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Loveland-based electric truck maker Workhorse in talks to buy Lordstown GM plant

Posted: 12:17 PM, May 08, 2019
Updated: 2019-05-08 17:41:57-04
Not just jobs riding on fate of GM plant after Trump promise

CINCINNATI — A Greater Cincinnati-based company is in talks to buy General Motors' shuttered plant in Lordstown, Ohio.

GM said in a news release Wednesday that it's in discussions with Workhorse and an affiliated, newly-formed entity, to sell the Lordstown complex. If the deal goes through, it could bring "significant production and electric vehicle assembly jobs to the plant," according to GM.

Workhorse is based in Loveland and makes electric trucks. The new entity that would acquire the Lordstown facility would be led by Workhorse founder Steve Burns, and Workhorse would hold a minority interest in it, according to GM. Burns said they plan to build a commercial electric pickup truck at the facility.

"This potential agreement creates a positive outcome for all parties involved and will help solidify the leadership of Workhorse's role in the [electric vehicle] community," Workhorse CEO Duane Hughes said in a news release.

President Donald Trump broke the news in a tweet Wednesday morning, writing that General Motors CEO Mary Barra told him about a deal to sell the plant, which is pending approval by the United Auto Workers. Additionally, GM plans to spend $700 million at three other locations in Ohio, according to Trump.

"We remain committed to growing manufacturing jobs in the U.S., including in Ohio, and we see this development as a potential win-win for everyone," Barra said in a news release. "Workhorse has innovative technologies that could help preserve Lordstown's more than 50-year tradition of vehicle assembly work."

More than 1,500 people lost their jobs when the GM plant closed in March. Ohio Gov. Mike DeWine said GM company leaders told him the plant would hire hundreds of workers if the deal goes through. GM also announced Wednesday it's creating 450 new manufacturing jobs in Ohio at facilities in Toledo, Moraine and Parma.

Sen. Rob Portman tweeted that he was "optimistic" about the Lordstown news.

"I look forward to hearing more from Workhorse about its plans to bring jobs to Lordstown, and I'm hopeful that this news will benefit the workers there," Portman said in a written statement.

Sen. Sherrod Brown said he welcomed the news of GM's investment and new jobs at its other Ohio plants, but questioned whether the sale of the Lordstown plant would make up for the thousands who have been laid off there since 2016.

"Workhorse is a leader in electric vehicle manufacturing and we are proud to have them call Ohio home, but GM cannot shirk its responsibility to these workers," Brown said in a written statement.

DeWine said it's "probably not yet the day to celebrate" a Lordstown deal.

The companies didn't specify how much how much money is on the table in the Lordstown plant sale, but Workhorse appears to be in rough shape financially. The company reported a net loss of $36.5 million in 2018 on revenue $763,173. Its liabilities of $27.2 million exceed year-end assets of $10.8 million. Workhorse reached an agreement with its investors to sell nearly 4 million stock shares for $0.74 per share last month, generating $2.9 million.

Hughes said in a financial report news release Tuesday that Workhorse is transitioning from a development-oriented organization to a production-focused manufacturer. The company cut its research and development expenses by 42 percent since the fourth quarter of 2017 as it moves its focus to manufacturing, according to first quarter financial results.

"In the more immediate term, we remain focused on our 'Trucks First' initiative, which has enabled us to make significant advances in all phases of the manufacturing process," Hughes said in the news release.

Workhorse and another company have partnered to bid on a contract for the U.S. Postal Service's "next-generation delivery vehicle." Trucks.com reported they offered a battery-electric prototype for USPS' request. The contract could be worth as much as $6.3 billion over seven years, the website reported.

That Postal Service contract may be a deciding factor in the Lordstown deal, according to DeWine. He addressed that effort during a news conference Wednesday, saying that JobsOhio has reached out to WorkHorse to offer help on deals before the GM plant purchase.

"I can surmise that if there is a contract with the U.S. Postal Service, there'll be investors," DeWine said. "There'll be money there. I'm not saying they don't already have the money lined up, I just don't know that. But if there's a contract, there should not be any problem with getting the money."

UPS ordered 50 electric delivery trucks from Workhorse last year, Electrek reported. Workhorse also entered an alliance with Duke Energy last month.

Workhorse has also been testing delivery drones in the Tri-State. The drones, which the company calls HorseFly, launch from a delivery truck and work as sort of an assistant to the driver. According to Workhorse, the drones can save time and money when a driver is out making deliveries.

It's not clear whether the Lordstown sale would affect Workhorse's jobs in Loveland. City Manager Dave Kennedy said he hasn't heard anything from the company yet.