GM sells the Lordstown plant for an electric pickup startup

Startup automaker Lordstown Motors announced late Thursday that it has purchased the plant and all of its robots and other equipment from General Motors for an undisclosed price. Lordstown Motors intends to start building electric pickup trucks there late next year.

The plant is 6.2 million square meters, almost twice the size of the Pentagon. GM ( GM ) opened the plant in 1966 and closed it earlier this year.
GM's decision to shut down the plant was controversial. President Donald Trump condemned the carmaker and threatened to take action against it. During the contract negotiations, UAW pressed for GM to move some of its production from facilities in Mexico to the United States to keep it open. GM's refusal to do so was an important factor in its decision to go on strike. But in the end, GM persisted and refused to revive the plant with its own production.

Steve Burns, CEO and primary owner of Lordstown Motors, said buying a plug-and-play facility was a rare opportunity, making the deal particularly attractive.

"Normally, all the equipment has been stripped out. This is the first time I've heard of someone getting a fully functioning plant," he said. "The only way we can do this is if we buy a factory ready to build."

Burns said he plans to sell the company's pickup, Endurance, for around $ 52,000. He expects to have a production prototype ready in time for the Detroit auto show in June next year. Although the prototype is ready by then, starting production by the end of next year would be challenging for any carmaker, let alone a startup.

He said with the reduced fuel and maintenance costs, and the $ 7,500 federal tax credit, Endurance will be more affordable than a $ 37,000 gasoline or diesel truck.

But Lordstown Motors will face increasing competition from other electric pickup trucks on the horizon.

GM ( GM ) has announced plans to begin building an electric pickup in another facility it had previously planned to shut down ̵[ads1]1; the Hamtramck Assembly facility in Detroit – though it has yet to set a date. Electric Pictures Tesla ( TSLA ) also has a pickup in progress, which it is preparing to unveil on November 21. Ford said it is planning an electric F-150.
  An artist rendering of a scheduled electric pickup track produced by Lordstown Motors.

Union workers wanted

Lordstown Motors intends to start with about 400 workers. Most of the hiring will start in September 2020. Burns expects to pay union-level salaries of $ 32 an hour that veteran workers at GM will earn under the new employment contract. He also intends to have the workers represented by the United Auto Workers union, but he has not yet spoken to the union about his employment plans.

Burns said that the workers who previously worked at the facility before it closed have the skills he has been looking for.

"Where else can you get 400 people, eventually thousands of people, who can do this kind of work?" he said. "The workforce is one of the things we follow with this agreement."

The Lordstown plant had 4,500 hourly workers as late as January 2017, when GM completed one of the three shifts in building the Cruze compact car. Changing consumer preferences for SUVs instead of sedan's doomed Cruze, and with that GM's need for the Lordstown facility. GM stopped production in March this year when it was down to around 1400 workers per hour. Most of these workers have taken other jobs with GM, though they had to move to GM facilities elsewhere to do so.

Mixed bag for GM workers

Tim O & # 39; Hara, president of the UAW local in Lordstown, said he is not sure how many members would be willing to leave one of these GM jobs somewhere else, where they accumulate service time towards their GM pension, to take up a job with a start-up – though many want to return to Lordstown.

Many former workers in Lordstown had moved away, even though their families remained in the region. These workers often returned home on weekends hoping that GM would reopen the Lordstown plant. But the employment agreement that ended the recent GM strike did not include any new GM product to revive the Lordstown plant as they had hoped.
"I guess I would say for the valley as a whole, if there are jobs in that plant, there is good news," said O & # 39; Hara. "It's better than sitting empty or being torn down. But especially for my members, they see the sale of the plant as a new kick in the gut that we've been getting for a year now since they announced plans to close the plant last November."
  Deal to end GM strike won & # 39; t save Lordstown plant

O & # 39; Hara said that about 400 of his members have not taken other GM jobs yet, but many of them have returned to school or started other careers or retired.

"Many have moved on. It's hard to say if they will work for [the startup]," he said.

O & # 39; Hara said it is absolutely positive that Burns is talking about using union workers and paying a union wage at the facility. But he said he would be skeptical until a deal is signed.

"It has been a years-long process of bad news for us," said O & # 39; Hara. "We continue through the stages of grief. I think most of our members are still angry and disappointed."

GM issued a brief statement on the sale stating that it believes that Lordstown Motors' plan "has the potential to create a significant number of jobs and help the Lordstown area grow into an electrification production hub."

Ambitious plans

Burns had previously been CEO of Workhorse Group ( WKHS ) another upstart truck manufacturer of UPS vans , FedEx and DHL. It is competing for a contract to build the next generation of delivery vehicles also for the US Postal Service. Earlier this year, Workhorse explored a possible acquisition of the Lordstown facility, but that never came to fruition.

Workhorse has a 10% interest in Lordstown Motors, and it licenses some of its intellectual property to its start-up for use in pickup trucks. It has also transferred 6,000 existing pre-orders received by Workhorse for its planned W-15 pickup. These will now be built by Lordstown Motors.

Like Workhorse, Lordstown plans to concentrate on fleet sales of its trucks to businesses such as construction companies or to city and city governments, rather than selling to consumers.

– CNN Business & # 39; Vanessa Yurkevich contributed to this report.

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