CINCINNATI - General Electric Co.’s promise to create 1,800 jobs at the Banks by the end of this year is looking less likely, thanks in part to Procter & Gamble Co. agitator Nelson Peltz.
The New York hedge fund manager, who started a proxy fight to gain a board seat at P&G, also owns about $2 billion in GE stock. Peltz argued for months the company’s costs are too high. In March, after meeting with Peltz, GE announced a plan to reduce expenses by $2 billion. In June, Jeffrey Immelt announced his retirement as CEO. Immelt is the Finneytown native who brought the Global Operations Center to Cincinnati.
Immelt’s successor, John Flannery, told Wall Street analysts June 12 he will conduct “a comprehensive review” to address areas of concern to investors “around our cash flow, around our cost structures.” In July, he said GE is “taking a hard look at our corporate spending, going through a zero-based budget exercise on all of our functions.”
Reuters reported Aug. 31 that Flannery has implemented a hiring freeze in certain technology positions and plans to announce significant job reductions in November.
What does this mean for GE at the Banks?
“We have nothing new to share,” said GE spokeswoman Arti Johri. “It is business as usual -- the center actively supports GE’s industrial businesses across the United States.”
But the hiring pace has clearly slowed. Johri said GE employs about 1,400 at the Banks today, the same number she provided in June. GE’s 10-story office building opened last October with about 1,000 employees and added more than 50 jobs a month on average from November to May. But GE’s online job site lists only four “global operations” jobs currently available in Cincinnati. Johri said digital jobs are also based at the Banks. That brings the total to 19 current postings.
The company is still “working towards” the hiring goal of 1,800, Johri said.
GE signed Job Creation Tax Credit agreements with the city and state to help finance the $90 million riverfront office building. Those deals call for GE to receive 85 percent of all earnings taxes paid by its employees for 15 years.
Cincinnati’s tax credit agreement allows the city to “suspend, terminate or modify” the deal if GE falls short of job creation and retention goals, but only if it falls more than 15 percent short of the goal. So, even though GE promised 1,800 jobs, it can only be penalized if it ends the year below 1,530.
The state’s agreement with GE calls for the company to create 1,400 new jobs and retain 326 in Ohio while creating new payroll of $89.81 million, all of it by the end of this year. In February, GE reported a total of 761 jobs at The Banks with $72.9 million in total payroll for the 2016 calendar year. The agreement gives the director of Ohio’s Development Services Agency broad discretion to determine whether GE is in compliance.