OM in the News: GE’s Once Every 40 Year Location Decision
GE plans to make a decision shortly on whether to move its headquarters of more than 40 years from Connecticut, a choice prompted by what the company considers an inhospitable climate for business in the state. The company has been weighing overtures from other states including NY and Georgia that are eager to lure the $150 billion firm, reports The Wall Street Journal (Sept. 11, 2105).
GE’s considerations expand beyond local issues and tax rates. It is looking at the voting records of each state’s lawmakers on national policy issues, such as the fight to reauthorize the Export-Import Bank. The company considers the bank vital to its exports of heavy machinery. GE never even considered a bid by Cincinnati—where GE is currently shifting hundreds of back-office jobs, and which is also the hometown of CEO Jeff Immelt—because of opposition from some Ohio politicians to reauthorizing the Ex-Im Bank. The same holds true for Dallas.
The company was considering various factors in deciding whether and where to move its head office from Fairfield, where it has been since 1974. GE isn’t approaching the decision lightly. Relocating is “the kind of thing you only think about every 40 years, so you want to make sure you get it right,” said Immelt. Most of GE’s facilities to manufacture heavy equipment like power turbines, jet engines and locomotives are in other states such as South Carolina, Ohio and Texas. GE currently employs 4,900 people in Connecticut, of which 800 work at the corporate headquarters in Fairfield. One of the changes in the Connecticut budget that GE took issue with was a cap on the amount of prior-year tax losses companies could use to offset their taxes. Connecticut officials say the state will make efforts to keep GE at the “right price.”
Classroom discussion questions:
- Why is this such a critical decision?
- Why did Boeing move its corporate HQ a few years ago from Washington State to Chicago?