Musk, GM weigh fate of Ohio plant Trump
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[December 21, 2018]
By Ben Klayman
DETROIT (Reuters) - Tesla Inc <TSLA.O>
Chief Executive Elon Musk raised hopes again on Thursday that he could
ride to the rescue of a threatened General Motors Co <GM.N> 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 Governor 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 U.S.
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 plans 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.
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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.
HIGH STAKES
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."
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.
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![](../images/122118pics/news_h17.jpg)
A view of the entrance to the West Plant at the General Motors
Lordstown Complex, assembly plant in Warren, Ohio, U.S., November
26, 2018. REUTERS/Alan Freed/File Photo
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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 Motor Corp <7203.T>
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.”
Musk 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 <FCHA.MI>
<FCAU.N> 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.
(Reporting by Ben Klayman in Detroit; additional reporting by David
Shepardson in Washington; Editing by Joe White and Matthew Lewis)
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