Lordstown Motors’ Fortunes Could Boost Trump in Trumbull
LORDSTOWN, Ohio – President Donald Trump’s political prospects in Trumbull County could receive a boost this week should the U.S. Postal Service award Workhorse Group Inc. a lucrative contract to build its next generation delivery vehicles, observers say.
“My gut feeling is that he’s going to pay a visit here before Election Day,” Lordstown Mayor Arno Hill says of Trump. “We have so much going on.”
The USPS is expected to make a decision on awarding an estimated $8.1 billion contract to at least one of three manufacturers competing for the project sometime soon – perhaps as early as Tuesday. The deadline for these companies to submit proposals was July 14 and a decision was to come 90 days after the deadline, which is Oct. 13.
However, the USPS has not identified a precise date on when it would award the contract.
Workhorse owns a 10% stake in Lordstown Motors Corp., the electric-vehicle startup that acquired General Motors’ former assembly plant here. Lordstown Motors has said it wants to manufacture the next generation postal service vehicles at the sprawling plant on behalf of Workhorse.
On May 8, 2019, Trump tweeted that Workhorse had purchased the former GM plant, which was shuttered in March of that year, eliminating the more than 1,600 jobs that remained at the factory.
“GREAT NEWS FOR OHIO,” Trump tweeted at the time. “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. I have been working nicely with GM to get this done.”
Trump was inaccurate when he said Workhorse had agreed to purchase the plant. Instead, a group led by former Workhorse CEO Steve Burns had entered into negotiations with GM to buy the Lordstown Complex. Burns’ new company, now named Lordstown Motors, purchased the complex in November 2019 for $20 million that was financed in part by a $40 million line of credit extended to the company from GM, which now owns an 11% stake in the company.
Lordstown Motors expects to produce what the company bills as the first all-electric-powered pickup, the Endurance, at the plant by the summer of 2021.
It’s clear the Trump administration has placed much of its political fortunes in this region on the success of Lordstown Motors and Workhorse. Vice President Mike Pence made a special appearance at the public unveiling of the Endurance in June, while the president hosted Lordstown Motors executives on the South Lawn of the White House last month where he received his first glimpse of the pickup.
He declared that the Lordstown area was “booming” during a short question and answer session at the event.
While the Endurance is a core component of Lordstown Motors’ business plan, CEO Steve Burns has said he hopes his new company could build the new postal service vehicles for Workhorse, which has limited capacity at its plant in Indiana.
“He’s told me that they’re going to be successful even without the postal contract,” Hill said. “This would be like icing on the cake.”
A company note issued by Roth Capital Partners on Friday expressed high optimism that Workhorse would get the USPS contract.
According to the report, Workhorse is one of three finalists vying for the six-year deal, worth an estimated $8.1 billion. The other competitors are Oshkosh Corp. in Wisconsin and Karsan Automotive, based in Turkey.
Roth Capital suggested that Cincinnati-based Workhorse stands the best chance of snagging the entire contract, since it is the single bidder presenting an all electric-vehicle solution to the USPS.
“We expect Workhorse to be the recipient as an EV is the best fit for the USPS application,” the note said.
Moreover, should Workhorse win the bid, it could inject $800 million of new business to Lordstown Motors’ operations, Roth’s company note said.
“Lordstown Motors is the probable manufacturing site for a Workhorse NGDV [Next Generation Delivery Vehicle],” the report stated. Although it is unclear as to how outsourcing would work, the report said, any manufacturing contract with Lordstown Motors could “reasonably be expected to represent roughly $800 million in potential revenue to LMC.”
It is unclear whether the award would be a winner-take-all contract, or split up among more than one manufacturer. The Roth report says it’s likely the contract would be awarded to a single manufacturer “given the high costs of supporting two parts, maintenance and training organizations.”
Last week, Lordstown Motors announced it would conclude an agreement slated to take effect at the end of the month that would take the electric-vehicle startup public through a special purpose acquisition company, DiamondPeak Holdings Corp.
Shares of DiamondPeak climbed 12.8% on Friday, closing at $23.20. Workhorse shares rose 12.6% the same day, closing at $26.77 – a stock that traded as low as $1.32 per share during the last 52 weeks.
Still the Roth report also cautioned that the postal service award could be delayed.
Hill, a Republican, added that should the Workhouse bid prove successful, it could translate into increased support for Trump across Trumbull County on Nov. 3.
“I think Trump is going to take Trumbull County again,” he said.
In 2016, Trump won Trumbull County by six points against Democratic presidential candidate Hillary Clinton. Four years earlier, Democratic President Barack Obama won the county by 23 points.
With Ohio polls deadlocked between Trump and Democratic challenger Joe Biden, Trumbull County could be pivotal in deciding who wins the state.
“A lot of people who are voting for Biden are simply voting for him because they don’t like Trump,” Hill said.
Pictured: President Donald J. Trump, joined by Lordstown Motors CEO Steve Burns, tours a Lordstown Motors 2021 Endurance Monday, Sept. 28, 2020, on the South Lawn of the White House. (Official White House Photo by Shealah Craighead)
Copyright 2020 The Business Journal, Youngstown, Ohio.