Malloy: GE irked by Pentagon, not Hartford
Democratic governor disputes Republican critics who say state tax increases drove out business
Gov. Dannel P. Malloy, smarting from Republican attacks on his economic development policies, said decisions in the Pentagon and Congress, not in Hartford, irked General Electric Co. as it decided to move to Boston and end its 43-year run in Fairfield.
In a recent interview with The Courant reviewing his eight years in office, the Democratic governor, who will exit Jan. 9, said GE representatives sidestepped talk of high taxes and slow economic growth. The two issues were the focus of fierce criticism and are still rallying cries among Republicans nearly three years after GE announced i t s decision to leave Connecticut.
In a meeting with GE representatives, the subject instead was the conglomerate’s loss of an alternate F-35 fighter jet engine contract with the Pentagon, Malloy said. Hometown rival Pratt & Whitney had the sole contract.
“Connecticut’s federal delegation didn’t support GE’s desire to be a competitor for the F-35 engine, which they would not have manufactured in Connecticut and would have been in direct competition with Pratt & Whitney who had the exclusive contract on the F-35,” he said.
“My first meeting as governor with GE I had to listen to that for a long period of time. More was said about the competition for an alternate engine than was ever said about tax policy or the state’s economy,” Malloy said.
GE’s aviation business is in Ohio. Pratt & Whitney, a unit of United Technologies Corp., is headquartered in East Hartford and manufactures engines in Middletown. UTC employs more than 18,000 workers in Connecticut at Pratt & Whitney, UTC Aerospace Systems in Windsor Locks, a research center in East Hartford and Otis and UTC headquarters in Farmington.
Sen. Richard Blumenthal, D-Conn., and a member of the Senate Armed Services Committee, said he supported Pratt & Whitney’s F-35 because “it meant thousands of good Connecticut jobs and more cost-effective engines, making it a better deal for Connecticut and American taxpayers.”
“GE understood the delegation’s position and never raised it with me as a reason for moving its headquarters,” he said.
Rep. Rosa DeLauro, D-Conn., said the Department of Defense decided it was in the “best national interest” to have one engine provider for the F-35 and Congress agreed.
And Rep. John Larson, D-Conn., whose district includes Pratt & Whitney’s headquarters, said GE understood the congressional delegation had to support its constituents, not aviation workers in Ohio.
“They knew where we were. It didn’t prevent them from being mad,” he said.
Sen. Len Fasano, the Republican leader of the state Senate and a critic of Malloy’s economic development policies, said he spoke to GE’s then-Chief Financial Officer Jeffrey Bornstein when the governor and Democrats were hammering out a budget in 2015 that included higher taxes.
“It’s not about GE,” he said, quoting Bornstein. “It’s about the state. It’s about the state squeezing out businesses that support our business."
“This guy is trying to rewrite the history of Connecticut,” Fasano said of Malloy.
Representatives of GE and Pratt & Whitney did not respond to requests for comment.
The Pentagon, backed by President George W. Bush and President Barack Obama, decided in 2006 that Pratt & Whitney would get the engine contract. In April 2011 the Department of Defense ordered a halt to work on an alternate engine, calling it a waste of taxpayer money.
Malloy’s Republican critics have said tax increases in 2011 and 2015 drove out GE and undermined business confidence in Connecticut.
More broadly, they blame Malloy for the state’s weak economic growth and an unemployment rate higher than the U.S. rate.
Jeff Immelt, GE’s chief executive officer at the time, announced in January 2016 that GE would head to Boston to tap into a deep pool of tech workers as the conglomerate pushed further into digital technology. He hinted that Connecticut’s tax policy may have played a role, saying GE began its review of new locations in June 2015, just as Malloy and the Democratic-led General Assembly began drafting new tax legislation.
Malloy, thrown on the defensive by the loss of the headquarters, denied a link between GE’s exit and his administration’s economic development policies. He said at the time of GE’s announcement that it considered many factors, including the proximity of Boston Logan International Airport.
GE’s headquarters move and plan to capitalize on digital technology have been overshadowed by the conglomerate’s financial turmoil. Its share price is one-fourth what it was in January 2017 when it prepared to move to Boston and more than $100 billion of its market value has been wiped out in the last decade as its capital unit was pummeled in the Great Recession followed by a bad bet on energy, an unfunded pension plan and other troubles.
Commenting on his low approval rating, Malloy took a swipe at GE executives, many of whom have been replaced in the less than two years since the move to Boston.
"How popular do you think the former leaders of GE are right now among retirees who don’t get their dividend,” Malloy said. “They made a whole lot of bad decisions in a relatively short period of time.”