Lordstown Motors visits northeast Ohio to discuss idled GM plant
If Lordstown Motors Corp. is able to finalize its purchase of the General Motors Co. assembly plant in northeast Ohio, the start-up automaker plans to start producing an electric truck there as early as next year.
Lordstown Motors continued its behind-the-scenes efforts on purchasing the GM plant by meeting with Mahoning Valley officials on Friday at Youngstown State University to introduce the company and explore opportunity for collaboration with the university. The project is contingent on the would-be automaker purchasing the plant after GM and the United Auto Workers complete negotiations on a new contract as early as next month.
"They feel as if with their singular focus on the electrical vehicle that they should be able to be a real force in the market ... the market that's inevitable," Youngstown State University President Jim Tressel told The Detroit News. "They truly want to be a part of the community and the region."
The News reported last week that Lordstown Motors was founded in June by CEO Steve Burns, who also founded and was CEO of Workhorse Group Inc., a Cincinnati-based electric-truck maker. Lordstown Motors would use the Workhorse technology to build its electric pickup truck at the 6.2 million-square-foot facility that pumped out Chevrolet and Pontiac cars for years. Workhorse would own 10% of Lordstown Motors.
The plant also would potentially partner with Workhorse to build the next U.S. Postal Service delivery truck. Workhorse is one of the companies vying to win by the end of year a $6.3 billion contract with USPS to build 180,000 delivery trucks. Access to the Lordstown facility is expected to be a "game changer" for Workhorse in its efforts to get the contract, CEO Duane Hughes said during the company's second quarter earnings call this week.
In addition to being an assembly facility, the plant would also become Lordstown Motors' headquarters and research and development center. Burns could not be reached for comment Friday.
Lordstown Motors' presence in the Mahoning Valley on Friday, as well as discussions with stakeholders there before the meeting, has helped turn skepticism about the company into excitement.
"They are the real deal," said Rick Stockburger, CEO of the Tech Belt Energy Innovation Center, a business incubator in Warren, Ohio. "The team they have there has worked for companies like Tesla and GM. This isn’t some random startup company. They have a real knowledge of the ecosystem."
Lordstown Motors, though, still has some hurdles to overcome. It needs to find out what comes of the UAW/GM negotiations because GM cannot idle, close or sell the plant under the current collective bargaining agreement expiring Sept. 14. The UAW officials say they will fight to keep GM product in the automaker's "unallocated" plants in Lordstown, Michigan and Maryland. Lordstown Motors is willing to work with the UAW, multiple sources said.
Lordstown Motors is also working on getting the rest of the financing needed to purchase and retool the plant. "Their willingness to be up here and to bring their team up here sends a strong message," said Ohio Sen. Sean O'Brien, D-Bazetta Township, who visited the Workhorse headquarters outside Cincinnati last week.
Workhorse develops electric delivery vans and pickup trucks. The company also has developed hybrid aircraft for short flights and delivery drones.
There's been skepticism about Workhorse since President Donald Trump announced on Twitter that GM was working with the company to sell the Lordstown plant — even though Workhorse wouldn't be the company purchasing the plant from GM. Lordstown Motors would be.
Skepticism among locals and some in the news media is driven in part by Workhorse's weak earnings and uncertain financial outlook. This week, the company reported $37 million in losses and only $6,000 in sales during the second quarter. In a Friday filing with the Securities and Exchange Commission, the company said it lost $43.1 million for the first six months of the year.
The company's sales were down about 50% year over year to $369,690, primarily attributable to a decrease in the volume of trucks sold. As of June 30, Workhorse's cash, cash equivalents and short-term investments totaled $23.5 million, up from $1.5 million on Dec. 31.