GE to Sell Digital Division - Impact on Rhode Island Jobs Unknown
Tuesday, July 31, 2018
The much-heralded General Electric jobs announced in June 2016 by Governor Gina Raimondo are falling far behind the announced target of 100 jobs and may be in jeopardy due to the upheaval of the financially struggling conglomerate. As of Monday, GE had only made 55 hires in RI. Its target number is 100 by January 2019.
According to “Rhode Island Commerce Corporation Qualified Jobs Incentive Tax Credits – Economic Impact Analysis General Electric Application,” GE has already missed one of its key hiring milestones.
“The Company would employ 50 people in the center’s first year [2016], 75 in its second year [2017], and 100 in its third year [2018] and through the remainder of the commitment period,” states the application.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTGE is scheduled to receive $4.6 million in qualified jobs tax credits for the 100 jobs if hired by January 1, 2019. The remainder of the qualified jobs tax credit is not paid out until the jobs are created and paying taxes for a year.
In addition, GE was targeted to receive another $650,000 in Wavemaker funding from RI Commerce Corp.
GE Struggles
But with GE’s stock floundering — it has traded at a 52-week high of $25.89, but has now nestled in at the $13 dollar range — GE closed at $13.16 on Monday -- the future is uncertain.
The Wall Street Journal was first to report on Monday that General Electric “is seeking a buyer for key parts of its digital unit as the conglomerate unwinds a signature initiative of former Chief Executive Jeff Immelt that loses money despite billions in investment.”
GE has hired an investment bank to auction off the digital division.
“Though proceeds of a sale aren’t expected to mean much for a company with a market value of more than $100 billion, the move to unload the operations is symbolic of a dramatic reversal of fortune at GE, which has stumbled badly after a series of missteps,” reported the Wall St. Journal.
According to RI Commerce Corporation, the sale of the division is not expected to impact the 55 Rhode Island jobs.
GE Struggles
The announcement of the sale of the digital unit is just the latest of a number of announcements and sales of business units by GE.
Recent headlines in the past 10-days in the Wall Street Journal alone have included, “GE stock rocked again after CEO speaks, negating better-than-expected results,” “GE's Profit Falls as Power Division Remains a Drag,” and “GE Will Be Dead Money for a While.”
This is a long way from the company which once annually made business magazine covers as the most admired company in America.
For Rhode Island, the 100 new jobs were to be just beginning. Elected officials said the 100 jobs were expected to lead to hundreds of additional jobs over the next few years.
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