You are using an older browser version. Please use a supported version for the best MSN experience.

Under pressure from Trump, GM acts in Canada and Ohio

Reuters logo Reuters 5/8/2019 David Shepardson and Tyler Choi
UP NEXT
UP NEXT

Video by CNBC

Under political pressure not to cut jobs, General Motors announced Wednesday it is in talks to sell its Lordstown, Ohio, plant to an electric truck company and said it will maintain some operations at a Canadian factory.

The decisions came after GM faced months of criticism over its plan announced in November to close five North American plants and cut 15,000 jobs. GM's decision to close the small-car Ohio assembly plant in a key state in the 2020 election had already become fodder for several Democratic presidential candidates.

U.S. President Donald Trump, who disclosed GM's plans on its Ohio plant in a tweet, said the deal will require the approval of the United Auto Workers union. GM said it will invest $700 million in three other Ohio facilities and add 450 jobs at its Toledo, Parma and Moraine operations. "Great news for Ohio," Trump tweeted.

GM said it was in discussions to sell the plant to Workhorse Group Inc and an affiliated newly formed entity. GM Chief Executive Mary Barra said Workhorse "could help preserve Lordstown’s more than 50-year tradition of vehicle assembly work."

The UAW said on Wednesday in a statement that GM should add a new product at Lordstown "and continue operating it."

Workhorse is a small electric truck and drone startup that has reported significant losses. The company said it had just $2.8 million in cash on hand at the end of March and reported a net loss of $6.2 million on net sales of $364,000.

Trump spoke to Barra earlier on Wednesday before the company announced plans to keep some operations in place in Canada.

Trump in June 2017 advised workers in nearby Youngstown, Ohio, that factory jobs were not leaving. "Don't move, don't sell your house," he said.

It is not clear how many people Workhorse may employ, whether they would make as much as the UAW workers at Lordstown or if GM will have a continuing business relationship with Workhorse. It is likely it would take at least a year or two before the plant, which halted production in March, could reopen, the sources said.

Workhorse shares jumped nearly 70 percent on Trump's tweet and were briefly halted. At midday on Wednesday the shares were up 43.6 percent at $1.21.

Separately, GM and the largest union representing Canada's auto workers have reached a deal to partly rescue an Ontario car-making plant slated to close this year by turning it into a parts-making facility, the automaker said in a statement.

The transformation of GM's Oshawa site, which would also be used to conduct advanced vehicle testing, would save 300 jobs and have "the potential to grow and generate significant additional jobs in the coming years, as the business attracts new customers," the U.S. automaker said in a statement.

Canadian union Unifor, which had fiercely opposed the shutting of the plant's doors, had previously said the closure was contrary to a contract that stipulates there would be no plant closure.

"There are 300 families that are better off than they would have been in December,” said Unifor President Jerry Dias in Toronto.

Flavio Volpe, president of the Automotive Parts Manufacturers' Association, said, "GM’s decision to keep their Oshawa facility operating is unexpected and allows for the emerging automotive technology ecosystem they are building locally to perhaps lift that region again one day."

AdChoices
AdChoices

More From Reuters

image beaconimage beaconimage beacon