General Electric Co. said it will close its New Orleans technology center and lay off all 100 employees in its Place St. Charles office, dealing a blow to the city’s technology sector amid the economic fallout of the coronavirus.
The news came on the same day that GE announced $2 billion of cost-cutting and sweeping job cuts, including 700 at its power division, as the global pandemic hit revenue and profit in major areas of industrial conglomerate’s business.
In a letter to employees at the tech center at 201 St. Charles Avenue, the company said employees would be kept on the payroll until the office officially closes at the end of June. The New Orleans office has had employees from both the aviation and gas power divisions, as well as general corporate employees. GE couldn’t immediately provide a breakdown.
“It’s not a move we take lightly, but the impact of COVID-19 is being felt globally and GE is not immune to it,” said Adam Tucker, a GE spokesperson. “This is a difficult decision, particularly at this time, but we are providing employees with 60 days’ notice and comprehensive benefits to help during this transition.”
The layoffs come as tens of thousands of Louisiana workers have lost jobs in recent weeks as stay-at-home orders aimed at slowing the spread of the coronavirus in the state have closed restaurants, bars and other businesses.
On Monday, Gov. John Bel Edwards said that he expected to begin a phased reopening of the state May 16, but in recent days business groups and some political leaders have warned that waiting too long could lead to further economic calamity.
Many of the initial layoffs occurred in the tourism and hospitality industry, where empty hotels and a lack of conventions meant no customers for the often lower-wage workers employed in that sector. The closure of the GE office underscores that the jobs of higher-paid workers are also under threat as the economy of New Orleans, as well as most of the U.S., screeches to a halt.
It’s also a setback for the city’s still nascent technology sector. GE’s arrival in New Orleans in 2012 was touted by former Mayor Mitch Landrieu, former Gov. Bobby Jindal and business leaders as a key cog in plans to grow the tech industry and bring big-name companies — along with high-paying jobs — to the New Orleans metro area.
Economic development officials lured what was then GE Capital, the conglomerate’s financial arm, with an offer of $10.7 million in grants along with millions more in tax rebates through the state’s Quality Jobs program. Announcements touted salaries of $60,000 to $100,000 a year and estimated that the 300 GE jobs would indirectly create 300 more.
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At the time, New Orleans was still seeing an influx of post-Katrina arrivals and the city was viewed as a potential up-and-comer in the tech world, with growing companies like online market-research firm Lucid, then known as Federated Sample, and several tech incubators and promotional organizations, like The Idea Village, beginning to generate a national profile. GE offered a stamp of approval from a multinational conglomerate.
Since then, the sector’s growth has remained steady, attracting some new firms and jobs — including HP spinoff DXC Technology in 2017 — even if it never saw the explosive growth experienced in other tech hubs that many leaders had envisioned.
Louisiana Economic Development Secretary Don Pierson said the state agency is reviewing GE’s compliance with its obligations under the incentive program.
“By any measure, the GE Digital Solutions Technology Center in New Orleans marked a significant step forward for Louisiana’s growing software, IT and digital sector,” Pierson said. “The company’s presence helped establish the Software Engineering Apprenticeship Program at UNO and build essential STEM career skills at schools throughout the area.”
Michael Hecht, president and chief executive of economic development agency GNO Inc., was one of a number of officials who lured GE to New Orleans eight years ago. He was hopeful that employees might find jobs at other local tech firms and said the office closure was another sign of the economic damage wrought by the coronavirus pandemic.
“GE New Orleans was known for being a high-productivity office within GE – and GE has been an important part of New Orleans’s growing tech scene,” said Hecht. “Clearly, the impact of coronavirus is beginning to hit home.”
GE still will have a total of about 500 employees in the state of Louisiana, including about 100 at its LM Wind Power unit located on the NASA Michoud campus in New Orleans East. The company said the wind power facility will not be affected by the layoffs.
GE’s chief executive, Larry Culp, said Wednesday that the company’s revenue in the quarter was down by about 8%, at $20 billion, and he blamed the pandemic for a $1 billion hit to free cash flow, which was negative $2.2 billion.