General Motors Co. is in discussions with Workhorse Group Inc. and an affiliated, newly formed entity to sell the company’s Lordstown Assembly Complex.
The move has the potential to bring significant production and electric vehicle assembly jobs to the plant, a GM news release states.
While those local GM jobs are gone, GM also announced Wednesday it will invest $170 million in its Oshawa, Ontario, plant to transition the facility from manufacturing vehicles to stamping and autonomous-vehicle testing. The Oshawa plant was among the five plants, including Lordstown, targeted for closure by GM last November. The closing of the Canadian plant was to affect about 2,600 workers.
Travis Hester, GM Canada president, said, however, Wednesday’s news will save 300 of 2,600 union jobs at the plant.
For Lordstown, Gov. Mike DeWine said a lot needs to happen before GM can sell its Lordstown plant to Workhorse. First, he said, is an agreement with the United Auto Workers, which represents workers at the idled GM plant.
Also, Workhorse, a Cincinnati-area company, needs to succeed in landing a contract to sell electric trucks to the U.S. Postal Service, he said.
“We have a long way to go,” DeWine told The Vindicator. “Cautious is probably the right word.”
Getting that USPS contract appears to be the key to Workhorse’s future at the idled GM plant in Lordstown.
“It’s not the day to celebrate yet for the Mahoning Valley or Lordstown or the workers,” DeWine said. “For this really to work, it’s going to be important for Workhorse to get the contract with the postal service.”
DeWine said he’ll be taking a delegation to meet with postal officials.
DeWine said he spoke Wednesday to Mary Barra, GM’s CEO, who told him once Workhorse was up and running – and he didn’t have a definitive time line – the company would start with “hundreds of jobs.” He added that another person close to the negotiations, who he didn’t disclose, said “it could be up to 3,000” if it lands the USPS contract.
A decision on that contract is months away, but Workhorse is among the five finalists for it.
USPS spokeswoman Kimberly Frum said testing of five prototypes for the service’s Next Generation Delivery Vehicles wrapped in March. The project is expected to be bid this summer, she said. She was unable to comment further on the contract.
DeWine said he spoke to Barra about the potential sale after she talked with President Donald Trump. The governor said he will do whatever it takes to provide state assistance to Workhorse.
Lt. Gov. Jon Husted told The Vindicator he visited Workhorse years ago, and it’s “trying to create a viable business model for electric trucks.”
While the company has had financial struggles, Husted said plenty of new tech companies initially don’t make money.
“It’s a company trying to make new products of the future,” he said. “That’s why the postal contract is so important.”
News of the potential sale broke late-morning when Trump tweeted that GM would sell the idled plant: “GREAT NEWS FOR OHIO! Just spoke to Mary Barra, CEO of General Motors, who informed me that, subject to a UAW agreement etc., GM will be selling their beautiful Lordstown Plant to Workhorse, where they plan to build Electric Trucks. GM will also be spending $700,000,000 in Ohio ...” and “.... in 3 separate locations, creating another 450 jobs. I have been working nicely with GM to get this done. Thank you to Mary B, your GREAT Governor, and Senator Rob Portman. With all the car companies coming back, and much more, THE USA IS BOOMING!”
U.S. Rep. Tim Ryan of Howland, D-13th, was less optimistic about the proposal, however.
“It doesn’t look like it will have much of an impact on workers in the short term,” the Democratic presidential candidate said. “They’ll have to chase a job and pension elsewhere with General Motors. It will take a while to get the deal done. But in the long run, if they get the postal contract, they can create jobs in the coming years.”
Ryan said he spoke Wednesday to Workhorse officials.
“I don’t know much about them,” he said. “They’ve got a few small deals. They’re not there yet. They’re hoping to get there. It’s better than the plant being empty. I’m cautiously optimistic.”
Dave Green, UAW Local 1112 president, said he doesn’t want to be a “negative Nelly,” but he does not know enough yet about it to say whether it would be a good thing or bad.
“It was really a surprise to myself and I’m sure to our members,” he said of the tweet Trump made. “It’s really too soon to say how it will affect our members.”
Green spent much of Wednesday operating a fork lift at the plant, cleaning things up.
“They are obviously cleaning it out for something. Maybe now we know what,” he said.
GM ended production of the Chevrolet Cruze at the 53-year-old plant in March, eliminating about 1,600 jobs left at a facility that once employed more than 10,000.
Green said many GM Lordstown workers have accepted involuntary offers to move to another GM plant, which he described in the past as moving or “you will lose everything.”
He has not yet been offered an involuntary offer, but he expects he will be, eventually. Because he has two daughters in high school and college and cannot afford to be without health insurance, he will have to say yes.
“I have to go,” he said. “I cannot leave the health care that I receive for my children, my pension or post-
retirement health care on the table and walk away. I would have to chase that.”
Asked whether GM Lords-town workers could make the transition to building electric cars, he said, “Absolutely. We’ve got the best workforce in the world. I would argue Northeast Ohio, the work ethic here is really second to none. ... Put a challenge in front of us, and we are ready to get that challenge done.”
Workhorse Group Inc. was founded in 2007 to manufacture electric delivery and utility vehicles.
Its products include electric cargo vans, medium and light-duty pickup trucks and delivery drone systems.
The company’s shares surged 214 percent Wednesday after Trump’s tweet announcing GM was selling the plant to Workhorse.
But the company has endured recent financial struggles, according to Seeking Alpha, a content service company that provides financial and stock market analysis.
The website reports that in 2018, Workhorse spent $21.8 million in operating activities on net sales of just $800,000.
In January, Seeking Alpha reported the “ailing” electric-vehicle developer announced a $35 million financing agreement with Marathon Asset Management, six months after the company closed its most recent $6.1 million agreement for a term loan with a fund managed by Arosa Capital Management.
The stock, WKHS, closed at $2.65 Wednesday, up 214 percent.
Upon final agreement, the entity, led by Workhorse founder Steve Burns, would acquire the Lordstown facility. Workhorse would hold a minority interest in the new entity.
“This potential agreement creates a positive outcome for all parties involved and will help solidify the leadership of Workhorse’s role in the EV community,” said Workhorse CEO Duane Hughes.
Burns added, “The first vehicle we would plan to build if we were to purchase the Lordstown complex would be a commercial electric pickup, blending Workhorse’s technology with Lordstown’s manufacturing expertise.”
The discussions between GM and Workhorse and the affiliated, newly formed entity started earlier this year, said Jim Cain, General Motors senior manager of news relations. He said Workhorse approached General Motors about acquiring the plant.
Tim Colton, senior analyst at Gateway, a consulting firm that contracts with Workhorse, declined to disclose details about the entity. Workhorse will be a minority interest, or stake, in the potential deal.
“The plan would be to have the separately created corporate entity that would then license the tech from Workhorse,” he said.
UAW HAS A ROLE
Cain said GM has had ongoing discussions with the UAW about the impact of the declining passenger-car demand industry-wide.
“Those discussions will be expanded to include this opportunity. We look forward to having constructive discussions. Those will begin as soon as they can be arranged,” Cain said. “Our assessment of this opportunity got to the point where we felt it was important to disclose it and begin the next phase of discussions.”
Portman said he spoke Wednesday with Barra about the potential sale of the Lordstown facility.
Portman, a Cincinnati-area Republican, said: “My message to GM all along has been either to bring a new GM vehicle to the plant or to find a partner that will use this world-class facility so people can get back to work. I look forward to hearing more from Workhorse about its plans to bring jobs to Lordstown, and I’m hopeful that this news will benefit the workers there.”
Ryan said Workhorse sees UAW workers as “an advantage,” but the union may seek opportunities for displaced GM workers to return.
Upon final agreement with all parties, work could begin immediately to prepare the Lordstown facility for new production.
GM also announced it is creating 450 new manufacturing jobs in Ohio at its facilities in Toledo, Moraine and Parma.
Terry Dittes, UAW national vice president, said: “The UAW’s position is unequivocal: General Motors should assign a product to the Lordstown facility and continue operating it. A federal lawsuit filed by the UAW over the closing of the Lords-town, Baltimore and Warren facilities is still pending, and the UAW will continue its effort to protect the contractual rights of its members at these locations.”
He added: “The parties regularly discuss product placement issues during national negotiations, which will begin in July of this year. We will monitor this situation as it develops to determine what course of action will most benefit UAW-represented workers at General Motors.”
James Dignan, Youngstown/Warren Regional Chamber CEO, said he had been working with DeWine’s office and Jobs-Ohio to urge GM to decide the fate of the Lordstown plant, but learned about the company’s intentions through Trump’s midday tweet.
“Until [Wednesday], we didn’t know there was any inkling one way or another. The governor has always intimated, ‘If you’re never going to invest, then sell.’ Now we have confirmation that the inclination is to sell.”
U.S. Sen. Sherrod Brown, a Cleveland Democrat, said: “It’s still too early to tell whether the proposed sale of Lordstown is good news for workers there. Workhorse is a leader in electric vehicle manufacturing, and we are proud to have them call Ohio home, but GM cannot shirk its responsibility to these workers. My No. 1 job is always to fight for the best possible outcome for Ohio workers, and that’s what I will continue to do as we learn more.”
Brown said he also spoke to Barra on Wednesday and “she didn’t have a lot of answers. GM has a responsibility to its workers. GM can still put electric vehicles in Lordstown.”
Lordstown Mayor Arno Hill said he is happy to hear there is a buyer for the plant. He doesn’t know how many people Workhorse will employ, but he’s optimistic it will be a good fit. He said his first choice would be for General Motors to bring a vehicle back to the plant.
State Sen. Sean O’Brien of Bazetta, D-32nd, said it could take about nine to 10 months to get the plant ready to manufacture its products, but it will take some additional time to carry out negotiations with the UAW to reach an agreement on having GM workers staff the facility.
“They are a good company. ... They are working with the [U.S. Postal Service] to replace their vehicles, so it could be a significant economic benefit for our area,” O’Brien said.
State Sen. Michael Rulli of Salem, R-33rd, added: “We’re going to do everything we can to help the UAW and the company work out the details and make sure we don’t get any snags.”