- GM may sell its shuttered Lordstown, Ohio, assembly plant to a small electric vehicle maker called Workhorse Group.
- Yet Workhorse reported first-quarter revenue of only $364,000 and has lost money for 11 straight years.
- GM and Workhorse insist a deal could "bring significant production and electric vehicle assembly jobs to the plant."
When President Donald Trump revealed this week that General Motorsto a little-known company called Workhorse Group, he described the tentative deal as "Great news for Ohio" and effusively praised GM CEO Mary Barra for moving to invest in the state. What his Twitter announcement glossed over: Workhorse, a small, money-losing maker of electric vehicles, may not be the savior GM workers were hoping for.
Founded roughly a decade ago, Cincinnati-based Workhorse has lost money every year of its existence. Until Mr. Trump's tweets, shares of the publicly listed manufacturer of electric trucks, drones and aircraft were trading for less than $1. In its latest quarter Workhorse reported a loss of $6.3 million on meager sales of just over $364,000. The company has lost money for 11 consecutive years, according to S&P Capital IQ, and recently turned to an investor in distressed assets for funding.
The upshot: While operating at a loss isn't unusual for a young tech company, on paper Workhorse doesn't sound like a natural candidate to buy a 6.2 million-square auto plant.
"Workhorse is literally an unknown startup that employs 100 people and did $1 million worth of business last year," said Harley Shaiken, a labor relations professor at the University of California at Berkeley.
That didn't stop GM and Workhorse from touting their discussions on Wednesday as having "the potential to bring significant production and electric vehicle assembly jobs to the plant," which made its last Chevrolet Cruze in March.
For now, meanwhile, the discussions between GM and Workhorse remain just that -- talk. A deal would involve creating a new entity led by Workhorse founder Steve Burns that would acquire the factory, a Workhorse spokesman said. Burns is no longer an employee, but rather consults for the company, which would hold a small stake in the still unnamed entity.
"Workhorse would have a minority stake, but would not be producing those future vehicles," the spokesperson told CBS MoneyWatch.
While the companies have yet to strike a deal over the Lordstown plant, a GM spokesperson said "talks had advanced to the stage where we felt it was appropriate to make the discussions public." Disclosing the potential deal also gives the United Auto Workers, which represents GM employees, a chance to weigh in, the spokesperson added.
"Continue operating it"
Indeed, the union has weighed in. "The UAW's position is unequivocal: General Motors should assign a product to the Lordstown facility and continue operating it," UAW Vice President Terry Dittes said in a statement.
GM is contractually obliged to not close or sell the plant until its four-year labor accord with the UAW expires in September, with talks between the union and automaker set to start in July. A federal lawsuit filed by the labor group over Lordstown and two other shuttered GM facilities is pending.
GM in November said it didn't have a product for Lordstown's more than 1,400 hourly employees to produce, saying consumer preferences for SUVs and pickup trucks came at the expense of the Chevy Cruze, and that the automaker was also focused on electric and autonomous vehicles.
The automaker's assertions are "all true, but have nothing to do with why the plant closed," Shaiken said. "The products that could have been put there instead were sourced in Mexico, where GM is the largest producer of vehicles, and 80 percent of Mexican production is sold in the U.S."
President Trump has frequently lashed out at GM's Barra, pressing the car maker to reopen the Lordstown plant or sell it to a company that would. Ohio is considered a key state in the 2020 presidential election.
"There's less here than meets the eye," Shaiken asserted. "This is a Trumpian announcement in rare form that conjures something that doesn't exist, might not exist and if it did exist would not be remotely comparable to the plant that was closed."