Earlier this week the Associated Press reported that GM was in the – likely uncomfortable – position of having to correct the vice president on his facts.
The issue centers on Lordstown, Ohio – a town that’s been battered by thousands of job losses over the past few years as GM streamlined, then shuttered a production plant, ultimately shifting about 4,500 positions out of the region.
Because it was such a devastating loss for Lordstown, there’s been a lot of buzz around reallocating the factory… and much of the talk has to do with an electric car company called The Workhorse Group that has reportedly been in talks with GM. Earlier this week, VP Mike Pence was visiting Lancaster, Ohio when he suggested than an affiliate of Workhouse had actually secured the funding to buy the plant, but GM quickly responded to the contrary, saying that – yes, the affiliate had obtained some recent funding but that it was not related to the Lordstown plant.
And a recent report from Bloomberg suggests that the purchase might actually be quite unlikely, saying Workhorse “looks more like Lordstown’s lottery ticket than a savior to be taken seriously.”
That might be because Workhorse reported such dismal earnings on Tuesday that its stock dropped 35 percent. Bloomberg says the 12-year-old company has never really stabilized sales to any sort of “robust” level, but this year’s Q2 was reported at $6,000. You heard that right: $6,000, or about $70 per day, whichever sounds better.
But… there are a few more variables in the mix.
Company co-founder and former CEO Steve Burns plans to form a spin-off of Workhorse called Lordstown Motors. This is the entity reportedly planning the deal with GM, with the strategy of licensing IP and technology to make an electric truck based on Workhorse’s Model W-15. Workhorse would own a minority stake, but Burns is still seeking hundreds of millions in outside backing.
And as for the relative strength of Workhorse, the company reportedly has $70 million backorders and is working out a yet-to-be-finalized but highly lucrative deal with the US Postal Service to produce next gen mail trucks. Gaining access to the Ohio plant, says CEO Duane Hughs, would be “a potential game changer.” And certainly based on Workhorse’s second quarter, something about this game needs to change.
