As a result of the newly ratified contract between General Motors and the United Auto Workers, GM has sold its Lordstown, Ohio Plant. The plant was sold to Lordstown Motors Corporation, an electric truck maker owned by the Workhorse Group. Mike Colias reports that, “the electric-truck startup plans to use union labor,” which is great news for the UAW (WSJ). However, as I have previously blogged about, “battery-powered vehicles require far fewer parts and are less complex to assemble,” which means fewer workers are required (WSJ). According to Al Root, “GM … will keep an equity stake in products that emerge from the old plant,” (Barron’s). These terms benefit both parties, as GM will now have a larger footprint in the electric pickup truck industry and, “having GM on board means Workhorse will have to raise less money,” to purchase and use the factory (Barron’s).
The sale is yet another sign of GM’s awareness of the coming switch to electric vehicles. Mike Colias reports that the company, “said the sale … could help the area become a hub for electric-vehicle manufacturing,” (WSJ). Not wanting to miss out on the action, “GM has also said it will invest in a nearby factory that will make battery cells for electric vehicles,” (WSJ). As mentioned earlier, GM is retaining an equity stake in the products produced at the factory, in exchange, “for providing the truck start up with intellectual property,” (Barron’s). Trucks are some of the company’s most profitable products, and, “all the investments and internal development in electric trucks appear designed to keep that true in the future – no matter which EV start-up gains traction in the marketplace,” (Barron’s).
General Motors decided to close the plant around one year ago, a decision which received sharp criticism from President Trump at the time. On Twitter, he wrote, “General Motors must get their Lordstown, Ohio, plant open, maybe in a different form or with a new owner, FAST!” (Twitter). After the announcement that GM was in talks to sell the factory, “the news was lauded by President Trump,” (WSJ). Although my predictions that he might intervene in the strike never materialized, he will likely have more thoughts on the changing auto industry in the coming weeks and months.