Taking in Just $70 a Day, Lordstown GM Plant Savior Workhorse Is in Trouble
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Back in early May, President Donald Trump blasted out a tweet one morning under the banner “great news for Ohio.” The great news? General Motors Co. was in talks with a company called Workhorse Group about forming a new affiliate that would buy — and reopen — the shuttered Chevrolet Cruze car plant in Lordstown. Hundreds of jobs would be saved, in other words.
The plan met immediate skepticism, and Workhorse’s second-quarter earnings report Aug. 6 further doused the optimism. The electric-truck maker’s sales, never really robust at any point in its 12-year history, totaled all of $6,000 in the quarter. That’s about $70 a day, give or take. The company’s stock plunged, sinking as much as 35% and dropping its market value to less than $200 million.
Now more than ever, Workhorse looks more like Lordstown’s lottery ticket than a savior to be taken seriously. While it’s hard to imagine at this juncture the company having the capital needed to get GM’s factory humming again, it has a ray of hope to point to: a potentially lucrative contract to build next-generation mail trucks for the U.S. Postal Service.
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... — Donald J. Trump (@realDonaldTrump) May 8, 2019
“They’ve got 50-plus years of experience on how to build vehicles in that facility,” CEO Duane Hughes told analysts on an earnings call. He said getting access to the plant could be a “potential game changer” in winning the Postal Service contract potentially worth upward of $6.3 billion.
Workhorse has about $70 million in back orders for its electric vehicles, though its factory in Union City, Ind., will handle much of that work. Deliveries will resume in the fourth quarter.
Under the proposed deal being discussed with GM, Workhorse’s founder and former CEO, Steve Burns, would form a new private company called Lordstown Motors Corp. The company would license intellectual property and technology to produce an electric truck based on Workhorse’s W-15 model.
Workhorse would in turn own a minority stake in Lordstown Motors. Burns told the Detroit News last week that he’s looking to raise $300 million to back the effort.
Tom Colton, an outside spokesman representing Workhorse, said its plans for Lordstown aren’t contingent on winning the Postal Service contract. The company believes demand from other customers will make the project feasible.
Anyone with a full-time job making $12 an hour earned more in the 2nd quarter than the EV company that's trying to buy the former GM plant in Lordstown, Ohio. https://t.co/nQdHHARIGh — Nick Bunkley (@nickbunkley) August 6, 2019
Trump pre-empted GM and Workhorse’s announcement of their talks in May by more than an hour by sending celebratory tweets and thanking GM CEO Mary Barra. But the United Auto Workers’ local president told Bloomberg News he was unaware of the discussions, and the union issued a statement calling for GM to assign a new product to the plant and keep operating it.
“As we’ve said before, our potential agreement with Workhorse and an affiliated, newly formed entity to sell the Lordstown complex can bring significant production and electric vehicle assembly jobs to the Lordstown plant,” GM said in an e-mailed statement. Discussions are moving forward, and the company said it remains focused on securing a final agreement.
During a July 2017 rally in nearby Youngstown, Trump told supporters “don’t move, don’t sell your house,” because his administration would bring jobs back and fill up the area’s factories. But by November of last year, GM announced plans to stop production, costing Lordstown the last of the roughly 4,500 direct jobs the plant provided just a few years ago.
