Politics

DeWine: ‘A Lot Has to Happen’ Before Lordstown Sale

LORDSTOWN, Ohio — Gov. Mike DeWine said Wednesday that it’s “probably not the day yet to celebrate” a sale of the General Motors Co.’s Lordstown Complex to Workhorse Group Inc., a Cincinnati-based manufacturer of electric vehicles.

“A lot has to happen,” the governor cautioned during a press conference at the statehouse that was streamed live on the Ohio Channel. “This is a day where we may be moving forward.”

Any sale would be contingent on an agreement with the United Auto Workers union, which on Wednesday reiterated its position that it wants GM to keep its Lordstown plant and retool it for a new product.

UAW Vice President Terry Dittes said in a statement that the union’s position is “unequivocal: General Motors should assign a product to the Lordstown facility and continue operating it.”

Discussions between the UAW and GM are to begin this summer. The existing bargaining agreement expires in September.

Another hurdle DeWine identified is the prospect of Workhorse securing a multibillion-dollar contract with the U.S. Postal Service, which is looking for a manufacturer to build its next-generation fleet of delivery trucks.

Workhorse is among five finalists vying for the contract, which includes replacing as many as 180,000 vehicles.  

“We remain confident in the strength and quality of our prototype vehicles and the way they performed during the testing process,” Workhorse CEO Duane Hughes told financial analysts during a conference call Tuesday. 

The governor acknowledged there are several other companies – two of them foreign – competing for the postal business and emphasized his office will make the best case for Lordstown and Workhorse. “We think we make a very good case. This will involve the full involvement of this administration and JobsOhio,” he said.

DeWine said that a contract with the postal service is a critical step in securing a sale of the plant and putting people back to work in Lordstown. Initially, he was told that the plant would employ “hundreds” without the postal contract. “With the postal contract, it could be significantly higher. For this to create significant jobs within the Mahoning Valley within a short period of time, they have to have the contract.”

Lt. Gov. Jon Husted had previously visited Workhorse and called it a “promising Ohio company.” The manufacturer has converted products for UPS and the company is trying to become a leader in this auto segment, he said.

However, Workhorse continues to lose money as it transitions to an electric-vehicle manufacturer. During the first quarter of 2019, the company reported sales of just $364,000, down from $560,000 during the same period in 2018. Workhorse experienced a net loss of $6.3 million during the quarter versus a net loss of $6.4 million a year ago.

As of March 31, the company reported $2.8 million in cash, leaving some to speculate on how even an affiliated entity could possibly purchase the six-million-square-foot Lordstown Complex.

As of now, the proposition calls for a straight sale of the Lordstown plant, said Tom Colton, head of investor relations for Workhorse. He acknowledged that substantial additional capital would be required to purchase the plant and begin production. 

The company has not had any dialogue with the UAW, Colton continued, but he said the company is committed to hiring former Lordstown autoworkers and is open to bringing in the union.

“That’s definitely on the table,” he said. 

The governor said should Workhorse secure the USPS contract, new investment dollars would likely pour into the company. “If there is a contract with USPS, they’ll have the investment and the money,” he said.

DeWine tempered earlier speculation after President Donald Trump Wednesday morning announced on Twitter that he had just spoken with GM CEO Mary Barra, who he said informed him that the company would sell its Lordstown plant to Workhorse, subject to approval from the UAW. 

“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,” the president tweeted.

“The president’s tweets certainly kicked everything off today, didn’t it?” DeWine said with a smile. “I would hope the president would weigh-in in regards to the post office.”

Yet he said it would be unfair to workers in Lordstown and the Mahoning Valley to declare this a done deal.

“I’m trying to be realistic,” DeWine said. Should a deal not materialize, then it would be “cruel to the workers and the people of the Mahoning Valley,” he said.

He said the first step is to secure the approval with the UAW. At the same time, the state will make its case to the USPS about the project.

“There are a lot of things that have to happen before we call it a victory,” DeWine said. 

More Coverage:

Union Chief, Elected Officials Mixed on Potential Lordstown Sale
GM in Talks to Sell Lordstown Plant to Electric Truck Maker

Published by The Business Journal, Youngstown, Ohio.