PROVIDENCE, R.I. (WPRI) – General Electric will establish a new technology facility in Rhode Island, Gov. Gina Raimondo announced Thursday, a win for her just months after she made a serious but unsuccessful pitch to land the company’s new headquarters.
“We went from the ‘no’ list to the short list,” Raimondo told reporters at the State House.
Raimondo’s office said the company plans to open a GE Digital information-technology center in Providence, which “will be responsible for developing new software applications and driving innovation in High Performance Computing.” GE expects to employ 100 people there in the near term, “with the aim of expanding its presence over the next several years,” her office said.
“We needed a place that had a strong tech talent pipeline, top-tier university partnership opportunities and great quality of life,” Chris Drumgoole, GE’s chief technology officer, said in a statement. “With its unique location along the northeast corridor, Rhode Island gives us access to many of the assets we need for success.” He expanded on the company’s rationale in a blog post on the GE website outlining “a digital industrial revolution.”
GE Digital said it’s also opening a new office in Atlanta and expanding one in Miami.
GE spokeswoman Amy Sarosiek told Eyewitness News the company is currently seeking a temporary space to start building its local work force and plans to start hiring in the coming weeks. The company expects to move into its permanent Providence location early next year.
“I’m thrilled that GE Digital is planning to bring hundreds of new high-paying jobs to Rhode Island over the next several years,” Raimondo said in a statement. “This will create a meaningful opportunity for hundreds of Rhode Island families, and it was made possible by working together with the speaker, Senate president, the congressional delegation, and the business community.”
Officials said GE will apply to the R.I. Commerce Corporation for taxpayer incentives to defray some of the cost of its Rhode Island facility, through the Qualified Jobs Incentive and First Wave Closing Fund programs.
While an exact dollar figure for potential incentives was not available, Commerce Secretary Stefan Pryor said the company could receive up to $5.65 million over 10 years if it creates 100 jobs, based on preliminary salary estimates. Any incentives would need to be approved by the Commerce Corporation’s board.
“We do expect to see a greater return than our initial investment,” Pryor said. “Over the next 12 years, we may see as much as double the return in state revenue received.”
Pryor said GE is in lease talks over several potential properties in Providence but has not made any decision yet on where the new office will be. Raimondo did rule out the company moving into the vacant Superman building downtown.
“This is real validation that the steps that we’ve taken to improve our business climate, to tackle tough issues – like pensions and Medicaid – and to invest in skills, are paying off,” Raimondo told reporters. “This is recognition that Rhode Island is on the move.”
With annual revenue of $149 billion and 305,000 employees in 2014, GE is one of the largest and most storied companies in American corporate history, rooted in Thomas Edison’s invention of the lightbulb. It currently ranks 11th on the annual Fortune 500 list, four spots below Woonsocket-based CVS Health. The company has been making a major push into cutting-edge industrial technology work in recent years.
The announcement comes as Raimondo is under increasing pressure to show lawmakers they made the right decision when they agreed to give her and Pryor millions of dollars in new incentives to hand out in a bid to promote economic development. The state budget lawmakers unveiled Tuesday continues funding for many of the programs, and adds $2 million more than the governor requested for the First Wave fund that GE hopes to tap.
“The General Assembly has worked closely with Governor Raimondo to focus on policies and budget priorities that focus on economic development,” House Speaker Nicholas Mattiello said in a statement. “I am pleased these actions are bearing fruit by capturing the attention of GE Digital and hopefully many other companies in the future to provide new job opportunities for our citizens.”
U.S. Sen Jack Reed, who played a key role in Raimondo’s original effort to woo GE, said Thursday he was “glad to work closely with her to successfully make the case to GE about the benefits of opening its new IT operation to Rhode Island.” U.S. Sen. Sheldon Whitehouse called the news “a boost for Providence and our state’s economy,” while Congressman Jim Langevin called it “a huge win.”
News about GE’s plans in Providence also comes as its footprint in New England is in flux.
The company, long based in Connecticut, announced last year it was looking for a new place to move its headquarters after lawmakers in the Nutmeg State threatened to increase taxes to deal with ongoing fiscal crises there.
Raimondo made a major push to woo GE to Providence, winding up as one of the finalists but ultimately losing out to Boston. However, GE officials said when they announced the Boston choice that they’d been impressed with Rhode Island’s pitch and were considering locating other jobs here.
“I immediately said, ‘Okay. What can we have then?'” Raimondo recalled Thursday.
In Massachusetts, officials have faced some criticism for offering GE generous incentives to relocate, pegged at up to $145 million, or roughly $181,250 each for 800 jobs. The Rhode Island package appears to be far smaller, at roughly $56,500 each for 100 jobs to start.
Former Massachusetts Secretary of Housing and Economic Development Greg Bialecki, who served under former Gov. Deval Patrick and was not involved in the Bay State’s GE deal, told Eyewitness News he sees the Rhode Island GE package as “in the range of a kind of more typical business incentive package that would be offered by, say, a Massachusetts or other competing states.”
However, Bialecki said Massachusetts Gov. Charlie Baker was “amply justified” in offering GE the “out-of-the-ordinary” incentive package he did because of the “special nature of the opportunity” in becoming the company’s headquarters. He said the positive free publicity it generated was alone likely worth millions of dollars.
Bialecki acknowledged critics who say states should not be offering incentives to businesses at all, but said he disagrees with that approach because it would take too many potential opportunities off the table. However, he said it was important for states not to focus solely on taxpayer breaks, noting reports that Massachusetts won the GE headquarters despite being outbid.
One of those critics, Sam Bell of the Rhode Island Progressive Democrats, said he will be watching to ensure GE does not seek further incentives from the city of Providence, which he said cannot afford it. “These policies of having states bid more and more direct cash subsidizes to companies is a race to the bottom, and something we should not be participating in,” he said.
Angus Davis, CEO of Providence-based tech firm Upserve, said in email that the 100 initial GE jobs are “not going to fundamentally alter the tech ecosystem in Rhode Island, but it’s certainly a welcome step.” He also urged that enthusiasm be tempered until the company’s plans become reality.
For Rhode Island’s tech sector to really grow and thrive over the long term, Davis argued, the state needs either a tech company with up to 1,000 high-skilled workers or “a network of smaller new tech employers who add up to that scale,” in order to incubate a work force.Ted Nesi (email@example.com) covers politics and the economy for WPRI.com. He writes The Saturday Morning Post and hosts Executive Suite. Follow him on Twitter, Facebook and Instagram