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- GM may sell its closed assembly plant in Lordstown, Ohio, to a small electric vehicle manufacturer called Workhorse Group.
- Still, Workhorse has only recorded revenues of $ 364,000 in the first quarter and has lost money for 11 consecutive years.
- GM and Workhorse insist that an agreement could "bring important electric vehicle assembly and production work to the plant".
When President Donald Trump revealed this week that General Motors had planned to sell its plant in Lordstown, Ohio at a little-known company called Workhorse Group, he described the tentative agreement as "great news for Ohio" and exuberantly congratulated GM's CEO, Mary Barra, for having decided to invest in this state. What Twitter slipped into his announcement: Workhorse, a small electric vehicle maker that loses money, may not be the savior that GM workers were hoping for.
Founded about a decade ago, Workhorse, based in Cincinnati, lost money every year of its existence. Until Mr. Trump's tweets, the shares of the manufacturer of electric trolleys, drones and aircraft listed on the stock market were trading for less than $ 1. In the last quarter, Workhorse posted a $ 6.3 million loss on modest sales of just over $ 364,000. According to S & P Capital IQ, the company has lost money for 11 consecutive years and has recently turned to an investor in troubled assets to finance themselves.
Result: While operating at a loss is not unusual for a young technology company, Workhorse on paper does not seem to be a natural candidate to buy a 6.2 million square car factory.
"Workhorse is an unknown start-up that employs 100 people and achieved a $ 1 million business figure last year," said Harley Shaiken, a professor of labor relations at the University of Toronto. University of California at Berkeley.
This did not stop GM and Workhorse from touting Wednesday's discussions as "likely to generate significant electric vehicle assembly and production work in the factory," which has realized his last Chevrolet Cruze in March.
For the moment, in the meantime, the discussions between GM and Workhorse are just that: talk. An agreement would involve the creation of a new entity headed by Workhorse founder Steve Burns, who would acquire the plant, said a Workhorse spokesperson. Burns is no longer an employee, but rather a board for the company, which would hold a small stake in the yet unnamed entity.
"Workhorse would have a minority stake, but would not produce these future vehicles," the spokesman told CBS MoneyWatch.
Although the companies have not yet reached agreement on the Lordstown plant, a spokesman for GM said that "the talks had reached the stage where we felt it was appropriate to make the discussions public" . The disclosure of the potential deal also gives United auto workers, who represent GM employees, a chance to weigh, the spokesman added.
"Continue to use it"
Indeed, the union weighed. "The position of the UAW is unequivocal: General Motors should allocate a product to the installation of Lordstown and continue to operate it," said UAW vice president, Terry Dittes, in a statement.
GM is contractually obliged not to close or sell the plant until its four-year work agreement with the UAW expires in September, with negotiations between the manufacturer and the manufacturer scheduled to begin in July. A federal lawsuit filed by the union group over Lordstown and two other closed GM facilities is under way.
In November, GM said it did not offer a product to more than 1,400 hourly employees in Lordstown, saying consumer preferences for SUVs and pickups were at the expense of the Chevrolet Cruze, and the automaker was also focusing on electric and autonomous vehicles. .
The builder's claims are "all true, but have nothing to do with why the plant has shut down," Shaiken said. "The products that could have been manufactured here came from Mexico, where GM is the largest producer of vehicles and 80% of Mexican production is sold in the United States."
State of the battlefield
President Trump has often made himself angry at GM's Barra, asking the automaker to reopen the Lordstown factory or sell it to a company that would do it. Ohio is considered a key state in the 2020 presidential election.
"There is less here than what we see," Shaiken said. "It's a Trumpian ad in a rare form that conjures up something that does not exist, might not exist and if it existed would not be very comparable to the factory that was closed. "
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