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GENERAL ELECTRIC FAIL

 

Conglomerate’s woes throw Boston HQ deal contradictions into bold relief

 

November 15, 2017

BY JASON PRAMAS @JASONPRAMAS

 

What a surprise. General Electric is tanking, and the scheme to bring the multinational’s headquarters to Boston is looking worse by the day. And whom shall the public blame if that once-secret deal cut by Gov. Charlie Baker and Mayor Marty Walsh in January 2016 goes south? Potentially tossing away millions in tax breaks and direct aid to a company that has already done massive damage to the Bay State over the past few decades? Readers of the dozen columns I’ve written criticizing the boondoggle will already know the answer to that question. But for those of you who have made the mistake of believing all the massive amounts of PR bullshit that the Boston Globe and other area press have been tossing around about the affair since that time, here’s a bit of a recap.

 

Where to begin? So, the governments of Boston and Massachusetts agreed to shovel tens of millions of dollars at GE in “exchange” for “800 jobs” in a new corporate headquarters campus in the Fort Point district of the Hub. Many of which would simply be transferred from the old headquarters, and most of which would be executive level jobs that will not help Boston’s struggling, underemployed working class.

 

Now there’s a problem. GE’s been losing money all year. According to the New York Times, its stock price had already dropped by 35 percent since January. Then, according to CNBC, the company’s share value dropped another 13 percent this week as of this writing after new CEO John Flannery announced a restructuring initiative—including the one thing investors hate most of all: dividend cuts. Only the second for GE since the Great Depression. So the knives are coming out around the beleaguered behemoth, and it remains to be seen whether some internal reorganization (doubtless costing legions of employees their jobs) and some belt-tightening by its execs will be enough to stop investors from moving to carve the conglomerate up like a Thanksgiving turkey. But let’s not assume the worst just yet.

 

Funny thing about that belt-tightening, though. According to the Boston Herald, cuts are now in store for GE’s still-small local workforce, and construction of the new Fort Point headquarters building was already pushed back two years from 2019 to 2021 in August. The plan is to make do with the two old Necco buildings already being refurbished on the site at first. The PILOT (payment in lieu of taxes) agreement signed by the Boston Planning and Development Agency (formerly the Boston Redevelopment Authority) and the city of Boston guarantees up to $25 million in tax breaks to GE if it provides the much-ballyhooed 800 full-time jobs. But by what date?

 

The discussion around GE moving its HQ to Boston has focused on the corporation creating those jobs by 2024. Herein, then, lies the rub about the PILOT deal: The agreement is framed around GE hiring “approximately 800 employees at the Headquarters Building and the Necco Buildings within eight years of the Occupancy Date.” But that occupancy date is explicitly defined as “the date upon which the Company initially occupies the Headquarters Building.” Which has now been pushed back from 2019 to 2021, according to the Boston Business Journal. So 2024 cannot be the year that GE will need to have 800 employees on its new campus. 2027 would have been the earliest it had to meet that target. And now that’s been pushed back to 2029, given the delay with the headquarters building.

 

Yet it turns out that the PILOT agreement doesn’t actually require 800 jobs to be created. Remember, it starts by stating GE will employ “approximately” 800 people on the Fort Point campus. But further down in the document, in a table explaining the specific tax break the city will actually give the company during each year of the deal, it allows for the creation of as few as 400 jobs in a chart with five tax break tiers between “Job Figure is between 400 and 499” and “Job Figure meets or exceeds 800.” Keeping in mind that the agreement also specifies a “stabilization” period of seven years between 2018 and 2024, during which GE gets $5.5 million in tax breaks no matter what and isn’t required to provide any jobs at all for the first six years. GE is then only required to provide between 400 and 800 jobs from 2024 until the agreement ends in 2037.

 

Job figure table from the GE Boston PILOT agreement
Job figure table from the GE Boston PILOT agreement

 

What’s super puzzling is that agreement first requires the company to start providing annual job figures “from and after” the aforementioned occupancy date. But the agreement already established that it only really has to start meeting any job targets as far out as eight years from the date it occupies its headquarters building. Making the job target requirement trigger as late as 2029, according to current plans. Despite the tax break table in the PILOT agreement using job targets to calculate tax breaks beginning in 2025 based on the 2024 job count.

 

The state, for its part, committed a total of about $120 million to the project. Late last year, GE spent $25.6 million to buy 2.5 acres on the Fort Point Channel that includes the land the existing buildings sit on and the land the new headquarters building will (perhaps) one day occupy from Procter & Gamble. MassDevelopment, part of the Commonwealth’s economic development apparatus, took out a $90 million loan from Citizens Bank—an interesting maneuver worth looking into—using $57.4 million to purchase the two old Necco buildings on the site from P&G, and the rest to refurbish the buildings. The remainder of the state’s “investment” is slated to go to fixing up the area around the site.

 

So, GE is getting basically free rent on the Necco buildings plus free upgrades on abutting public land courtesy of the state. And a big chunk of the taxes it would normally pay over the next 20 years is coming free from the city. Without any real requirement that it actually provide any jobs in Boston for many years, and then only (maybe) 400 jobs by 2029—assuming the headquarters building is built in 2021.

 

Which is the problem with all such erstwhile “economic development” deals in the Bay State. From their origin as a way to help encourage investment in areas of the state that were down on their luck precisely because GE and companies like it moved their manufacturing operations away from cities like Pittsfield, Lynn, and Fitchburg to places without the decent labor and environmental regulation that was in place by the 1970s, they have become yet another way for rich and powerful corporations to get richer and more powerful. Worst of all, such corporations hold all the cards in the deals. If they don’t get lavished with free public money, they can refuse to move their operations here or can leave if they’re already operating in the area. Once they get the cash they’re looking for, they can basically pull out at any time. Or as is the case with GE, they can “alter” the deal Darth Vader-style, leaving our local “Lando Calrissians” like Baker and Walsh to “pray” the deal is not altered “any further.”

 

The Boston Business Journal was correct to point out that GE will get $2.1 million in tax breaks on the Fort Point Complex by 2021—the year that the company now claims it’ll be completing its new 12-story headquarters building on the site. But what if it doesn’t build the new structure at all? It’s not clear. Because the PILOT agreement is pegged to job creation starting as far out as eight years after the headquarters building is built, and then allows for the company providing as few as 400 jobs between 2024 and 2037 rather than the 800 everyone’s been assuming. While not actually demanding any job creation until as late as 2029, making it unclear how the tax break will be calculated between 2025 and 2029 should GE drag its feet for the full eight years. The conditions for the company defaulting on the agreement are also pegged to job creation. Not to the construction of the headquarters building. Oh, and by the way, the PILOT deal only covers the headquarters building and the land the company purchased under and just around it (which the agreement calls the “Headquarters Project”). Not the Necco buildings, now owned by the state. Also, there’s no word about what happens if the company has less than 400 workers in Boston at any point from 2024 to 2037. Do these curious contradictions amount to loopholes for GE to bag the whole deal? It certainly looks that way.

 

The minimum GE will get in tax breaks from the city of Boston over 20 years is $5.5 million by 2024 plus whatever breaks it qualifies for between 2025 and 2037. However, the amount the company actually puts out in annual PILOT payments after 2024 is calculated by a complicated formula based on the taxes that would have been assessed without the PILOT agreement. And the assessed value of the relevant property could change from current projections. So it’s hard to know what the total value of the PILOT deal will ultimately be to GE, other than that it will be a bunch of money… however many jobs it actually creates.

 

But why exactly are Boston and Massachusetts giving a huge company that’s still profitable any money at all? And what happens if GE bails on the scheme by hook (simply running and fighting its PILOT default in court with its vast legal department) or by crook (not building the headquarters building at Fort Point and possibly getting away with delaying the job creation target trigger until the deal ends in 2037)? And what happens if worse comes to worst for GE, and the company actually does collapse?

 

These remain my central questions. And I continue to encourage all of you to ask those and related questions to every Boston and Massachusetts politician you can find. And ask the Globe while you’re at it. They’ve got a loooot of ’splaining to do about their cheap boosterism… which they’ve become awfully quiet about of late. Preferring, it seems, to focus on the next giant company that’s demanding public bribes to come to town, Amazon.

 

A shorter version of this column appears in this week’s DigBoston print edition.

 

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston. Copyright 2017 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

PRESS FAIL: AS GE CEO STEPS DOWN, BOSTON JOURNALISTS MUST DO THEIR JOB

AH-GE-TOP

 

June 14, 2017

BY JASON PRAMAS @JASONPRAMAS

recent column by the Boston Globe‘s Shirley Leung perfectly encapsulates the problem with local media cheerleading for General Electric’s decision to move its headquarters to Boston. The title alone says it all: “Will GE’s new CEO remain committed to Boston?” Because, like so many pieces on the subject by Leung and company, it fails to ask the key question: why did state and local government shovel huge amounts of public money to a private enterprise, and put it in a position to potentially cause grievous harm to a major city’s economy, to begin with? And why did the region’s newspaper of record — and much of the Boston press corps — back the scheme so uncritically?

But now, after all the prattle by fawning journalists about the days of wine and roses to come, it turns out that the various moves GE CEO Jeff Immelt made to reinvent the conglomerate as an “innovation” company came at the expense of a significant drop in profits. And it looks like the GE board balked and forced Immelt out — although the official line is that he “stepped down.” Doubtless after noting a rise in share prices in March after activist investors told Fox News that he might be pushed into retirement. He’s been replaced with a new CEO from within GE’s own ranks, John Flannery. Who hails from Chicago, and may not have the same warm fuzzies for the Hub that Immelt at least pretended to have. If Flannery doesn’t back the Boston deal as strongly as Immelt that could mean disaster for everyone who shilled for it. And if GE’s stock prices continue to tank, fuggedaboutit!

In that spirit, it’s worth recalling that the whole boondoggle was dumped on the public by Mayor Marty Walsh and Gov. Charlie Baker as a done deal in January 2016. There were no public forums on the plan, no deliberation by the state legislature or the Boston City Council, and certainly no referendums. The whole thing was cooked up on the quiet by high level politicians, their aides, and top GE brass. In the end, over $145 million in state and city tax breaks and direct aid was promised to GE — together with another $25 million in state money to fix up the area around the site of the company’s new Fort Point HQ, and up to $100 million in repairs to the Old Northern Ave. bridge. Up to $270 million in public money in total. Although the bridge project is now up in the air; so the final total — as with all final totals in public spending — remains to be seen. Still, a huge amount of money to spend on a vast multinational any way you slice it. Especially when GE is not yet being asked to pay rent for the 20 year lease on the public property its new headquarters is using.

As my own series of columns on the deal showed last year, GE has a decades-long track record of screwing government at all levels, communities it operates in, and its own workers six ways from Sunday. Which is why unearthing corporate crime after corporate crime by way of demonstrating why the people of Massachusetts have absolutely no reason to trust the company did not require much new reporting on my part. It was a relatively simple matter of looking at major investigative stories on GE by several news outlets — including the Globe itself. What I found was disturbing in the extreme. Yet the largest Boston news outlets were virtually silent about the very obvious downsides to championing the payoff of a corporate behemoth to relocate its HQ to our fair city. And now the most prominent of them is clearly getting worried about its violation of the public trust.

To review, General Electric has done a lot of bad stuff over the last forty years — much of it in Massachusetts. It slashed tens of thousands of good unionized jobs here. Destroying the economies of Bay State cities like Lynn, Pittsfield, and Fitchburg in the process. GE played highly illegal games with municipal bond investment funds nationwide — and got away with it. It wreaked havoc with the environment in many of the places it did business. Notably in Pittsfield and the Housatonic River valley south to Long Island Sound. Which it polluted with carcinogenic PCBs. A horrendous mess that it partially cleaned up after a protracted struggle with the EPA and local activists. Yet it continues to try to weasel out of finishing the job to save some small fraction of its annual profits. Like it did in a similar Hudson River cleanup. GE also played a major role in creating the toxic housing debt that led to the 2008 financial crash, and was then bailed out by the federal government with boatloads of practically free public money. In exchange for ruining the lives of thousands of poor mortgage holders. And it did all this while paying hardly any taxes at all relative to its huge size.

Ultimately, far too many area journalists dropped bags of balls with the GE Boston Deal story. If they had been doing their job — instead of engaging in a particularly crass form of unthinking civic boosterism that one would expect of low rent PR consultants for a down-on-the-heels rust belt city — Boston might not be in the position it’s now in. Stuck with a bad deal and light a bunch of money that the city and state desperately need during our ongoing fiscal crisis. Which was created by the very neoliberal playbook that still guides both government policy and kid glove news coverage of same.

But that’s what passes for thinking on economic development in the American press of today. My colleagues in major news media generally don’t push for regional planning controlled by democratically elected politicians and overseen by the public in real ways. They don’t support a grassroots process directly involving local communities that start by asking “what do working families need, and how might those needs be best served?” No, they just figure “let’s encourage the pols to throw public money at big corporations, and then they’ll come to Boston, and we’ll have a great economy.”

Well an economy that’s not great for working people is not a great economy. It’s a bad, unequal economy. And that’s the root of most of our major societal woes in this era.

Whatever happens going forward, I hope that next time top politicians cook up another backroom deal with corporate titans that the rest of the Boston news media will join my teammates and I at DigBoston in calling it what it is: corruption. Those who won’t should just go ahead and get jobs in the sleaziest PR operations they can find. Because they’re not fit to be journalists.

 

Apparent Horizon is syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ’s network director, and executive editor and associate publisher of DigBoston.

Copyright 2017 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.

LABOUR HATERS: The Boston Globe’s Worrisome Rightward Lurch

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September 17, 2015

BY 

There was a time when the Boston Globe was led by what Americans like to call “good liberals.” In global terms that would have made them perhaps center-left at best. Reliably progressive on social issues. Able to at least consider the public good in political economic discussions while trumpeting the wonders of capitalism like every other mainstream news outlet. Of late, however, with staff cuts continuing apace and much of their content devoted to advertising-friendly fluff, they’re well on their way to becoming little more than corporate cheerleaders.

How else to explain yesterday’s bizarre editorial “The Labour Party’s worrisome leftward lurch”?

Why the pressing need for the Globe editorial board to bash the ascendency of a genuinely pro-worker socialist like Jeremy Corbyn to the leadership of the Labour Party in the United Kingdom — which was, after all, founded as a socialist party? And governed as such for decades post 1945.

The piece attempts to smear Corbyn as wildly unrealistic and out of touch after the long and ostensibly glorious reign of Tony Blair’s corporatist New Labour wing of the Labour Party. This position relies on the low levels of American awareness of international politics. Because only near total public ignorance of foreign affairs could embolden Globe editors to paint the devastating effects of nearly four decades of successive warmongering neoliberal Thatcherite and Blairite governments as being positive on the balance for the vast majority of UK residents.

Worst of all, the Globe editorial board fails to mention that the UK public is overwhelmingly in support of Corbyn’s major policy proposals. But can barely restrain its glee in attacking those very same proposals. Most puzzling. They seem to be simply echoing their counterparts in the corporate media across the pond. And this passage in the middle of the hectoring editorial is where the knives really come out:

“The election of Corbyn as Labour Party leader represents a large leftward lurch even from the politics of Miliband. Corbyn’s stands include such outmoded ideas as nationalizing the UK’s railroads and energy companies, imposing a maximum wage on private-sector salaries, and the widespread reimposition of rent control. Some prominent Labour MPs are already upset about his refusal to rule out joining the campaign to pull Britain out of the European Union.

The polemic continues: “On foreign policy, Corbyn has called for unilateral nuclear disarmament for Britain, is against air strikes targeting ISIS, and supports a ban on the sale of weapons to Israel. He has talked of having Britain leave NATO, though more recently has called for a rethinking of NATO’s mission. He labeled the killing, rather than trial, of Osama bin Laden ‘a tragedy.’”

Let’s get this straight:

  • Corbyn’s “large leftward lurch” includes renationalizing the UK’s railroads and its energy industry — both of which did just fine as public services. Privatizing energy, an extremely undemocratic and brutal process in the case of the once-mighty coal industry, caused massive layoffs and the ongoing immiseration of entire sections of the country. Not to mention providing worse service across the board for higher prices while profits for stockholders soared. Privatizing rail resulted in “series of failures, scandals and fatal crashes, each at great expense to taxpayers” according to the pro-renationalization activist group Bring Back British Rail. Nevertheless, the Globe thinks such privatization was positive, and that Corbyn’s thinking about deprivatizing those industries is bad. Got it.
  • And a maximum wage is also bad? In an age when fewer and fewer people control more and more of the world’s wealth — and then use the money to rig political systems to their ever-increasing advantage — we don’t want to cap CEO salaries? Why would this a bad thing? Here’s what Corbyn has to say on the matter: “Why is it that bankers on massive salaries require bonuses to work while street-cleaners require threats to make them work? It’s a kind philosophical question really. There ought to be a maximum wage. The levels of inequality in Britain are getting worse.” Sounds like a fine idea from this corner. Especially here in the US where CEOs make more than 350 times as much as the average worker — compared to UK CEOs, who make 183 times as much as their average worker … up from 160 times as much in 2010.

  • And rent control? Why is that bad? The Globe itself reports on the huge and growing housing crisis in the Boston area. And is continually amazed that “letting the market handle it” isn’t working. Of course the market isn’t handling the crisis at all. It’s not designed to do that. It’s designed to make profits for the real estate and construction corporations. So some sort of rent control is definitely one reform that needs to come back to both the UK and Boston. Were the old rent control systems perfect? No. Could they be handled better now? Sure. Were they better than the current situation for working and middle class families in both locales?Hell yes. Then why can’t rent control be on the table, too?
  • Also, is pulling the UK out of the European Union bad? Even if the existing foundational treaties can’t be renegotiated to benefit the people of Europe? When the Greek crisis recently exposed the EU as just a front for German banks and American financial service hucksters providing toxic loans to entire countries via the Troika of the European Commission, the European Central Bank and the International Monetary Fund in collusion with various local oligarchs? And then reducing those countries to penury if they refuse to pay up under the worst possible terms? Is allowing bankers to hold sovereign nations hostage an example of the “good governance” that Globe writers are always crowing about?
  • And then … seriously now … is unilateral nuclear disarmament bad? Of what possible use are nuclear weapons to Britain or any country? They’re massively expensive, utterly pointless — except to the war companies that profit from their manufacture, and the reactionaries that insist on huge militaries — impossible to defend against, and if they’re ever used by anyone then … the entire planet is completely screwed. Because even if it’s “only one” nuke, the door will then be open for using more. And more. And more. Until the Earth is a cinder. So why is nuclear disarmament bad?
  • By the same token is banning “bomb diplomacy” against enemies like ISIS — which has worked so very well when the US, a servile UK and other puppet allies du jour used it in Iraq that it spawned ISIS in the first place — a bad idea? Is disbanding NATO — a cold war relic that a parade of US and European neocons are using to reignite hostilities with the Russia via proxy wars in border countries like Ukraine — so terrible?

Not that the Globe offered anything at all in the way of proof of its positions. It simply stated them. In the confident normative tone that is the mark of the edicts of hegemonic power. That is to say, these kinds of truisms are the stock in trade of journalists who are acting as mouthpieces for the rich and powerful. Which rich and powerful people and institutions don’t really matter.

What does matter is that attacking the kinds of positions that Jeremy Corbyn represents is pro-corporate, pro-war, anti-democratic and therefore quite right wing.

And how do we account for this strong rightward drift from Globe editors? One could speculate, as above, but it’s not clear.

So Globe readers need to contact them and ask them. Early and often. Boston is about the last city on the planet that needs two major right wing corporate newspapers.


PS: Shout out to the Boston Carmen’s Union, who slapped down Joan Vennochi’s pro-Pioneer Institute column in last Friday’s Globe with a feisty fact-laden rejoinder on their website.

Apparent Horizon is the first column syndicated by the Boston Institute for Nonprofit Journalism. Jason Pramas is BINJ network director.


Copyright 2015 Jason Pramas. Licensed for use by the Boston Institute for Nonprofit Journalism and media outlets in its network.