GM in talks to sell Lordstown plant

Nora Naughton
The Detroit News
President Donald Trump says Workhorse plans to build electric trucks at Ohio's Lordstown plant.

General Motors Co., hoping to heal political wounds, is negotiating a potential sale of its shuttered Lordstown Assembly Plant to Cincinnati-based electric truckmaker Workhorse Group Inc.

The potential sale would bring "significant production and electric vehicle assembly jobs" to the currently idled plant in northeast Ohio, Workhorse CEO Duane Hughes said in a joint statement with GM. Workhorse founder Steve Burns said the first vehicle his start-up company plans to build in the event of a sale would be a commercial electric pickup.

The possible sale of Lordstown would represent yet another political win for GM, which also eased tensions in Canada Wednesday when it announced a slimmed-down future for the automaker's endangered Oshawa plant — minutes before a tweet from President Donald Trump previewed the potential deal between GM and Workhorse. GM also announced it will invest $700 million in three other Ohio facilities, creating about 450 new jobs.

"We remain committed to growing manufacturing jobs in the U.S., including in Ohio, and we see this development as a potential win-win for everyone,” GM CEO Mary Barra said in a statement. "Workhorse has innovative technologies that could help preserve Lordstown’s more than 50-year tradition of vehicle assembly work."

GM has been on the defensive since November when the company announced a global restructuring that includes stopping production at five North American plants, enduring harsh criticism from politicians and union representatives in the U.S. and Canada. GM has since promised it would be able to offer new positions to a majority of the 2,800 affected U.S. hourly workers, announced new plant investments, created 1,800 new jobs and began negotiating with Canadian union Unifor. 

Workhorse is a startup focused on electric truck and aircraft development. The Ohio company recently postponed plans for an electric pickup to focus on battery-powered lightweight vans in an attempt to generate enough revenue to avoid a collapse, according to a March report from Trucks.com. Workhorse reported a net loss of $36.5 million in 2018. The company recorded sales worth $364,000 in the first quarter of 2019, when its net losses totaled $6.3 million.

Still, Workhorse plans to create a new entity to acquire the Lordstown plant in an attempt to attract investment, according to a person familiar with the company's plans. The electric truck company plans to create an acquisition entity, of which it would be a minority stakeholder. That new entity would own Lordstown and use Workhorse technology and intellectual property to build a vehicle, the source said.

A spokesman for GM said it's too early to say whether the automaker would invest in the new Workhorse-backed entity. But news of the potential transaction with GM pushed Workhorse shares 214.6% higher to close at $2.65 on the NASDAQ.

The Cincinnati startup is among a field of applicants vying to build the next generation of the U.S. Postal Service's delivery vans. Acquiring the Lordstown plant with a fresh round of investment could give the company a leg up in that bid. Other applicants include Auburn Hills-based Mahindra Automotive North America and Ford Motor Co.

Any promised future for Lordstown, which built the last Chevrolet Cruze on March 6, would be a win for Trump. Lordstown's Trumbull County, formerly a Democratic stronghold, flipped to vote for the Republican nominee in 2016 after Trump repeatedly promised on the campaign trail and in the early days of his presidency to revive American manufacturing that for decades formed the bedrock of what locals call the Mahoning Valley.

Trump has continued to publicly pressure GM on Lordstown via Twitter and in public appearances in Ohio: "Lordstown is a great area. I guess I like it because I won so big there," Trump said during a visit to Lima, Ohio, this year.

But the United Auto Workers leadership appeared to reject the idea of a sale, saying it would prefer GM restart the factory and commit to producing a vehicle there. The 2015 agreement between the UAW and GM, to be renegotiated this fall, states: "Any sale of an operation as an ongoing business would require the buyer to assume the 2015 GM-UAW Collective Bargaining Agreement."

"The UAW’s position is unequivocal: General Motors should assign a product to the Lordstown facility and continue operating it," said UAW Vice President Terry Dittes, who oversees negotiations with GM.  Workhorse is interested in the UAW workforce at Lordstown and would commit to hiring laid-off GM workers should the sale go through, Workhorse spokesman Tom Colton confirmed.

Kristin Dziczek, vice president of Ann Arbor-based Center for Automotive Research, said it's "inconceivable" that the UAW would stop representing the Lordstown plant, regardless of the owner.

"There is no question in my mind the UAW already is or will be involved," she said. "But there are still a lot of details to work out."

Ohio politicians — fiercely critical of GM's restructuring actions — reacted positively to both the potential sale of Lordstown and GM's plans to invest in its Toledo, Parma and Moraine facilities across the state.

"I want to thank @realDonaldTrump for his help in bringing new production to #Lordstown," U.S. Sen. Rob Portman, R-Ohio, tweeted in the minutes following Trump's Wednesday morning tweet. "I’m hopeful we will see the #Lordstown plant humming again."

Presidential candidate and U.S. Rep. Tim Ryan, D-Ohio, represents Lordstown. He was more skeptical on a conference call Wednesday.

"In the short term, it’s not going to help a lot of people," Ryan said of the potential sale of the Lordstown plant that resides in his district. "It’s going to take a long time to ink the deal (and) retool the plant."

Still, he added, a sale to Workhorse or any other buyer is "the next best thing besides the plant closing."

nnaughton@detroitnews.com

Twitter: @NoraNaughton

Staff Writer Keith Laing contributed.