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Q&A: Lordstown Motors Is Turning Up The Voltage In The Mahoning Valley

A banner depicting the Chevrolet Cruze model vehicle is displayed at the General Motors' Lordstown plant in Lordstown, Ohio in this In this Nov. 27, 2018, AP file photo.

Boosters for the Youngstown-area economy have ever more frequently dubbed the Mahoning Valley as “Voltage Valley,” hoping technology will give far Northeast Ohio a needed jolt. A big piece of this transformation is the new life supporters are trying to breathe into a shuttered GM plant in Lordstown. An electric truck company named Lordstown Motors could be a tent pole for this future tech strategy. ideastream’s Glenn Forbes joined Tony Ganzer on All Things Considered to talk about Lordstown Motors.

The CEO of Lordstown Motors, Steve Burns, has been in the Voltage Valley for about four months with this venture. What are his impressions of his time in the Valley so far?

It doesn't come as a surprise that Burns and his executives knew they were coming into a tough situation. There are a lot of unknowns, not only for Lordstown Motors, but for people in the Valley as well. And any time a plant from a major auto supplier like GM essentially shuts down, it creates a void. There's a lot of tension and despair, particularly because that plant was so productive and successful. Even by GM's admission, the move had nothing to do with the performance of labor, but rather the declining demand for that Chevy Cruze.

And you and I have reported before on what it's like in schools: Friends are moving away. Their parents took a transfer from GM or they got a stable job offer somewhere else. And Burns says that [Lordstown Motors] in some ways had to prove their worth to that community.

“A lot of skepticism,” Burns said. “a) Electric, b) How can a small company take over a plant of that size and return it to its former glory. But I think every leg, as we’re hiring people, some of the production engineers that used to be there at GM, and I think everybody starting to see the expertise we're bringing to bear on the issue.”

And Burns says as they make strides, belief is coming from the community. And the buy-in from local and state officials has helped as well.

Burns mentioned some of these reasons for skepticism. What do we know about that company's current economic situation?

So like most startups, things get a little bit complicated here. Burns was a founder and CEO of electric truck maker Workhorse, based out of Cincinnati. He left Workhorse and now has started this, Lordstown Motors. Workhorse now licenses their technology to Lordstown Motors. That's where these electric pickup trucks are now being manufactured. So the financial picture for Workhorse has not been rosy. And I'll let Burns explain what's happening now:

“Workhorse had 6,000 preorders for that vehicle, all from fleets. I thought that was 19 fleets that ordered 6,000 of those. And we have an agreement with Workhorse where, since Workhorse isn’t coming out with the W-15 [vehicle], to transfer those orders over to us,” he said.

So, the Lordstown Endurance is expected to be unveiled in June at the Detroit Auto Show. Designs aren't finalized, but sketches have been released. It does resemble that W-15. The Endurance is designed to be the first production vehicle utilizing a four-wheel-drive hub motor system. It's also expected that the features on the Endurance will be able to fit the specific needs of their fleet customers.

It was announced last week that First Energy signed a letter of intent to buy about 250 of those vehicles. Lordstown Motors was also in the running for a $200 million loan from the Department of Energy. That program, though, was scrapped in the Trump administration's first budget proposal. There's also a $6 billion dollar, I think, contract available from the postal service that Workhorse and Lordstown Motors were hoping for. What did Burns say about those potential infusions of financing?

So he did try to kind of downplay the importance of both. I mean, for one, who knows if that energy loan will be reinstated in the budget process. But here's what Burns had to say about really any loan from a bank or government: “It's not something we count on in any business, right? So it is not in our business plan for success.”

And I suppose that makes sense because it would be a loan, but a contract worth more than $6 billion from the postal service, that would be a huge deal for any company, especially an electric startup.

Yeah, absolutely. But Burns also said when you're looking for funding, you can't count on what's essentially a gamble.

“The post office is signing off on the paper. We treat it as gravy. It's a lot of gravy, but it's not something you can ask investors to bet on,” Burns said.

And $6.3 billion, that's certainly a lot of gravy. But Lordstown Motors hasn't released specifics on how that contract might add to their goal of hiring 400 workers by the end of the year.

Burns says that contract is likely to be awarded in the summer. They are preparing the plant for that possibility. But he also said they intend to sell more Endurances than what's in that postal contract.

Glenn Forbes is supervising producer of newscasts at Ideastream Public Media.