General Motors CEO Defends Plan to Sell its Shuttered Ohio Assembly Plant to EV Startup Workhorse
General Motors Chief Executive Mary Barra on Wednesday defended the automaker's plan to sell an assembly plant in Ohio, arguing the plan to sell the plant to electric vehicle start-up Workhorse Group Inc was thoroughly vetted and has a chance of succeeding, according to Reuters.
In a brief interview with Reuters on Wednesday after meetings on Capitol Hill, Barra told Reuters that the automaker did not plan to add a new vehicle to its Lordstown, Ohio assembly plant that ended production in March because it has additional unused U.S. capacity.
Last month, GM announced it was in talks to sell the plant to EV startup Workhorse and an affiliated, newly formed entity. Barra defended GM's decision to sell the plant to the EV and drone startup.
"We remain thinking it's a strong possibility and think people should focus on opportunity and maybe every now and then a little optimism wouldn't hurt anyone." When asked if the deal was a "PR stunt" Barra said no. "We vetted many opportunities."
She also said it was unclear what the precise impact would be on GM if U.S. tariffs on Mexican goods that could take effect on June 10, but according to congressional aides who spoke to Reuters, she told lawmakers the impact would be significant. She said "it really hard to tell without understanding what the rules are going to be and the exclusions around it."
The Workhorse SureFly electric Octocopter and electric pickup truck.
GM's Lordstown Closure Became a Political Battle
GM was thrust into the political national spotlight in Nov 2018 when it announced the closure of four U.S. plants, including the Lordstown plant, located in politically important northeast Ohio. GM also announced the layoffs of 15% of its workforce. The plant built the Chevy Cruze sedan, which the automaker discontinued to focus more on compact SUVs and electric models.
After the announcement, President Trump accused GM of letting the U.S. down and claimed that "other much better car companies" are coming to the United States "in droves." Trump was possibly referring to Toyota's March announcement that it would make a $750 million investment in five of its existing U.S. factories. Trump demanding that GM either reopen or sell the Lordstown assembly plant.
Trump also criticized David Green, the local United Auto Workers Union (UAW) president at the Lordstown plant, labeling him a Democrat.
Ohio is crucial to Trump's 2020 reelection chances and he has made auto manufacturing jobs a key focus of his presidency.
GM was also criticized for producing vehicles in Mexico, including the 2019 Chevy Blazer SUV. Ohio Congress members urged Barra to add an electric vehicle at Lordstown or shift production of its Chevrolet Blazer to the U.S.
Ohio-based Workhorse is a small electric truck startup that has reported losses of nearly $150 million since its launch in 2007. The company had just $2.8 million in cash on hand at the end of March. Critics doubt that Workhorse can afford to buy the sprawling Ohio facility.
According to Reuters, Republican Senator Rob Portman said they were told it would take a $300 million to $400 million investment to redevelop the Lordstown plant. He said it would be "tough" for Workhorse to make the investment given its balance sheet and urged Barra to reconsider. "We think the plant has earned the right to be able to continue to produce products for General Motors."
Brown emphasized that the plant employed about 4,500 workers in 2016 and about 1,500 in March after GM cut production to just one shift. Workhorse at best might employ about 400 and it is not clear what they would pay, the senators said. However, Barra remains more optimistic about Workhorse moving into the plant and urged people to support the idea.
Barra said Workhorse has technology and contracts. "I'd like to see people looking and giving it a chance." However, Workhorse still needs to raise additional capital and the plant's status must be addressed during this summer's United Auto Workers contract talks that begin in July, she added.
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