By Mike Colias
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (November 8, 2019).
General Motors Co.'s closed Lordstown, Ohio, assembly plant --
which became a flashpoint for President Trump and unionized workers
angry over the company's factory closures -- has a new owner.
The auto maker has sold the factory to a new electric-truck
maker, Lordstown Motors Corp., for an undisclosed amount, the
startup company said Thursday. Lordstown Motors said it is seeking
investment to begin production in late 2020 of electric pickup
trucks, aimed at business and government customers. Its first model
will be called the Endurance.
GM said the sale to Lordstown Motors could help the area become
a hub for electric-vehicle manufacturing. GM has said it also will
invest in a nearby factory that will make battery cells for
electric vehicles.
GM disclosed in May it was in talks to sell the plant to the
newly formed manufacturer, saying the move would preserve jobs as
the auto industry transitions from traditional gas-powered vehicles
to those running on electricity. That news was lauded by President
Trump, who had urged GM to keep the factory open and salvage jobs
in the politically pivotal state.
During recent contract negotiations, officials with the United
Auto Workers -- the union representing workers at the factory --
unsuccessfully pressed GM to earmark a different model to the
Lordstown plant to keep it open. Instead, the new four-year
contract ratified by GM factory workers last month after a 40-day
strike paved the way for GM to close or sell the plant.
The electric-truck startup plans to use union labor but has yet
to have contract discussions with the UAW, said Steve Burns,
Lordstown Motors' chief executive. The union said it is committed
to ensuring good, well-paying jobs at the plant.
The Lordstown factory will employ roughly 400 workers to start,
Mr. Burns added. He expects pay to be competitive with wages
workers had been making under GM ownership, which ranged from about
$17 an hour to $30 an hour.
Even so, battery-powered vehicles require fewer parts and are
less complex to assemble, which means the factory likely will
employ far fewer employees than the roughly 4,000 who worked at the
GM plant a few years ago.
The sprawling, 6-million-square-foot plant in northeast Ohio was
opened in 1966 and once was home to marquee GM models, including
the Chevrolet Bel Air and Impala.
The factory survived GM's 2009 bankruptcy thanks to the auto
maker's plans to redouble efforts in small cars. But GM gradually
laid off Lordstown workers in recent years amid an industrywide
collapse in sedan sales, as buyers flock to sport-utility
vehicles.
GM's decision nearly a year ago to close the Lordstown factory
and three other U.S. plants as part of a restructuring sparked a
backlash from Mr. Trump, the UAW and elected officials in Ohio. GM
said it no longer needed the factory because of poor sales of the
Chevrolet Cruze compact car built there.
Mr. Burns, who has started software companies and co-founded
another electric-truck company more than a decade ago, is working
to raise at least $300 million to jump-start the manufacturer. He
hopes to attract strategic investors, similar to the approach of
Michigan-based Rivian Automotive, an electric-truck maker that has
drawn investment from Ford Motor Co. and Amazon.com Inc.
Mr. Burns said the company intends to eventually fill the plant,
which has capacity to produce about 500,000 vehicles annually. GM
made roughly half that number of Cruzes in recent years before
sales declined. GM closed the factory in March.
GM and Lordstown Motors didn't disclose the sale price. In the
past, closed automotive plants have changed hands for relatively
small sums.
Rivian in 2017 bought a shut Mitsubishi Motors Co. factory in
Illinois for $16 million. In 2010, Tesla Inc. paid $42 million for
its Fremont, Calif., factory, which had been jointly owned by GM
and Toyota Motor Co.
Lordstown Motors will use much of the plant's existing
equipment, including the paint shop and robotic welding machines,
which will save on costs, Mr. Burns said.
"The plant is still warm from when it made the last Chevy
Cruze," he said. "That gets us to market a lot faster and
dramatically lessens our [capital expenditures]."
Mr. Burns is the co-founder of Workhorse Group Inc., a
Cincinnati-area electric-truck maker formed more than a decade ago.
The company has a 10% stake in Lordstown Motors, Mr. Burns
said.
Lordstown Motors will face competition from Rivian, which
recently landed an order for 100,000 vehicles from Amazon, as well
as GM and Ford, which both have electric pickup trucks in the works
and large commercial-vehicle portfolios.
Mr. Burns said an exclusive focus on electric vehicles for fleet
buyers will help his company compete. "Things are changing so fast,
it really requires a nimble company to take advantage of that," he
said.
Last month, Lordstown Motors hired Rich Schmidt, a former
director of manufacturing at Tesla, as production chief.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
November 08, 2019 02:47 ET (07:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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