Tesla could potentially save Lordstown
12-21-18 | 11:25 AM
#1
Tesla could potentially save Lordstown
DETROIT — Tesla Chief Executive Elon Musk raised hopes again on Thursday that he could ride to the rescue of a threatened General Motors car plant at the center of a political storm about auto jobs, and GM replied, saying the Ohio factory's fate depends on union talks next year.
Musk suggested in a Twitter exchange with outgoing Ohio Gov. John Kasich that he would consider acquiring GM's Lordstown small-car factory in Warren, Ohio, which GM has signaled it could close next year. The decision has prompted bipartisan anger in Washington, led by President Donald Trump.
Musk had dropped a hint in an interview with the CBS-TV program "60 Minutes" on Dec. 9 that he might be interested in buying one of the three North American vehicle assembly plants GM has said have no work allocated after next year.
On Monday, Kasich tweeted at Musk, "Hey @ElonMusk. Call me. There are no better workers than Ohio workers. And Lordstown is ready for you." Musk responded on Thursday, "Thanks, will consider next year."
GM, however, owns the factory, and in a statement following the Musk tweet, GM spokesman Patrick Morrissey said: "GM has said the plant is unallocated and the next steps are a matter of UAW-GM negotiations."
GM and the United Auto Workers will negotiate new master contracts for the automaker's U.S. operations next year, with a resolution likely in the fall.
The Lordstown assembly plant, which builds GM's slow-selling Chevrolet Cruze compact sedan, is one of five plants in North America GM has marked for possible closure.
Trump has put pressure on GM to find a new vehicle for the Lordstown plant, threatening to kill a $7,500 federal tax credit program for electric vehicles that is beneficial to GM. That program has also benefited Tesla, and both automakers have lobbied Congress for months to lift the cap on electric vehicles eligible for the full $7,500 tax credit from the present level of 200,000 vehicles.
For Trump, the stakes are clear. Ohio is a battleground state the president won in 2016 and needs to win again to be re-elected in 2020. Trump said during a July 2017 visit to nearby Youngstown that jobs were coming back to the region. "Don't move," he told local residents. "Don't sell your house."
Kasich, meanwhile, is acting in the interests of his constituents. But he also ran against Trump in the 2016 Republican presidential primaries and may intend to run again, so a role in saving Lordstown could be a boost for him as well.
For GM, selling Lordstown to Tesla could help "reduce costs, improve sentiment and de-escalate political pressure," Morgan Stanley analyst Adam Jonas said in a research note on Thursday.
GM, however, plans to compete more aggressively with Tesla by launching a fleet of electric vehicles over the next several years. Enabling Tesla's expansion could undermine its own electric-vehicle strategy.
Tesla's sole assembly plant in Fremont, California, used to be a GM factory. The electric vehicle maker acquired the plant in 2010 for $42 million after GM and then-partner Toyota abandoned production there. Tesla has begun building a plant in China.
Ohio's incoming governor, Mike DeWine, plans to meet with senior GM executives next month at the Detroit Auto Show to discuss the fate of the Lordstown plant, but GM officials have told Congress it is extremely unlikely the company will add a new vehicle there.
If GM did reverse course and decide to retool the plant, it could take at least three years to prepare it for production, including potentially replacing the paint shop, GM told lawmakers.
The United Auto Workers reiterated on Thursday that the union "will leave no stone unturned contractually, legally and through bargaining to keep the GM plant open."
But if Musk were to acquire the plant, he has had a tense relationship with the UAW, which is seeking to represent workers at Tesla's Fremont plant. The union in May filed a complaint accusing Musk of illegally threatening to take away benefits from workers who join the union.
Musk previously accused the UAW of driving GM and Chrysler to bankruptcy and losing "200,000+ jobs for people they were supposed to protect," apparently referring to effects of the crisis in the U.S. auto industry in 2008-2010. UAW officials called Musk's comments "ridiculous"
GM shares were down 2.7 percent at $33.97 and Tesla shares were down 5.8 percent at $313.76 on Thursday afternoon.
Musk suggested in a Twitter exchange with outgoing Ohio Gov. John Kasich that he would consider acquiring GM's Lordstown small-car factory in Warren, Ohio, which GM has signaled it could close next year. The decision has prompted bipartisan anger in Washington, led by President Donald Trump.
Musk had dropped a hint in an interview with the CBS-TV program "60 Minutes" on Dec. 9 that he might be interested in buying one of the three North American vehicle assembly plants GM has said have no work allocated after next year.
On Monday, Kasich tweeted at Musk, "Hey @ElonMusk. Call me. There are no better workers than Ohio workers. And Lordstown is ready for you." Musk responded on Thursday, "Thanks, will consider next year."
GM, however, owns the factory, and in a statement following the Musk tweet, GM spokesman Patrick Morrissey said: "GM has said the plant is unallocated and the next steps are a matter of UAW-GM negotiations."
GM and the United Auto Workers will negotiate new master contracts for the automaker's U.S. operations next year, with a resolution likely in the fall.
The Lordstown assembly plant, which builds GM's slow-selling Chevrolet Cruze compact sedan, is one of five plants in North America GM has marked for possible closure.
Trump has put pressure on GM to find a new vehicle for the Lordstown plant, threatening to kill a $7,500 federal tax credit program for electric vehicles that is beneficial to GM. That program has also benefited Tesla, and both automakers have lobbied Congress for months to lift the cap on electric vehicles eligible for the full $7,500 tax credit from the present level of 200,000 vehicles.
The pros and cons on all sides
Analysts on Thursday tried to sort out the pros and cons of a deal that has not happened.For Trump, the stakes are clear. Ohio is a battleground state the president won in 2016 and needs to win again to be re-elected in 2020. Trump said during a July 2017 visit to nearby Youngstown that jobs were coming back to the region. "Don't move," he told local residents. "Don't sell your house."
Kasich, meanwhile, is acting in the interests of his constituents. But he also ran against Trump in the 2016 Republican presidential primaries and may intend to run again, so a role in saving Lordstown could be a boost for him as well.
For GM, selling Lordstown to Tesla could help "reduce costs, improve sentiment and de-escalate political pressure," Morgan Stanley analyst Adam Jonas said in a research note on Thursday.
GM, however, plans to compete more aggressively with Tesla by launching a fleet of electric vehicles over the next several years. Enabling Tesla's expansion could undermine its own electric-vehicle strategy.
Tesla's sole assembly plant in Fremont, California, used to be a GM factory. The electric vehicle maker acquired the plant in 2010 for $42 million after GM and then-partner Toyota abandoned production there. Tesla has begun building a plant in China.
Ohio's incoming governor, Mike DeWine, plans to meet with senior GM executives next month at the Detroit Auto Show to discuss the fate of the Lordstown plant, but GM officials have told Congress it is extremely unlikely the company will add a new vehicle there.
If GM did reverse course and decide to retool the plant, it could take at least three years to prepare it for production, including potentially replacing the paint shop, GM told lawmakers.
The United Auto Workers reiterated on Thursday that the union "will leave no stone unturned contractually, legally and through bargaining to keep the GM plant open."
But if Musk were to acquire the plant, he has had a tense relationship with the UAW, which is seeking to represent workers at Tesla's Fremont plant. The union in May filed a complaint accusing Musk of illegally threatening to take away benefits from workers who join the union.
Musk previously accused the UAW of driving GM and Chrysler to bankruptcy and losing "200,000+ jobs for people they were supposed to protect," apparently referring to effects of the crisis in the U.S. auto industry in 2008-2010. UAW officials called Musk's comments "ridiculous"
GM shares were down 2.7 percent at $33.97 and Tesla shares were down 5.8 percent at $313.76 on Thursday afternoon.
12-21-18 | 05:19 PM
#2
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Joined: Oct 2016
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From: Oregon
I have almost given up on trying to figure out anything coming from Musk's mouth. I would have thought that the very last thing he would want is to be saddled with UAW overhead.
Then, on top of that, all the BS about tunneling below LA to "relieve traffic congestion." Just amazing to me that reporters swallow this stuff without bursting out laughing.
So I guess I'm just not smart enough to see the guy's genius. Although I do agree the SpaceX stuff is pretty cool, bringing the boosters back for a soft landing and all that.
Then, on top of that, all the BS about tunneling below LA to "relieve traffic congestion." Just amazing to me that reporters swallow this stuff without bursting out laughing.
So I guess I'm just not smart enough to see the guy's genius. Although I do agree the SpaceX stuff is pretty cool, bringing the boosters back for a soft landing and all that.
12-21-18 | 05:31 PM
#4
Lexus Fanatic
Joined: Oct 2003
Posts: 91,715
Likes: 89
From: Virginia/D.C. suburbs
Sounds like B.S. to me. How is Musk going to pay the bills to operate the Lordstown plant when his company can't afford the bills on all of their company-owned facilities now? If he can find an (honest) way to do it....fine. But I've got my doubts. GM has far deeper pockets than he does.....and even they are obviously having trouble making ends meet at Lordstown.
Now...don't get me wrong. I don't want to see the Lordstown plant (or any other plant where GM builds sedans) shut down...especially the Hamtramck plant that builds the Lacrosse and Impala, my two favorite GM products. But, if GM is determined to ax these plants, assuming that different vehicles will be built there, at least sell them to somebody who can put their money where his (or her) mouth is. We're also talking about a lot of potential employees out of work....or being absorbed by another company.
Last, of course, you can't build Tesla products with GM tooling. It will take a long time, work, and a lot of money simply to re-tool the plant to Tesla standards.
Now...don't get me wrong. I don't want to see the Lordstown plant (or any other plant where GM builds sedans) shut down...especially the Hamtramck plant that builds the Lacrosse and Impala, my two favorite GM products. But, if GM is determined to ax these plants, assuming that different vehicles will be built there, at least sell them to somebody who can put their money where his (or her) mouth is. We're also talking about a lot of potential employees out of work....or being absorbed by another company.
Last, of course, you can't build Tesla products with GM tooling. It will take a long time, work, and a lot of money simply to re-tool the plant to Tesla standards.
Last edited by mmarshall; 12-21-18 at 05:41 PM.
12-21-18 | 06:44 PM
#5
On Monday, Kasich tweeted at Musk, "Hey @ElonMusk. Call me. There are no better workers than Ohio workers. And Lordstown is ready for you." Musk responded on Thursday, "Thanks, will consider next year."
12-21-18 | 07:12 PM
#6
Lexus Fanatic
Joined: Oct 2003
Posts: 91,715
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From: Virginia/D.C. suburbs
Agreed, though, that it's great for them if they can get a solid job, preferably in the same plant, working for someone else....though I'm not sure I'd want to work for Musk. Say what you will about Mary Barra (and I've got some beefs with her myself about axing the big-GM sedans), at least she is playing with a full deck between her shoulders. Musk?.....I'm not so sure.
12-21-18 | 07:42 PM
#7
Tesla or not, they will probably still be employed through Christmas and New Year. GM, as I understand it, isn't planning to shut the plants down until spring at the earliest....it's not something that is going to be done overnight.
Agreed, though, that it's great for them if they can get a solid job, preferably in the same plant, working for someone else....though I'm not sure I'd want to work for Musk. Say what you will about Mary Barra (and I've got some beefs with her myself about axing the big-GM sedans), at least she is playing with a full deck between her shoulders. Musk?.....I'm not so sure.
Agreed, though, that it's great for them if they can get a solid job, preferably in the same plant, working for someone else....though I'm not sure I'd want to work for Musk. Say what you will about Mary Barra (and I've got some beefs with her myself about axing the big-GM sedans), at least she is playing with a full deck between her shoulders. Musk?.....I'm not so sure.
I have three friends who work for Tesla at the Fremont plant. They have good things to say, nothing crazy.
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12-21-18 | 07:58 PM
#8
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From: Virginia/D.C. suburbs
12-21-18 | 08:24 PM
#9
Lexus Champion
Joined: Jul 2013
Posts: 2,300
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From: RightHere
It's too early to really say that somehow Tesla is going to show up and save Lordstown. It's a nice Autoblog headline that gets people thinking, but that's about it.
First of all it's a union plant and it's a UAW plant. Tesla is basically a non-union company. That's the first hurdle. The second one is time - Tesla has overwhelming demand for its product and is scrambling to fill it. How quickly can Lordstown be converted to a Tesla factory? And how quickly can GM workers be re-trained to manufacture Teslas? The UAW isn't all that keen on Tesla, and with an entire year of negotiations still to go between two parties, Elon is not going to wait around for GM and the UAW to sort things out.
GM is not just going to walk away from Lordstown with its investments in tooling and the factory. So Musk would just be looking at a factory shell and some production equipment. It has to all be converted over to the Tesla system.
OTH you could see younger GM workers willing to try out Tesla after they get a severance and it would be attractive because now you don't have to move away to get another job. Musk gets a relatively young trainable workforce that knows how to make a car. It's all in how sweet the deal is for the workers, GM and for Tesla. The UAW might be the one getting squeezed out.
First of all it's a union plant and it's a UAW plant. Tesla is basically a non-union company. That's the first hurdle. The second one is time - Tesla has overwhelming demand for its product and is scrambling to fill it. How quickly can Lordstown be converted to a Tesla factory? And how quickly can GM workers be re-trained to manufacture Teslas? The UAW isn't all that keen on Tesla, and with an entire year of negotiations still to go between two parties, Elon is not going to wait around for GM and the UAW to sort things out.
GM is not just going to walk away from Lordstown with its investments in tooling and the factory. So Musk would just be looking at a factory shell and some production equipment. It has to all be converted over to the Tesla system.
OTH you could see younger GM workers willing to try out Tesla after they get a severance and it would be attractive because now you don't have to move away to get another job. Musk gets a relatively young trainable workforce that knows how to make a car. It's all in how sweet the deal is for the workers, GM and for Tesla. The UAW might be the one getting squeezed out.
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