Rivian work plants seeds of ideas for shuttered Ohio factory | Business

The plant was about three weeks from a meeting with a wrecking ball when a Michigan-based tech and electric-vehicle manufacturer swooped in and bought it at a rock-bottom price, returning some optimism to the town of 53,000 or so residents fearful of a tailspin when the Japanese automaker walked away.

The scenario shares some close similarities to what has played out in the past year at GM’s former Lordstown, Ohio, assembly plant.

It’s been a year since the automaker delivered the crushing news Lordstown was among several plants in North America it planned to idle, costing the local economy 1,500 more jobs and sending the Mahoning Valley into panic mode.

Now both communities are pinning their hopes on innovative electric-vehicle makers to return them to automaking glory.

In Normal, battery-powered truck and SUV maker Rivian bought the 2.4 million- to 2.6-million-square-foot facility for $16 million. Recent big-money investments by Ford, Amazon and Cox Automotive have legitimized the company and provided some relief to concern the effort would flop.

“When Ford and Amazon announced their investments in the plant, that got rid of all the skepticism in the community,” Normal Mayor Chris Koos said. “That just really validated Rivian as a real manufacturer.”

Before the $500 million investment from Ford; before the $700 million investment from Amazon; and before the $350 million investment from Cox Automotive, whose brands include Autotrader and Kelley Blue Book, there was doubt whether Rivian could succeed.

“The mood was yeah, we don’t believe this was going to happen,” Koos said, a sentiment spurred by negative blog posts regarding Rivian that spread like fire through the community.

The plant was owned and being marketed by a liquidator that planned to sell off the tooling and equipment inside, raze the building and sell the land. Rivian officials attended a preview auction, were impressed by the plant’s well-maintained state and of Normal, a “pretty progressive” town, Koos said, and sent word back to top Rivian officials the plant was worthy of consideration for Rivian’s production needs.

“During the whole time, Rivian, we didn’t know who they were. They were a startup and they were very secretive about their product and their process …,” Koos said. “Their investors were real and the money they raised at that point was real, but we knew as a startup, a new company, it was a very risky measure and our feeling was if they buy the plant and they fail, we still have the plant.”

Koos said the plant is being retooled to fit Rivian’s needs and plans are to start production in the fourth quarter of 2020. About 200 people work there now, but estimates are at least 1,000 at full production. That number, however, may rise due to delivery van production for Amazon.

Production at the Normal plant began in the early 1990s as Diamond-Star Motors, a joint venture of Mitsubishi and Chrysler. In its heyday, the plant was churning out more than 200,000 vehicles per year, but production dwindled to about 60,000 toward the end.

Market forces out of the hands of the men and women who worked there led to the decline.

“A big reason I think that it closed … it was primarily export product they were making. They were shipping cars to the Middle East, into Brazil, but their largest customer was Russia and when the Russian economy went bad with the sanctions and that, the market really dried up for them,” Koos said.

The plant was ahead of its time regarding production. Rather than one vehicle on a continuous line, it could push out multiple vehicles in succession.

“I remember getting a tour there. You’d see an (Mitsubishi) Eclipse come down the line, you’d see a Chrysler come down the line and then you’d see an SUV come down the line, one right after another,” Koos said. “Because of the robotics system they had and the workforce training, they were able to deal with that.”

When the end came in 2015, Normal was sour, but the community withstood the economic blow better than most would have.

“It wasn’t as bad as people had expected. Again, it was a regional employer so it didn’t hit the market that hard. There were workforce retraining efforts. We’re in a manufacturing area. Caterpillar has plants in Peoria. Komatsu has a plant in Peoria, plants in Decatur and Pontiac, so a number of those people took jobs at Caterpillar and Komatsu and places like that,” Koos said.

Still, Mitsubishi was a major employer and the mood when it left was somber.

“We put together a task force, public/private, to try and find a use for the plant because we knew if it went dark and stayed dark things were not going to be good for the community,” Koos said.

In Trumbull County, Ohio, Lordstown Motors Corp. bought the 6.2-million-square-foot production plant and everything inside for a reported $20 million. CEO Steve Burns and his investment team from Cleveland are trying to raise north of $300 million to repurpose the plant, making it fit to produce a fleet-style commercial pickup truck, and eventually transform the sprawling facility into an epicenter of electric vehicle manufacturing.

Lordstown Motors doesn’t yet have the type of commitments of Rivian, but what it does have is an agreement with battery-powered delivery truck maker and tech company Workhorse Group Inc. in Cincinnati to transfer 6,000 preorders for Workhorse’s W-15 commercial pickup.

Burns, who also founded Workhorse, wants to begin production in late 2020. The targeted timeline to have the plant retooled is six months.

“The equipment is there, but we have to reconfigure it. We have to stretch the footprint a little bit initially to hit our planned target,” said Rich Schmidt, Lordstown Motors’ chief production officer.

Lordstown Motors officials say GM left the facility in remarkable condition.

Building the plant from the ground up today would cost upward of $3 billion, but walking into the well-kept plant — like Lordstown Motors is — shaves about a year off the time needed to start production, Schmidt said.

But still the plant needs to be reconfigured to fit the production needs of the Endurance, Lordstown Motors’ first offering. Over the next several months, thousands of contractors will be in the plant to make that happen, Schmidt said.

“As we reconstruct and retool this facility we want to make it as flexible as possible so we can run a car, SUV, a truck down the same line,” Schmidt said. “We don’t want to be like the old traditional mindset — we build a platform to run a car, we build a platform to run a truck. We want to be universal, flexible.”

Burns has repeatedly said he envisions the plant as an epicenter of electric vehicle manufacturing.

He hopes to entice suppliers of components for the Endurance, like battery pack, hub motor and wiring harness manufacturers to the facility.

“We want all the folks that make the new type of tier one parts that we need,” Burns said. “There is no kind of central place to do it so we think this can be a jump start to that.”

Adding to the mix is a proposal by GM to locate a battery cell production facility in or near Lordstown. It would employ about 1,000 and its workers would be members of United Auto Workers, but pay would be in the neighborhood of $17 per hour, a far cry from the $30 per hour the top wage earners in the plant had made.

Initially, the automaker would employ about 400, but Burns said he wants upward of 5,000 at the plant working three shifts when it reaches full capacity.

For the last 10 years, the plant produced the Cruze, once one of Chevrolet’s best-selling vehicles. But as GM shifted focus to trucks, SUVs and electric and autonomous vehicles, it no longer needed the compact in Chevrolet’s lineup.

In its heyday, the plant employed 15,000 people and pushed out between 250,000 and 375,000 vehicles a year. It had as many as three shifts in recent years, but in 2018, GM announced it was cutting the second shift, a move that shed about 3,000 jobs.