Mayor: GE 'assured' Boston it will keep jobs commitment amid restructuring
Thursday, August 31, 2017
Boston Mayor Martin J. Walsh said he's been "assured" that General
Electric will keep its commitment to the city after a report surfaced
that the company's new CEO has warned executives to prepare for cuts.
Chief executive John Flannery is planning to "significantly" cut the company's corporate staff, Reuters reported today, and has already frozen hiring for some technology positions.
The report, citing an unnamed source, also said Flannery plans to limit the size of the new Seaport headquarters, and wants to reduce staff in human resources, corporate security, procurement and other areas.
Earlier this month, GE rolled back the completion of its new Fort Point headquarters by two years.
Last year, the city had agreed to give GE a $25 million tax break for moving its headquarters from Connecticut in a widely touted deal based on bringing 800 jobs to the Seaport.
Under the agreement, GE has until 2025 to hit that target and begin realizing the full $1.5 million in annual incentives -- and it could still receive a portion of that if it ultimately brings fewer jobs to Boston.
Walsh today indicated he isn't worried, saying, "GE didn't have a good quarter last quarter and they're taking it very seriously."
"It's the sixth largest company in the world, so I'm sure they're just trying to get costs under control," the mayor said. "I think that it happens everywhere, but we've been assured that GE is committed to their jobs here in Boston."
GE has seen its stock fall 23 percent this year.
In a statement, a GE spokeswoman reiterated the company's intention to cut $2 billion in costs by the end of 2018. Flannery plans to update investors in November.
"We’ve said John is reviewing all aspects of the company," the spokeswoman said.
Jim Corridore, an analyst with CFRA, an investment research firm, said the Reuters report appears to be the start of "a long-term restructuring program."
"GE has been undergoing exhaustive transformation and restructuring for years," he said.
However, Jeff Windau, an analyst with Edward Jones, said GE's new headquarters is not seen as a major cost that should be cut.
"It’s more the ongoing expenses that they have to run the business that they have to look at and manage," he said.
Chief executive John Flannery is planning to "significantly" cut the company's corporate staff, Reuters reported today, and has already frozen hiring for some technology positions.
The report, citing an unnamed source, also said Flannery plans to limit the size of the new Seaport headquarters, and wants to reduce staff in human resources, corporate security, procurement and other areas.
Earlier this month, GE rolled back the completion of its new Fort Point headquarters by two years.
Last year, the city had agreed to give GE a $25 million tax break for moving its headquarters from Connecticut in a widely touted deal based on bringing 800 jobs to the Seaport.
Under the agreement, GE has until 2025 to hit that target and begin realizing the full $1.5 million in annual incentives -- and it could still receive a portion of that if it ultimately brings fewer jobs to Boston.
Walsh today indicated he isn't worried, saying, "GE didn't have a good quarter last quarter and they're taking it very seriously."
"It's the sixth largest company in the world, so I'm sure they're just trying to get costs under control," the mayor said. "I think that it happens everywhere, but we've been assured that GE is committed to their jobs here in Boston."
GE has seen its stock fall 23 percent this year.
In a statement, a GE spokeswoman reiterated the company's intention to cut $2 billion in costs by the end of 2018. Flannery plans to update investors in November.
"We’ve said John is reviewing all aspects of the company," the spokeswoman said.
Jim Corridore, an analyst with CFRA, an investment research firm, said the Reuters report appears to be the start of "a long-term restructuring program."
"GE has been undergoing exhaustive transformation and restructuring for years," he said.
However, Jeff Windau, an analyst with Edward Jones, said GE's new headquarters is not seen as a major cost that should be cut.
"It’s more the ongoing expenses that they have to run the business that they have to look at and manage," he said.
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