Representative End User Clients
Representative Automation Clients
Representative Software Clients
ARC has been heavily involved in strategic planning, including partnerships, merger and acquisitions, and site location decisions for much of its 30 year history. Many site location decisions are based on what you might expect, a balance of taxes, cost of living, real estate costs, climate (both business and weather), available talent, access to direct flights, and financial packages offered by the local municipalities. But ARC is seeing another element gaining greater influence into the headquarters site location decision equation, and that is the value of being headquartered in the middle of a technology ecosystem full of colleges, millennials, R&D, start-ups, and access to venture capital, even if the location is a high cost area for taxes, real estate, and salaries. This provides established companies with the opportunity to change their image and perception, as well as create access to a talented tech-savvy workforce. It also provides established companies with the ability to network with local startups, which are technology incubators that can be nurtured, funded, and potentially acquired in the future. With companies, such as GE, trying to re-invent itself from an industrial conglomerate to a “Digital Industrial Company” that embeds industrial internet of things (IIoT) technology into all aspects of its businesses, this explains its decision to relocate its corporate headquarters to Boston, an area that is high in costs but also a leader in university research, a tech-savvy workforce, a high percentage of millennials, a large number of startups, and access to venture capital funding that creates a strong IIoT ecosystem.
Why would a 124 year old, $130 billion company, with 300,000 employees and major facilities located all over the world, not just decide to relocate its 800 person headquarters to the city, or country for that matter, that offered the lowest overall costs, or even consider a corporate inversion, which is the relocation of a company’s legal domicile to a lower tax country while maintaining operations in a higher tax country. A recent example is Pfizer purchasing Allergan for $155 billion, and shifting its corporate headquarters from the US to Allergen’s location in Ireland. GE began the thought process of moving its headquarters from Fairfield, CT more than three years ago. They began a formal review in June 2015, with a list of 40 potential locations. Boston was selected after a careful evaluation of the business ecosystem, talent, long-term costs, quality of life for employees, connections with the world and proximity to other important company assets. So ultimately, the company’s quest to be part of an IIoT ecosystem that helps it shed past perceptions and evolve into a digital industrial company with IIoT technology threaded into all of its businesses helped GE to make this important strategic decision.
GE Chairman and CEO Jeff Immelt is betting the company’s future on IIoT, which connects the company’s industrial assets, such as turbines, jet engines, and locomotives, to the cloud and to each other. IIoT is the foundation of its Predix platform, which provides the set of development tools, and its Brilliant Manufacturing Suite, which integrates and aggregates data from design to service and leverages analytics to support decision-making for edge-to-cloud connectivity, security and manufacturing. This bet in IIoT is what led Jeff Immelt to decide on Boston. Jeff Immelt states: “GE aspires to be the most competitive company in the world. Today, GE is a $130 billion high-tech global industrial company, one that is leading the digital transformation of industry. We want to be at the center of an ecosystem that shares our aspirations. Greater Boston is home to 55 colleges and universities. Massachusetts spends more on research & development than any other region in the world, and Boston attracts a diverse, technologically-fluent workforce focused on solving challenges for the world. We are excited to bring our headquarters to this dynamic and creative city.” Jeff Immelt has stated that he anticipates that the re-invented GE going forward will generate over 90 percent of its earnings by 2018 as a result of its high-value industrial businesses, betting on IIoT to play a key role in achieving that high-value.
The content of GE’s headquarters will also change, with more emphasis on innovation, and specifically IIoT. In Boston, GE will have roughly 800 people; 200 from corporate staff and 600 IIoT-savvy digital industrial product managers, designers and developers split between GE Digital, Current, Robotics and Life Sciences. In 2014, GE moved its Life Sciences headquarters to suburban Marlborough, MA, and in 2015 GE announced its energy services start-up, Current, would also be headquartered in Boston. And maybe what will be most important for GE and its IIoT initiatives going forward is establishing the “GE Digital Foundry” at its new headquarters, which will be launched for co-creation, incubation and product development with customers, startups and partners. The remainder of administration functions will be placed in shared service operations throughout the Company.
For Jeff Immelt to re-invent GE from an industrial conglomerate to a digital industrial company that embeds IIoT technology into all aspects of its businesses requires a change of its culture and perception, which is as important as remixing its business portfolio. People often think of GE less so for IIoT and the businesses that it has bought, such as Alstom, Lufkin, Avio, Converteam and Dresser; and more so for the businesses that it has sold off, such as Plastics, NBC Universal, Capital/Real estate and Synchrony, and will think of GE as an Appliance manufacturer long after the sale to Haier is complete. That is why the company has been aggressively running its “What’s the matter with Owen” series of commercials, where Owen, a recent college graduate who is a software/IIoT developer, has to justify to his friends and parents why he is going to work for GE. These commercials, according to GE, have increased visits to its online recruitment site 66 percent in the first month of running the ad campaign. Most of the new traffic to this site has been by millennials, which GE expects to make up about 50 percent of the workforce by 2025. So even though GE’s headquarters employs only 800 out of approximately 300,000 employees, the corporate address on the company’s masthead, press releases, and all things digital needs to reflect the image, culture, and direction of the company, even if 99.7 percent of the jobs are in locations other than the corporate headquarters. Having that Boston address will certainly play a role in helping GE change its perception from an industrial conglomerate to a digital industrial company focused on IIoT.
Many of ARC’s financial services clients will certainly be asking questions about GE’s decision to relocate its headquarters to Boston, as they have been continuously asking questions about the impact of GE re-inventing itself, remixing its portfolio of businesses, and its decision to fully embrace and deploy IIoT technologies, both within its GE factories as well as solutions to sell to non-GE factories. Jeff Immelt has stated that there will be no material financial impact to GE related to the cost of the headquarters move to Boston, with a package of local incentives helping to offset the costs of the relocation. GE also selling its existing Fairfield, CT headquarters campus and its building at 30 Rockefeller Plaza in New York City to even further offset the costs of the move, which is expected to be completed by 2018. From ARC’s perspective, the question that should be asked is, if GE is trying to re-invent itself, and with the perception challenges of being a 124 year old global industrial conglomerate, what is the cost of not taking the bold step to relocate its headquarters to an area with an ecosystem that can help a global digital industrial company focused on IIoT thrive. ARC is confident that companies, such as GE, that want to re-invent themselves around an emerging technology, such as IIoT or equivalent initiatives including Industrie 4.0, are making the correct strategic move by locating their headquarters, or at a minimum a major technology center, to an area, such as Boston, that offers a strong technology ecosystem. ARC also feels that the long-term positive benefit effects on both the company’s top and bottom lines will more than offset the higher costs of locating a corporate headquarters in an area with strong technology ecosystem, as long as the company best leverages and takes advantage of all that area has to offer. ARC is fully confident that GE will certainly do that in Boston.
Why would a 124 year old, $130 billion company, with 300,000 employees and major facilities located all over the world, not just decide to relocate its 800 person headquarters to the city, or country for that matter, that offered the lowest overall costs, or even consider a corporate inversion, which is the relocation of a company’s legal domicile to a lower tax country while maintaining operations in a higher tax country. A recent example is Pfizer purchasing Allergan for $155 billion, and shifting its corporate headquarters from the US to Allergen’s location in Ireland. GE began the thought process of moving its headquarters from Fairfield, CT more than three years ago. They began a formal review in June 2015, with a list of 40 potential locations. Boston was selected after a careful evaluation of the business ecosystem, talent, long-term costs, quality of life for employees, connections with the world and proximity to other important company assets. So ultimately, the company’s quest to be part of an IIoT ecosystem that helps it shed past perceptions and evolve into a digital industrial company with IIoT technology threaded into all of its businesses helped GE to make this important strategic decision.
GE Chairman and CEO Jeff Immelt is betting the company’s future on IIoT, which connects the company’s industrial assets, such as turbines, jet engines, and locomotives, to the cloud and to each other. IIoT is the foundation of its Predix platform, which provides the set of development tools, and its Brilliant Manufacturing Suite, which integrates and aggregates data from design to service and leverages analytics to support decision-making for edge-to-cloud connectivity, security and manufacturing. This bet in IIoT is what led Jeff Immelt to decide on Boston. Jeff Immelt states: “GE aspires to be the most competitive company in the world. Today, GE is a $130 billion high-tech global industrial company, one that is leading the digital transformation of industry. We want to be at the center of an ecosystem that shares our aspirations. Greater Boston is home to 55 colleges and universities. Massachusetts spends more on research & development than any other region in the world, and Boston attracts a diverse, technologically-fluent workforce focused on solving challenges for the world. We are excited to bring our headquarters to this dynamic and creative city.” Jeff Immelt has stated that he anticipates that the re-invented GE going forward will generate over 90 percent of its earnings by 2018 as a result of its high-value industrial businesses, betting on IIoT to play a key role in achieving that high-value.
The content of GE’s headquarters will also change, with more emphasis on innovation, and specifically IIoT. In Boston, GE will have roughly 800 people; 200 from corporate staff and 600 IIoT-savvy digital industrial product managers, designers and developers split between GE Digital, Current, Robotics and Life Sciences. In 2014, GE moved its Life Sciences headquarters to suburban Marlborough, MA, and in 2015 GE announced its energy services start-up, Current, would also be headquartered in Boston. And maybe what will be most important for GE and its IIoT initiatives going forward is establishing the “GE Digital Foundry” at its new headquarters, which will be launched for co-creation, incubation and product development with customers, startups and partners. The remainder of administration functions will be placed in shared service operations throughout the Company.
For Jeff Immelt to re-invent GE from an industrial conglomerate to a digital industrial company that embeds IIoT technology into all aspects of its businesses requires a change of its culture and perception, which is as important as remixing its business portfolio. People often think of GE less so for IIoT and the businesses that it has bought, such as Alstom, Lufkin, Avio, Converteam and Dresser; and more so for the businesses that it has sold off, such as Plastics, NBC Universal, Capital/Real estate and Synchrony, and will think of GE as an Appliance manufacturer long after the sale to Haier is complete. That is why the company has been aggressively running its “What’s the matter with Owen” series of commercials, where Owen, a recent college graduate who is a software/IIoT developer, has to justify to his friends and parents why he is going to work for GE. These commercials, according to GE, have increased visits to its online recruitment site 66 percent in the first month of running the ad campaign. Most of the new traffic to this site has been by millennials, which GE expects to make up about 50 percent of the workforce by 2025. So even though GE’s headquarters employs only 800 out of approximately 300,000 employees, the corporate address on the company’s masthead, press releases, and all things digital needs to reflect the image, culture, and direction of the company, even if 99.7 percent of the jobs are in locations other than the corporate headquarters. Having that Boston address will certainly play a role in helping GE change its perception from an industrial conglomerate to a digital industrial company focused on IIoT.
Many of ARC’s financial services clients will certainly be asking questions about GE’s decision to relocate its headquarters to Boston, as they have been continuously asking questions about the impact of GE re-inventing itself, remixing its portfolio of businesses, and its decision to fully embrace and deploy IIoT technologies, both within its GE factories as well as solutions to sell to non-GE factories. Jeff Immelt has stated that there will be no material financial impact to GE related to the cost of the headquarters move to Boston, with a package of local incentives helping to offset the costs of the relocation. GE also selling its existing Fairfield, CT headquarters campus and its building at 30 Rockefeller Plaza in New York City to even further offset the costs of the move, which is expected to be completed by 2018. From ARC’s perspective, the question that should be asked is, if GE is trying to re-invent itself, and with the perception challenges of being a 124 year old global industrial conglomerate, what is the cost of not taking the bold step to relocate its headquarters to an area with an ecosystem that can help a global digital industrial company focused on IIoT thrive. ARC is confident that companies, such as GE, that want to re-invent themselves around an emerging technology, such as IIoT or equivalent initiatives including Industrie 4.0, are making the correct strategic move by locating their headquarters, or at a minimum a major technology center, to an area, such as Boston, that offers a strong technology ecosystem. ARC also feels that the long-term positive benefit effects on both the company’s top and bottom lines will more than offset the higher costs of locating a corporate headquarters in an area with strong technology ecosystem, as long as the company best leverages and takes advantage of all that area has to offer. ARC is fully confident that GE will certainly do that in Boston.