General Electric’s decision to move its headquarters to Boston is representative of the company’s goal to “remain contemporary and paranoid’’ as it maneuvers to redefine itself for the future, CEO Jeffrey Immelt wrote in a letter to shareholders Monday.
Immelt said corporate operations will remain key to GE, but the company is in the process of a “simplification journey.’’ The new homestead’s expected head count is about 800, with 200 working for corporate.
“[G]one are the days when people would migrate to headquarters to report out and receive instructions,’’ Immelt wrote. “Rather, we must be in the world of ideas, so that we remain contemporary and paranoid. This is behind our move to Boston. We plan to keep our corporate costs low—less than 2% of revenue—but having a big impact.’’
GE has shifted its focus toward building “smart’’ Internet-connected industrial machines, a factor cited for its move to Boston and its vibrant tech scene. Immelt contrasted the strategy with the company’s broader approach in the past.
“Can anyone see GE acquiring NBC or Insurance today, businesses with no tangible fit?’’ he wrote. “Yet, decades ago, this was applauded, and in the 1980’s and 90’s, it worked.’’
Immelt preemptively shed light on the company’s paranoia in an interview with The Boston Globepublished Sunday night. In the interview, Immelt cited Boston’s tech and education “ecosystem’’ while speaking to the philosophy driving both the move and the company’s overall mindset.
“The only way to survive when you’ve been around 140 years is you’ve got to be constantly thinking about what the next iteration is,’’ he told the paper. “We really felt like the company was changing, and we wanted to be in the flow of ideas.’’
The report additionally said a package of tax breaks and infrastructure grants from the city and the state worth upward of $140 million “played a role but were not a deciding factor’’ in the move. GE began publicly exploring a move from its Connecticut headquarters last year after voicing displeasure with the state’s tax climate.
Immelt suggested to the Globe that GE’s philanthropy in Boston would likely benefit area high schools.
GE announced the move to Boston in January. It plans to set up shop in South Boston’s Seaport District, but has not announced a specific location yet. Executives are expected to set up in temporary headquarters later this year, with a full move to come by 2018, the company has previously said.
In the shareholder letter, Immelt additionally spoke to Current, GE’s new LED lighting and energy division, which GE announced would set up shop in the Boston area in October. Immelt wrote that Current will grow revenue from $1 billion to $5 billion by 2020.
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