Lordstown Motors Expects to Complete Capital Raise in March
YOUNGSTOWN, Ohio – A Lordstown Motors Corp. official said Wednesday he expects the company’s capital raise to be completed by the end of March.
John LaFleur, chief operating officer for Lordstown Motors, was among several representatives of the startup electric vehicle manufacturer on hand for the first of two supplier procurement events at Stambaugh Auditorium. LaFleur and Rich Schmidt, Lordstown Motors’ chief production officer, addressed the assembled potential vendors.
Approximately 450 individuals representing potential vendors registered for Wednesday’s event, reported Lauren Johnson, 422 Corridor and business development manager for the Youngstown/Warren Regional Chamber.
The Regional Chamber hosted the event, which was targeted to plant-related suppliers. Chamber officials are anticipating more than 300 individuals to register for the Feb. 4 event, which is targeted to suppliers for the vehicles themselves.
Describing the response to the event as enthusiastic “would be nothing if not an understatement,” Johnson said.
Lordstown Motors has been “very active “ on several fronts regarding financing and is now transiting to larger institutional fundraising, or strategic partners, LaFleur said. The company is aiming to raise upwards of $300 million to fund startup costs at the plant, where it plans to manufacture its Endurance electric truck.
“Financially, we’re having a great response to fundraising. We anticipate our own raise to be done by the end of March,” he said.
Company officials met Monday with representatives of the U.S. Department of Energy about a potential $200 million loan from the Advanced Technology Vehicles Manufacturing loan program, as well as possible grant funds from JobsOhio, Ohio’s private nonprofit economic development corporation.
The Department of Energy loan “may or may not happen but we certainly are open to it and very interested in that type of support,” he added.
“Completing fundraising by the end of March should provide plenty of time to get the vehicle up and running into production,” he continued. “There’s nothing going to hold us up in development of this vehicle,”
Retooling work is already underway in the plant.
“My team’s working on the development of the facility as far as the flow of the plant,” Schmidt said.
Lordstown Motors looks to produce 20,000 vehicles its first year in a plant that’s designed to manufacture 500,000, “so I have to look at how to shrink that and be efficient,” he continued. The plant previously was owned by General Motors Co., which manufactured the Chevrolet Cruze there until last year.
He also needs to look at how to increase the “envelope size” of the plant. “It was built for the Chevy Cruze so it’s a smaller box and we’re going to a larger truck,” he said. Lordstown Motors already is in negotiations with some of its contractors, and once it has outlined the scope of work, it will begin bidding that work.
Retooling of the plant should take six or seven months.
“We are planning to ramp this up in record speed,” LaFleur said. “Some people are nervous about it, others are excited, and we want both.”
The company also is in the process of building alpha and beta versions of the vehicle for testing, Schmidt said. The alpha builds are underway and about 30 betas will be hand-built in June at the factory. Preproduction builds will start in September.
Full production is expected to begin in November, with 300 to 500 manufactured depending on how the ramp-up goes, he said. The company is targeting manufacturing of 20,000 vehicles in 2021.
Employment on the production side should be at 500 during the beta period — around April or May — and a second shift added by the end of this year. Employment should be up to 1,500 by mid-2021, he said.
The company has “just started’ discussions with the United Auto Workers, LaFleur said.
“We really don’t need to engage until they engage with us because you have to have a workforce that votes and wants a union,” he said. “Crucial discussion really won’t happen until they want to start forming a union. We’re completely open to it and we would embrace it, if that’s what the employees want.”
Wednesday’s event drew vendors from 10 states in addition to Ohio, as well as two international firms, and Johnson said she expects the Feb. 4 event to draw a similar response. Through registration, information about the attendees was being gathered for Lordstown Motors officials to evaluate.
“We’ve gotten inquiries from companies across the spectrum,” she remarked. “We know that there will be a wide variety of opportunities generated for service providers, suppliers to the facility itself, as well as automotive suppliers.”
Potential Lordstown Motors vendors attending the event seemed encouraged by what they heard.
“We foresee ourselves doing a lot of construction and maintenance work for the plant, specifically with their electrical apparatuses,” said Dominic Donofrio, business development manager for Enertech Electrical Inc., Lowellville. The company provides “comprehensive electrical services that we feel would partner well with Lordstown Motors Corp.”
Jugenheimer Industrial Supplies, Hubbard, previously supplied the former GM Lordstown plant and now is selling to the Lordstown Energy Center in the village. The company, which sells products including gloves, fasteners and drill bits, is “looking to get into the maintenance end of the business,” said President Rick Jugenheimer.
Brittany Mendez, vice president of operations at Sherman Creative Promotions, Boardman, also attended the event to explore potential opportunities. The company sells branded apparel and other promotional products.
“Getting to work with a new venture here in my hometown of Lordstown is really exciting,” she remarked. “It’s a great opportunity for all businesses in the area.”
Among the out-of-state vendors who attended was Scott Corum, sales manager for Browne Laboratories Inc. in Chattanooga, Tenn., which specializes in industrial and commercial water treatment. Corum said he worked with members of Lordstown Motors’ management team when they were employed at Tesla and has “a lot of confidence” in the new venture.
“It’s exciting,” he said. “They have a good product. They have a phenomenal facility.”
Pictured above: John LaFleur, chief operating officer for Lordstown Motors, and Rich Schmidt, Lordstown Motors’ chief production officer, met with potential vendors at a supplier procurement event Wednesday. All pictures via Youngstown/Warren Regional Chamber.
Copyright 2020 The Business Journal, Youngstown, Ohio.