RI Will Lose Out on Millions to Economy as General Electric Misses Jobs Number
Saturday, December 15, 2018
In June 2016, Governor Gina Raimondo and a room of VIPs announced at the Providence Public Library that General Electric was creating a digital office in Providence. The numbers were big and so were the subsidies.
GE would receive more than $5.65 million in subsidies from Rhode Island taxpayers and in exchange, the company would open an office and hire more than 100 employees by January 1, 2019. Some of the politicians said the office would grow to be hundreds over the next few years.
“I’m thrilled that GE Digital is planning to bring hundreds of new high-paying jobs to Rhode Island over the next several years," said Raimondo.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTU.S. Senator Sheldon Whitehouse said when GE announced its decision, "The decision by one of the nation's largest, most innovative companies to locate a cluster of high-tech jobs here is a testament to our prime location, our world-class universities, and the great quality of life we enjoy in Rhode Island. I commend Governor Raimondo for her tireless efforts to attract these jobs and for letting the world know Rhode Island is open for business."
Now, with less than three weeks before the deadline, GE counts about 50 employees in Rhode Island and the company will miss out on hundreds of thousands in incentives in the short-term and could miss out on millions in the long-term. The 50 employees hits the minimum trigger for the jobs incentives, but misses on the promised levels of job creation.
Rhode Island’s Commerce Corporation estimated that the GE deal by the third year would drive more than $28 million into the Rhode Island economy annually.
GE Will Not Generate $28M for RI’s Economy
According to Commerce RI, “As proposed, the number of people employed at the new center would stabilize at 100 in its third year of operation (expected to be 2019). In its third year the center’s operations would, directly and indirectly, account for:
160 full-time equivalent jobs in Rhode Island.
Approximately $15.1 million in annual earnings (in 2017 dollars).
$28.7 million in annual State-wide economic output.
An increase of $18.5 million in Rhode Island’s annual GDP.
All the numbers came from Commerce RI’s report developed by the agency’s consultant.
“These taxes would include approximately: $723,000 in state personal income taxes paid by Rhode Island workers employed at the center, or whose jobs are indirectly attributable to the center’s operations; $316,000 in state sales taxes paid on those workers’ taxable household spending; and $91,000 in state business corporation taxes,” said the report.
Despite the fact that GE is spiraling and has only hit 50 percent of the target number, RI Commerce's Brian Hodge wrote in an email to GoLocal, "The GE Digital office here in Providence has exceeded its initial hiring benchmark. It’s encouraging to know that, even though the company is going through a global restructuring, GE has maintained its commitment to its Providence operation."
READ THE ECONOMIC ANALYSIS HERE
GE’s Financial Meltdown
Almost immediately after GE’s arrival in Rhode Island, the company began to unravel. Storied CEO Jeff Immelt was forced to resign as was his successor. GE is now led by its third CEO in just over a year. The company that annually made the list of Fortune’s “most admired companies” was delisted by the Dow Jones Index in June after 110 years on the 30 company index.
In Friday’s Wall St. Journal the paper tracks how GE was the king of the business world, “They came by the dozens in luxury sedans, black Ubers and sleek helicopters. As they did each August, General Electric ’s GE 7.30% most important executives descended on a hilltop above the Hudson River for their annual leadership gathering. Just an hour’s drive from New York City or a short flight from Boston, Crotonville, N.Y., is the home of GE’s management academy, famed for culling and cultivating a cadre of leaders the company saw as its most valuable product."
The article title? “GE Powered the American Century — Then It Burned Out,”
