President Donald Trump tweeted his enthusiastic approval yesterday of a plan by General Motors to sell its shuttered but “beautiful” assembly plant in Lordstown, Ohio to a Loveland, Ohio-based company called Workhorse Group. But it’s not a done deal on several fronts.
Workhorse describes itself as “a developmental-stage vehicle electrification company” that was known as AMP Electric Vehicles from its founding in 2007 through March 2015, when it acquired the Workhorse brand and the Workhorse Custom Chassis assembly plant in Union City, Ind.
Trading on the Nasdaq exchange, it had sales of $364,000 for the first quarter of 2019, it announced Tuesday. Its stock shot up 215% yesterday, closing at $2.65, following the Presidential shout-out. Workhorse secured a critical loan in April that “would provide ‘meaningful, near-term funding’ toward building and delivering vehicles to United Parcel Service Inc., Deutsche Post AG’s DHL and other customers this year,” Andrew Scurria reported at the time for the Wall Street Journal.
“Tom Colton, who is representing Workhorse in the potential deal, says the company has been involved in negotiations since the beginning of the year, but that there’s still a lot of details to be ironed out,” Aaron Gordon writes for Jalopnik.
Describing the talks as “roughly preliminary,” Colton, who is head of investor relations, “declined to elaborate on the details of the negotiations, including the timeframe they’re working under or the price of the acquisition. But it’s a complicated deal, because Workhorse itself is not acquiring the plant. Instead, it’s putting together another entity which will own the plant and build an electric pickup truck there, a distinct product from Workhorse’s current offerings of short-range electric trucks,” Gordon continues.
Indeed, “GM sent out a press release saying that it is ‘in discussions’ with Workhorse ‘and an affiliated, newly formed entity’ to sell the plant. The release notes that ‘upon final agreement, the entity, led by Workhorse founder Steve Burns, would acquire the facility. Workhorse would hold a minority interest in the new entity,’” Phil Dzikiy writes for Electrek.
Burns stepped down as CEO in February. He was replaced by Duane Hughes, who had been president and COO.
“Hughes said if the purchase goes through, the plant would produce a commercial electric pickup as its first vehicle,” Dzikiy adds.
Any deal with Workhorse would also be subject to an agreement with the United Auto Workers, as Trump mentions in his tweet.
“The UAW indicated it would continue to push for GM to bring a new vehicle to Lordstown,” Heather Long writes for the Washington Post.
“‘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 in a statement,” Long reports.
“Senator Sherrod Brown, an Ohio Democrat, noted that Workhorse employs fewer than 100 people, compared with the thousands who worked for GM in Lordstown as recently as April 2018,” write Nelson D. Schwartz and Neal E. Boudette for the New York Times.
“It’s still too early to tell whether the sale is good news for workers,” Brown tells them.
Should the deal transpire, the company, which “makes battery-powered pickup trucks, delivery vans, drones and aircraft, faces big obstacles in getting the Lordstown plant humming again with hundreds working the line. It has no experience in mass vehicle production, its shares recently traded for less than $1, and quarterly revenues were less than the price of one high-end sports car,” Schwartz and Boudette observe.
“Trump added that GM will also spend $700 million in Ohio, creating 450 new jobs in three separate locations,” CNBC’s Ashley Turner reports, with his enthusiasm spilling over into some self-patting on the back in a second tweet.
“I have been working nicely with GM to get this done. Thank you to Mary B [CEO Mary Barra], your GREAT Governor [Mike DeWine], and Senator Rob Portman. With all the car companies coming back, and much more, THE USA IS BOOMING!” he effused in a tone quite different from his mood in November when the automaker announced layoffs and plant closings.
“Trump promised to bring back blue-collar jobs to the Rust Belt, and the closing of the Lordstown factory, located in a county that swung from blue to red in the last presidential election, has been a sore mark on his promises to working America,” WaPo’s Long reminds us.