those were driven in part by lingering costs absorbed by the GE Capital subsidiary in Norwalk, stemming from the mortgage market collapse a decade ago and inadequate reserves for a prior insurance business.

Rep. Gail Lavielle, R-Wilton, said, “We’ve known they’ve been troubled for a long time. But at the time (GE announced its move to Massachusetts), they had a lot of very specific things to say about Connecticut, and I guess they certainly didn’t feel at the time that Connecticut was a propitious environment for them.”

Lavielle said of GE’s departure from Connecticut, “I’m not sure what that says about (former Gov. Dannel P. Malloy), because clearly he was not successful in finding any way to entice them to stay here. ... Obviously, their business hasn’t gotten any better.”

Immelt’s successor, John Flannery, would last only a year, with GE’s board hiring the Danaher Corp. veteran Culp, as the first outsider CEO in GE history, to help the company find a path to growth in its industrial roots.

Culp has moved to shed digital, health technology and other GE areas of focus that Immelt had pursued, while considering a sale of its share of the Baker Hughes oil and gas infrastructure business, and scrutinizing the $13 billion acquisition of Alstom’s energy businesses that Immelt had made a centerpiece of his tenure.

This month, the French government fined GE $57 million for filling just 25 of the 1,000 jobs it had promised to create there in exchange for the 2015 approval of the Alstom purchase, through which GE picked up Alstom operations in the United States as well, including the Hartford area.

“I don’t think I would ever say, even on my last day here, that we have found all the skeletons, right?” Culp said in a conference call two weeks ago with investment analysts. “With a lot of fresh eyes — and it’s not my fresh eyes, we’ve got a new (general counsel), we’ve got a new controller ... we’re going to be as open and transparent as we possibly can, when we find things.”

General Electric added 2,000 U.S. employees last year to give it 106,000 in all, its first increase since 2014 when it exited the year with 136,000 employees. In Norwalk, the company has consistently reported a workforce of about 1,400 people.

GE’s original incentives from Boston and Massachusetts totaled more than $150 million, not including incentives executives received as assistance to purchase homes in moving there from Connecticut and other locations.

In the months after Immelt reached the deal, Malloy maintained that the cost to Connecticut would have been too high to convince GE to stay put. Malloy’s newly installed successor, Gov. Ned Lamont, has indicated he does not plan to rely on big incentive packages to convince companies to grow in Connecticut.

— Dan Haar, Emilie Munson and the Associated Press contributed to this report.

— Corrected from an earlier version for a typo in the spelling of United States.

Alex.Soule@scni.com; 203-842-2545; @casoulman