Economic Development

Officials See New Future for Valley with Battery Plant

YOUNGSTOWN, Ohio – Lordstown Mayor Arno Hill had little doubt, even when General Motors Co. announced a year ago that it hadn’t allocated a new product for its Lordstown Complex, that things would work out in the end.

That belief, borne out of “gut instinct,” he said, was rewarded with the announcement Thursday morning that GM, partnering with LG Chem, would build a $2.3 billion battery plant in or near Lordstown that would supply the electric vehicle market.

Two sites within the village and another elsewhere in the Mahoning Valley are under consideration, state Sen. Sean O’Brien, D-32 Bazetta, said. The joint venture company is eyeing an April 2020 groundbreaking for the plant, which would employ 1,100 workers.

Once a site is chosen, the project will move “at warp speed,” Hill anticipated. “If you snooze, you lose,” he remarked.

The plant will supply battery cells for the electric trucks and other vehicles from its electric vehicle architecture, GM CEO Mary Barra said at a news conference in Warren, Mich. GM is on track to have 20 EV models on the global market by 2023, she said.

“This collaboration also includes a joint development agreement that brings together two leaders in battery science to develop and produce advanced technology batteries and reduce battery costs to industry-leading levels,” Barra said. The joint venture will “accelerate our ability to win in the electric vehicle space.”

GM and Seoul-based LG Chem have worked together since 2009 to create an “eco-friendly culture,” LG Chem’s CEO, H.C. Shin, said. This year alone, LG Chem spent more than $1 billion on research and development, around 4% of its company’s sales.

“The joint venture signed today represents more than just a collaboration. It marks the beginning of a great journey to create an emission-free society and transform the global automotive market into an eco-friendly era,” he said.

Hill said he was notified just before GM’s 9 a.m. news conference about the announcement.

“I’m ecstatic. Hopefully this is the start of things to come to Lordstown to help offset the loss of General Motors,” he remarked. “This is going to be the start of good things for the community and at the end of the day we’re going to be very happy.”

Ohio was in contention with two other states for the project, one of which was Tennessee, according to O’Brien

The GM-LG joint venture could not simply retrofit the GM Lordstown plant because the requirements for the battery plant are different from those in the auto assembly building. “It’s got to be a brand-new facility,” O’Brien said.

The entire local delegation to Columbus – Democrats and Republicans – worked with the governor’s office and JobsOhio on the project over the past several months, he said.

“This is not a Democratic or Republican issue. It’s a job creation issue that we’re all behind,” he said.

“We have to make sure that the statehouse is ready and jump in there to make sure we get rid of any roadblocks and make it a reality,” added state Sen. Michael Rulli, R-33 Salem.

“This is something that the people of Ohio and the state have earned because of their capabilities,” Barra said. Both CEOs pointed to the quality of what she referred to as the “very capable” workforce as a key factor in the battery plant’s future success.

Ohio provides “probably the best workforce,” Shin said.

Several state officials joined Barra and Shin for the announcement, including Ohio Lt. Gov. Jon Husted and representatives of JobsOhio.

“Technology in a car is now driving the business, and to this point Ohio didn’t have any presence in the electrically powered vehicle space. This puts us in the mix to be a leader and to have a future in the industry,” Husted said during a phone interview. Thursday’s announcement is important because it provides the opportunity to “build an ecosystem in northeast Ohio around this technology,” he said.

Husted declined to provide details on the incentive package being offered, but said it was “competitive” with the other states competing for the project. “We still have details to work out with the local officials,” he said.

Additionally, some details might require adjustment depending on what site ultimately is selected. Details of the incentive package eventually will be disclosed.

“We hope this will be the beginning,” Husted said. “This is a substantial investment but we hope not the last investment that GM makes in the Valley. We want to be great partners with them in trying to build the workforce, research and development, and other types of things that can come along with this to really build the right kind of ecosystem to capitalize on the technology, the innovation that is going to be in this facility.”

The announcement represented the greatest opportunity that the Mahoning Valley has seen in decades, U.S. Rep. Tim Ryan, D-13 Ohio, told reporters during a conference call Thursday afternoon. Millions of electric vehicles will be manufactured somewhere over the next decade and China has about 50% of that market, he said.

“For a long time in our community we were chasing smokestacks. We were chasing things that were on the decline,” he continued. “We’re positioned now to have a really good run in the next couple of decades because we’re investing into industries of the now, but also the future.”

Ryan sees a potential partnership between GM and Brite Energy Innovators in Warren, which has a battery testing lab. Like other officials, he envisions building an EV ecosystem involving Youngstown State University and Eastern Gateway Community College, and Lordstown Motors Corp., the electric truck startup being based in the former GM Lordstown plant.

A spokesman for Lordstown Motors hailed the announcement as a positive development. “It’s going to create an epicenter for electric vehicles in the Mahoning Valley,” he said.

Bill Adams, Ohio economist with PNC Bank, agreed the battery plant is a positive development for the local economy. “It’s not going to offset the loss of the GM Lordstown plant, but it’s good news for the outlook for more high-wage jobs,” he said. Building the $2.3 billion plant also will be good for the building trades.

“It’s going to drive local construction employment for an extended period while this project is under way,” Adams said.

About 500 former GM Lordstown workers didn’t accept transfers, reported Darwin Cooper, vice president of United Auto Workers Local 1112, which represented workers at the GM Lordstown plant. The union itself now has about 40 members, only one of whom is a GM employee who is finished at the end of the month.

Barra said Thursday that GM and LG were open to having UAW representation at the plant, but it would be up to the workers to decide.

“We assume because they say they want to be UAW that we won’t have any issues,” Cooper said.

Other lawmakers and local leaders issued statements of support for the new venture.

“Since GM first announced it would discontinue production of the Chevy Cruze, I have pushed hard for the company to do the right thing and stand by the world-class workforce in Lordstown,” U.S. Sen. Rob Portman, R-Ohio, said. “While I remain disappointed that GM chose not to reinvest in its Lordstown auto assembly plant, I’m hopeful this new investment will be the beginning of a sustained, long-term commitment to the region that will continue to grow over time.”

U.S. Sen. Sherrod Brown, D-Ohio, pledged to push GM to ensure the new jobs at the plant are “good-paying, union jobs” that benefit the Mahoning Valley.

“Autoworkers in the Valley are among the best in the world at what they do and any investment in Ohio workers is a smart investment. At the same time, we know that GM could have made a better investment in the Valley by bringing a new vehicle to Lordstown — and saving the jobs of its 4,500 workers at the plant,” he said.

Also voicing his support was Tom Humphries, transitional CEO at the Youngstown/Warren Regional Chamber. Last year, the chamber launched its Drive It Home campaign to support the plant.

“With a unified voice, we let GM know through the deliberate messaging of Drive It Home that we would continue to welcome them in our region and hoped they would utilize our strong and capable workforce,” he said. He applauded the efforts of Gov. Mike DeWine, Husted and JobsOhio “for their direct efforts over the past year in carrying that messaging to Detroit.”

Pictured: The GM-LG joint venture could not use the former GM Lordstown plant because the building requirements for the battery plant are different from those in the auto assembly building.

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Copyright 2020 The Business Journal, Youngstown, Ohio.