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New life for Lordstown? Workhorse in talks to acquire shuttered GM facility

GM closed its Lordstown Complex on March 5, 2019, but it could see new life as the company is negotiating with Workhorse, which would build electric pickups in the facility. (Photo: Tim Dooner/FreightWaves)

Workhorse Group (NASDAQ: WKHS) is in the final stages of acquiring General Motors’ (NYSE: GM) Lordstown Complex in Lordstown, Ohio, GM said in a statement on May 8, 2019. Under the terms of the deal, which has not been finalized, a newly formed entity led by Workhorse founder Steve Burns would acquire the facility with Workhorse itself holding 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 [electric vehicle] community,” said Workhorse CEO Duane Hughes.

The release, sent out by GM, was a planned release, Tom Colton, investor relations for Workhorse, told FreightWaves, and had nothing to do with President Donald Trump tweeting that Workhorse would be buying the facility.

Colton added that discussions on the facility have been ongoing since early in 2019 and the said the conversations are still ‘preliminary’ with no timetable for conclusion.

Colton also couldn’t say what role the new entity would play in any agreement, but the deal is being discussed as a simple sale of the facility. Trump had tweeted that GM would be making a $700 million investment in Ohio, but it doesn’t appear that the investment would include any partnership or investment with Workhorse.

GM shuttered Lordstown on March 5, 2019, as the last Chevrolet Cruze automobile rolled off the assembly line. The closure eliminated nearly 1,700 hourly positions and is part of a major restructuring GM is undergoing. The company is expecting to close as many as five plants in North America and slash 14,000 jobs as it transitions to make trucks, SUVs and electric and autonomous vehicles.

This week, GM announced that its autonomous vehicle subsidiary, Cruise Automation, had secured $1.15 billion in equity funding as it seeks to bring an autonomous, electric vehicle to production later this year.

New manufacturing jobs

If the Workhorse deal is finalized, it could mean new jobs for the workers in Lordstown, although how many remains a question. Colton said Workhorse wasn’t prepared to say how many jobs the acquisition would create, but that it would be “in the hundreds.”

Terry Dittes, vice president of the United Auto Workers (UAW), which represents GM’s Lordstown workers, called on GM to bring a new product to the facility and continue operating it. The UAW contract reportedly prevents GM from selling or closing the plant until September, when the current UAW labor deal expires.

“A federal lawsuit filed by the UAW over the closing of the Lordstown, 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 said in a statement. “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.”

Colton said any labor deal or discussions with the UAW are between the union and GM, but that Workhorse would consider employing displaced workers should a deal be reached.

“As it currently stands, if everything proceeds as it happens, we have every intention of reaching out to the UAW and the former GM workers in Lordstown,” Colton said.

Burns said Workhorse would start production as soon as the facility could be prepared, if a deal is reached.

Electric pickups first up

“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,” he said.

Workhorse produces electric delivery vans for FedEx and UPS, is one of four contenders for the United States Postal Service contract for its next generation of postal vehicles, makes a last-mile delivery drone that is in testing, and is ramping up testing of Surefly, a personal helicopter.

Burns was put in charge of monetizing Surefly earlier this year, stepping away from his role as CEO of Workhorse to do so. Hughes replaced him. On Workhorse’s first quarter earnings call, Hughes said the company is still looking to sell the Surefly business.

Colton said that any acquisition of the Lordstown facility would not include the Surefly business.

Since last November, GM has been in discussions with the UAW regarding the impact of changing market conditions on the Lordstown facility. These discussions will include this opportunity.

“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,” Mary Barra, GM chairman and CEO, said. “Workhorse has innovative technologies that could help preserve Lordstown’s more than 50-year tradition of vehicle assembly work.”

Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at [email protected]