GM Lordstown Plant Buyer Called Into Question Over Finances
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Earlier this month, General Motors appeared to deliver a victory to Ohio as it announced talks were ongoing to sell the Lordstown plant. While the focus on the buyer largely honed in on Workhorse, an electric-vehicle startup company based in Ohio, it’s actually a mysterious new entity that would finance the purchase.
Except, the entity exists almost entirely on paper. The New York Times reported on the shadowy business going on in an attempt to purchase the Lordstown plant from GM. The new venture, which doesn’t have a name even, features Workhorse founder and former CEO Steve Burns at the helm. However, his mystery company needs to raise at least $300 million to purchase the idled GM factory and get things runnings again, the newspaper reported.
Burns declined to comment about whether the company had raised any money at all or if he’d begun to court investors for the new venture. He called the entire string of events “gargantuan.”
Yet, his current company, Workhorse, isn’t in the peachiest of financial shape either. The electric-vehicle startup has about $3 million in the bank and posted a revenue of $763,000 last year. The figure is less than the salaries of its top three executives totaled up, per the report. Workhorse has also lost $150 million since its founding in 2007.
The report also said the company has pursued high-cost loans from hedge funds to keep things afloat and suppliers demand payment in advance to ensure they’re paid. It all hardly sounds like a company involved in purchasing a massive auto manufacturing facility.
Workhorse would reportedly have a minority share in the new company itching to purchase the Lordstown plant.
On the ground, locals are far from joyous. The mayor of Lordstown, Arno Hill, met with Workhorse earlier this month and walked away with more concerns and questions than answers.
“Who is going to be underwriting all of this? That’s a legitimate question, and I am very wary,” Hill told the newspaper.
Yet there’s one silver lining for Workhorse. It’s been building electric mail trucks for UPS and it’s a finalist to potentially earn a multi-billion contract with the United States Postal Service. Workhorse would build new mail trucks for the USPS, though, the company has said these vehicles wouldn’t be made at the Lordstown plant.
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Source: The New York Times
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Not shocking to me at all. GM needed to sell this to Tesla or another Big Manufacturer that could utilize this size of the Lordstown Plant. It is way too big of a facility for a Startup Company liker Workforce. As I have repeatedly stated I feel for the people of Lordstown. GM completely dropped the Ball on this one. They should have announced it will close for six months to a year and built Silverados there or Something.
True- especially since GM announced today that they are going to import two volume vehicles that could have easily been built at Lordstown- the Encore GX and the Trailblazer.
This just goes to show the inept management at GM and this is what happens when you make decisions by the seat or your pants instead of thinking things out. Unless GM plans to be a partner in this venture and buy some of the vehicles made there, I do not see how this facility can cover its costs with low volumes. As it stands now, it looks like this venture has a high chance of not succeeding and this will make GM management look all the worse.
Workhorse already owns two plants in Ohio with over 250,000 sq ft, buying the 6 million sq ft Lordstown facility makes no sense to me at all. That is unless GM wants to subsidise them in a big way. But why would GM want Workhorse? But then why did GM want Rivian, this makes even less sense. Perhaps GM thinks Workhorse has a good shot at winning the $6 billion contract for new mail vans for the USPS. Or maybe GM likes the Workhorse electric EGEN and NGEN vans being sold to last mile delivery companies like UPS, and then again they may see some value in the Workhorse W-15 simple but capable range extended electric pickup.
One reason to sell Lordstown to Workhorse would be to get Trump off their ass over closing it. But Workhorse sales are too small for a plant that large, so what to do? Maybe Marry Barra calls trump to make a deal that would go sort of like this. Mr President, if you could see your way for Workhorse to win your $6 billion mail van program, we could make a financial arrangement with Workhorse to take over our Lordstown plant. This would be mutually beneficial by retaining voter support in Ohio, which is a key state for your reelection, and GM would takeover Workhorse as a brand for future electrified commercial trucks and vans which will also be manufactured at Lordstown.
They should be building crew cab Silverados there instead of Mexico. I worked for EDS a few years ago and had Lordstown as my client. I was the Account Manager for the IT organization for the entire facility. I was fully impressed with the work force and automation of the facility and just how efficiently they built cars from sheetmetal up. GM spent millions on the state-of-the-art paint shop. I fail to see the wisdom in abandoning such a facility that had a reputation of building great product. It especially gulls me to see product being built in Mexico when it could be built here, especial products that are their main profit producers like Silverado and Cadillac. Makes you wonder about the top management of this huge company. I hope the stock holders are taking notice.
Agreed
What a copout, GM probably know the company couldn’t afford Lordstown. Just another way to say “well we did our jobs”.
The tariffs against the supply chain of GM makes the entire idea of GM building anything there a non-sequitor.