June 5, 2019 / 5:33 PM / 20 days ago

Exclusive: GM CEO defends plan to sell Ohio plant to startup

WASHINGTON (Reuters) - General Motors Chief Executive Mary Barra on Wednesday defended the automaker’s plan to sell an assembly plant in Ohio, arguing the plan to sell the plant to an electric vehicle start-up was thoroughly vetted and had a chance of success.

General Motors CEO Mary Barra departs after meeting with lawmakers on Capitol Hill in Washington, U.S. June 5, 2019. REUTERS/Jonathan Ernst

Barra told Reuters in a brief interview Wednesday after a series of meetings on Capitol Hill that the company did not plan to add a new vehicle to its Lordstown, Ohio, assembly plant that ended production in March because it has additional unused U.S. capacity. Last month, GM announced it was in talks to sell the plant to EV startup Workhorse Group Inc and an affiliated, newly formed entity.

Barra rebuffed criticism of the planned deal.

“We remain thinking it’s a strong possibility and think people should focus on opportunity and maybe every now and then a little optimism wouldn’t hurt anyone.” Asked if the deal was a “PR stunt” Barra said no. “We vetted many opportunities.”

She also said it was unclear what the precise impact would be on GM of U.S. tariffs on Mexican goods that could take effect on June 10, but according to congressional aides, she told lawmakers the impact would be significant. She said “it really hard to tell without understanding what the rules are going to be and the exclusions around it.”

GM’s announcement last month it planned to sell the plant followed months of criticism and pressure from President Donald Trump over the fate of the plant in politically important northeast Ohio. Ohio is crucial to Trump’s 2020 reelection chances and he has made auto jobs a key focus of his presidency.

Ohio members of Congress urged Barra to add an electric vehicle at Lordstown or shift production of its Mexican-made Chevrolet Blazer to the plant.

“We want General Motors back. We want them to fill that plant again,” Senator Sherrod Brown, an Ohio Democrat, told reporters after the meeting with Barra. “We didn’t hear from Ms. Barra what Plan B is.”

Some critics question how Ohio-based Workhorse, a small electric truck and drone startup that has reported losses totalling almost $150 million (£118 million) since its launch in 2007, and had just $2.8 million in cash on hand at the end of March, could buy the massive Lordstown plant.

Senator Rob Portman, an Ohio Republican, said they were told it would take a $300 million to $400 million investment to redevelop the plant. He said it would be “tough” for Workhorse to make the investment given its balance sheet and urged Barra to reconsider. “We think the plant has earned the right to be able to continue to produce products for General Motors.”

Brown noted that the plant employed about 4,500 workers in late 2016 and about 1,500 in March after GM had previously cut two of the three shifts. Workhorse might employ about 400 and it is not clear what they would pay, the senators said.

Barra said Workhorse has technology and contracts. “I’d like to see people looking and giving it a chance,” Barra said. Workhorse still needs to raise additional capital and the plant’s status must be addressed during this summer’s United Auto Workers contract talks that begin in July, she added.

Reporting by David Shepardson; Editing by Nick Zieminski

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