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iPhone-maker Foxconn could soon be moving to Lordstown — here's what we know so far

Lordstown Motors on Thursday confirmed it plans to sell the 6.2-million-square-foot plant it purchased from General Motors in 2019 to Taiwanese electronics giant Foxconn. Here's what we know about its effect on Lordstown Motors' workers and its all-electric Endurance pickup truck.
lordstown motors complex march - provided - 640x420
Shown here in this March 2020 file photo is the 6.2-million square-foot Lordstown Motors Corp. complex along Hallock Young Road in Lordstown.

LORDSTOWN — The world’s largest electronics manufacturer is expected to take over Lordstown Motors Corp.’s 6.2-million-square-foot automotive plant along Hallock Young Road.

An agreement announced Thursday between the electric vehicle startup and Hon Hai Technology Group of Taiwan, otherwise known as Apple iPhone manufacturer Foxconn, suggests another electric vehicle product is now coming to the Lordstown plant, in addition to Lordstown Motors’ all-electric pickup truck, the Endurance.

It also signals an employment shakeup for at least some of the plant’s about 500 workers, all of whom will no longer be Lordstown Motors employees, but most of whom are expected to be offered employment with Foxconn.

In light of this new partnership, Lordstown Motors also is now reviewing its production schedule for the Endurance, executives announced. Limited production of the Endurance was slated to begin this month. But executives are now considering new supply chain opportunities through the Taiwanese electronics giant as well as worker integration.

Executives are expected to update investors on production plans during the company's third-quarter earnings call set for mid-November.

Under the tentative agreement — which is non-binding and subject to negotiations of “definitive agreements,” according to a Thursday news release from Lordstown Motors — Foxconn would pay $230 million for the former General Motors Lordstown Assembly Complex. Lordstown Motors purchased the facility from GM for $20 million in 2019.

Lordstown Motors executives in June warned investors that a cash crunch could keep the company from continuing past 2022. During the company's second-quarter earnings call in August, then-head executive Angela Strand said the company was in talks with "multiple [original equipment manufacturers] interested in leveraging the assets we have today,” including the plant.

Currently, Lordstown Motors uses less than a third of the 650-acre campus, President Rich Schmidt said during that investors call, which means there’s “ample room” for partners who want to build their own vehicles. Executives said at the time they hoped those vehicles would use the Lordstown chassis and hub motor “skateboard.”

“The biggest issue [Lordstown Motors has] had is getting funding,” Lordstown Mayor Arno Hill told Mahoning Matters on Thursday. “It appears if this goes through with Foxconn, their biggest problem just kind of evaporated.”

In the 30 minutes following the announcement, Lordstown Motors stock (NASDAQ: RIDE) rose 0.63 points in after-market trading to $8.63. Its Wednesday closing price was $7.36.

The agreement is expected to be finalized by Oct. 31 and integration at the plant is expected to begin in late April 2022 — a “tight timeline,” a Lordstown Motors spokesperson noted.

“We are highly confident in this arrangement. We would not have gone forward in such a public manner if we weren’t confident [in its completion]” said spokesperson Kimberly Spell. “We had other offers that we entertained but this by far made the most sense for us strategically.

“You want to get to scale in the [electric vehicle] world and this is going to allow us to scale.”

Under a separate contract manufacturing agreement, Foxconn would manufacture Lordstown Motors’ all-electric Endurance pickup truck and retain rights to future vehicles developed by the company. This deal would be contingent on the plant sale.

Lordstown Motors’ hub motor assembly and battery module lines, packing line assets and other assets would be excluded from the sale of the plant, according to the release. The company would then lease the space for those assets from Foxconn.

“It’s going to be a Foxconn facility producing the Endurance alongside Lordstown [Motors],” Spell said. “Both signs will be out front.”

Under the agreement, Foxconn would also purchase $50 million in Lordstown Motors’ common stock at $6.89 per share and retain them for a specified period. With the plant’s $230 million price tag, that puts the deal’s total cash value for Lordstown Motors at $280 million.

Lordstown Motors would also issue warrants for 1.7 million shares of its stock to Foxconn at $10.50 per share.

“We are excited about the prospect of joining forces with a world-class smart manufacturer like Foxconn and believe the relationship would provide operational, technology and supply chain benefits to our company and accelerate overall scaled vehicle production and increase employment in the Lordstown facility,” Lordstown Motors CEO Daniel Ninivaggi is quoted in the release.

“The partnership would allow Lordstown Motors to take advantage of Foxconn’s extensive manufacturing expertise and cost-efficient supply chain, while freeing up Lordstown Motors to focus on bringing the Endurance to market, developing service offerings for our fleet customers and designing and developing innovative new vehicle models,” he continued.

Foxconn is currently looking to expand into the electric vehicle market, and has partnered with Fisker Inc. (NYSE: FSR) to begin producing an electric vehicle dubbed the “personal electric automotive revolution,” or PEAR, in 2023, Forbes reported in August. The vehicle is based on Foxconn technology and is expected to be priced at about $30,000. Under the new agreement, that vehicle would be produced at the Lordstown plant, Spell confirmed Thursday.

“This mutually beneficial relationship is an important milestone for Foxconn’s [electric vehicle] business and our transformation strategy,” said Young Liu, chairman of Hon Hai Technology Group. “I believe that the innovative design of the Endurance pickup truck, with its unique hub motors, delivers an advantageous user experience and has manufacturing efficiencies. It will undoubtedly thrive under our partnership and business model.”

The number of Lordstown Motors workers to be retained by Foxconn is still in question, but Spell said Lordstown Motors expects the Taiwanese manufacturer to keep “a great number of them.” It was the region’s “manufacturing group” that attracted Foxconn to the Lordstown plant, she said.

Following unconfirmed reports about the sale, first reported early Thursday by Bloomberg, U.S. Rep. Tim Ryan of Howland, D-13th, and U.S. Sen. Sherrod Brown of Cleveland, D-Ohio, issued statements stressing the importance of the Lordstown Motors plant as a job creator.

"I plan to meet with company officials soon to discuss what this decision means for jobs in our community and how it will help the Mahoning Valley remain a leader in electric vehicle production,” said Ryan. “We deserve answers.”

Brown said Lordstown Motors "arrived in the Mahoning Valley with promises of jobs and economic growth."

"I have asked LMC to explain their plans for Lordstown and its workers and I am still waiting," Brown is quoted in the release. "The hard-working men and women of the Mahoning Valley don’t just deserve answers — they need them. Going forward, there are two key questions for LMC and Foxconn: What does this mean for jobs in Lordstown? What are their plans to ensure that the Mahoning Valley is a leader in electric vehicle production?

"I expect to meet with LMC and hear their plans in the coming days. I look forward to learning about Foxconn and their plans for Lordstown."

In a separate Thursday announcement, Lordstown Motors said it "continues to move forward" with plans to start limited production of the Endurance for testing, validation, verification and regulatory approvals through the end of this year and into next year.

The company previously signaled that it was on-track to begin limited production in September. But the new deal with Foxconn appears to have moved that target.

"In light of the Foxconn agreement, the company will evaluate the potential impact of the parties’ contract manufacturing relationship on commercial production, supply chain opportunities with Foxconn" and integration of its worker teams, reads the release.

The first Endurances are still expected to be delivered to customers in the first half of 2022, Spell confirmed.

Prior to the official announcement, Guy Coviello, president and CEO of the Youngstown/Warren Regional Chamber, said the partnership “would be a positive development for the Valley.”

"Lordstown Motors has a great, new vehicle. Foxconn is a well-established, robust corporation that can bring tremendous resources to bear,” he wrote. "In addition to utilizing more of the assembly plant, this increases the supply chain opportunities for Valley companies," he said. "It also gives our team an opportunity to attract suppliers that would be new to our market."

When considering Foxconn’s plans to support electric vehicle manufacturers like Fisker, “the stars might be aligning nicely for us,” Coviello said.

Foxconn is the world's largest electronics manufacturer, and reported NT$5.35 trillion in revenue in 2020, or about $192 billion in U.S. dollars, according to its website. But at least one of its recent forays into manufacturing in the U.S. didn’t spur the kind of economic growth that was promised.

Fisker in May considered hosting production of the PEAR at Foxconn’s facility in Mount Pleasant, Wis., which was initially intended to produce flat-panel screens for TVs.

State and local economic development agencies like the Youngstown/Warren chamber, TeamNEO and JobsOhio tried to court Foxconn to build that facility in the Valley, but were unsuccessful.

Ultimately, Foxconn in April of this year announced it would scale back its planned $10 billion investment in Mount Pleasant to just $672 million, according to Reuters. The site was up for $4 billion in tax subsidies, but fell short of development and job creation benchmarks, Forbes reported in August.

“They demolished my house for this?” 37-year-old Sean McFarlane, who was uprooted from his home in 2017 to make way for the facility, told The Guardian three years later, when the site was still empty.

“It’s upsetting. That’s where my old house was, and now it’s just nothing. You know? Nothing.”

Neither Lordstown Village nor Trumbull County extended any tax abatements to Lordstown Motors which may now be up for review following the Foxconn agreement. However, the Ohio Tax Credit Authority in December approved Lordstown Motors for a 1.6-percent, 15-year state tax credit worth $20 million, on expectations it would create 1,570 new full-time jobs.

Also, as reported by Forbes, Fisker found adversity in Wisconsin law, which wouldn’t have allowed the automaker to sell vehicles directly to consumers. Ohio has the same rule — but Lordstown Motors has asked the Ohio Legislature for an exemption.

A bill introduced in March by state Sen. Mike Rulli of Salem, R-33rd, would “carve out” room for Lordstown Motors to make direct sales, but that bill has seen no action in the Statehouse, aside from its assignment to the Senate’s Transportation Committee.

Neither Rulli nor Lordstown Motors’ government relations director could immediately be reached for comment Thursday.

Justin Dennis

About the Author: Justin Dennis

Justin Dennis has been on the beat since 2011, covering crime, courts and public education. Dennis grew up in Poland and Salem and studied journalism and communications at Cleveland State University and University of Pittsburgh.
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