Home Economy ‘We Have a Lot of Questions’: Doubts Loom Over G.M. Plan for Lordstown Plant

‘We Have a Lot of Questions’: Doubts Loom Over G.M. Plan for Lordstown Plant

by Nelson D. Schwartz

It has all the elements of a classic Trump tale: intervention with an otherwise heartless company, a saved factory in the heartland, and assurances that old-school manufacturing jobs would be preserved.

On Wednesday, the factory in question was the General Motors plant in Lordstown, Ohio. Mr. Trump announced that it was being sold to a little-known maker of electric vehicles, Workhorse Group, and that G.M. was making a new investment in the state.

“I have been working nicely with GM to get this done,” he wrote on Twitter. “With all the car companies coming back, and much more, THE USA IS BOOMING.”

But for all the seemingly good news in Ohio, which has been hit hard by the loss of manufacturing jobs, the president’s record in delivering on such deals suggests that caution is warranted.

He helped persuade Carrier to keep a factory in Indianapolis open in 2016, but the company still cut roughly half of the jobs at stake there. In 2017, he said Foxconn, a Taiwanese electronics supplier, would invest $10 billion to build a manufacturing complex in Wisconsin. The company was supposed to create 13,000 jobs — positions that have proved illusory. Mr. Trump’s 2018 assertion that “Chrysler is leaving Mexico and moving back to Michigan” was a stretch by any measure.

Workhorse, a small company based near Cincinnati, makes battery-powered pickup trucks, delivery vans, drones and aircraft, faces big obstacles in getting the Lordstown plant humming again with hundreds working the line. It has no experience in mass vehicle production, its shares recently traded for less than $1, and quarterly revenues were less than the price of one high-end sports car.

“This president is no stranger to grandiosity when it comes to job claims,” said Scott Paul, president of the Alliance for American Manufacturing, a partnership between employers and the steelworkers’ union. “Foxconn is in limbo and virtually no one believes it will live up to the billing.”

Senator Sherrod Brown, an Ohio Democrat, noted that Workhorse employs fewer than 100 people, compared with the thousands who worked for G.M. in Lordstown as recently as April 2018.

“It’s still too early to tell whether the sale is good news for workers,” he said in an interview.

It is not clear whether G.M. will strike a deal. The company said it was in discussions to sell the plant to a new business partly owned by Workhorse and headed by that company’s founder and former chief executive, Steve Burns.

G.M. said the deal had the potential to bring “significant” production and assembly jobs to the plant. The number, however, would likely be far fewer than G.M. employed, given Workhorse’s size.

Separately, G.M. said it would invest $700 million in three other Ohio cities — Toledo, Parma and Moraine — creating about 450 manufacturing jobs. The company also said on Wednesday that it would invest $130 million to keep 300 jobs at a plant in Oshawa, Ontario, that it had planned to close.

G.M. announced in November that it would stop production at five North American factories, including Lordstown and Oshawa, and lay off 14,000 workers.

Since then, Mr. Trump has repeatedly criticized the automaker, particularly over Lordstown. In March, he demanded that G.M. reopen the factory or sell it “to a company who will open it up fast!”

During the 2016 election campaign, Mr. Trump vowed to increase automotive jobs in the United States, and Ohio was a key state in his victory.

Like the Carrier plant in Indiana, Lordstown took on political symbolism for a president who has repeatedly promised to restore American manufacturing jobs and industrial prowess. At a rally in nearby Youngstown in 2017, he declared: “Don’t move. Don’t sell your house.”

Nationally, the manufacturing sector has done well since he took office, but in Ohio, factory employment remains 10 percent below where it was before the recession.

In halting the Lordstown plant’s output of the Chevrolet Cruze — G.M. said the factory had been “unallocated” — the company eliminated 1,600 jobs. Some 700 of the Lordstown workers have found positions at other G.M. factories as of this month, the company said. Sales of the Cruze have dwindled over the last few years as consumers gravitated away from small cars in favor of trucks and sport utility vehicles.

G.M. said it was discussing its Lordstown plans with the United Automobile Workers. A spokesman for Workhorse, Tom Colton, said the company and the new affiliate that would own the plant intended to use unionized labor.

But the union appeared to be skeptical of the deal and called on G.M. to resume operations at the Ohio plant. “General Motors should assign a product to the Lordstown facility and continue operating it,” Terry Dittes, the union’s vice president, said in a statement on Wednesday.

G.M. and the U.A.W. are scheduled to start talks on a new labor contract in July. Automakers have in the past agreed to production commitments in exchange for cost reductions from the union.

Workhorse was founded in 1998 to take over production of delivery vans that G.M. had dropped from its lineup. Workhorse was acquired by Navistar in 2005 and later sold to AMP Holding, which changed its name to Workhorse Group after the acquisition.

The company’s customers include UPS and FedEx, and it has several thousand orders for its electric trucks. It is hoping to win a contract to supply delivery vehicles to the United States Postal Service.

But Workhorse has struggled financially while preparing to increase production. In January it borrowed $35 million from a hedge fund, Marathon Asset Management.

Its stock price increased by more than 200 percent on Wednesday to close at $2.65.

Mayor Arno A. Hill of Lordstown, a Republican, said he was “elated” by the news, but acknowledged it was early in the process.

“We have a lot of questions,” he said. “We’d like to find out how many people will be employed and the level of investment. We’re very optimistic that we could be on the leading edge of something here.”

The Youngstown area has clawed its way back from being a byword for economic collapse, drawing new employers and a hotel downtown for the first time in decades.

Still, the local economic picture is mixed. After inching higher amid the fracking boom in 2014, employment has edged down more recently.

Decades of economic struggle have left some Ohioans cautious.

“The president has a habit of tweeting things that turn out later to be either inaccurate or completely false,” said David B. Cohen, a professor of political science at the University of Akron. “We have to wait and see and make sure what the president tweeted out is true and that it comes to fruition.”

On the other hand, if the Lordstown plant does open under Workhorse’s auspices, Mr. Cohen said, “it will be a big win for the president.” It would also be good news for Representative Tim Ryan, a Democrat whose district includes Lordstown, and who is one of the lesser-known contenders for the party’s 2020 presidential nomination.

“It’s been so heartbreaking over the past few months,” Mr. Ryan said in an interview. “This has a lot of upside if we can get the deal inked and help this company grow.”



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