The history of an automotive assembly plant in Lordstown, Ohio is the story of the last half-decade of the American automobile industry – and of how impotent government subsidies are in the face of its immense market forces.
General Motors announced plans for an assembly plant on former farmland just off the Ohio Turnpike in Lordstown, Ohio in 1956. The plant opened in 1966 – nine years later than originally planned – building mostly full-sized Chevrolets and Pontiacs, including the first generation of the iconic Pontiac Firebird. It was also home to the Chevy Vega, one of GM’s most famous flops.
GM Lordstown shifted production to compact cars in the 1980s as the American automakers responded to foreign competition. It lost two shifts in General Motors’ 2008 bankruptcy, then in 2009, GM asked for and received new subsidies as it retooled the plant to produce the smaller, more fuel-efficient Chevy Cruze. The automaker got approval for $60.3 million in tax breaks over the next 15 years, and in return committed to keep 3,700 employees, add 200 more and keep the plant operating until 2039.
Despite these subsidies and commitments, the last GM vehicle rolled off the Lordstown assembly line on March 6, 2019 in a plant that employed just 1,500 people. Six months later, GM announced that it would officially close the plant.
State officials threatened to try to get $60 million of the subsidies the plant had received between 2009 and 2016 back from General Motors, but in the end settled for $28 million in returned and a promise from GM to spend $12 million in the Lordstown region on “workforce, education and infrastructure needs.” Under the terms of the deal, GM ended up keeping $20.3 million in state subsidies for a plant it closed a decade earlier than promised.
(The same day that the agreement with GM was reached, Ohio approved $13.8 million in new tax breaks for a new Lordstown plant where a joint venture between General Motors and LG Chem would manufacture EV batteries. The deal contained promises from the new plant owners that it would, for sure this time, keep operating in Lordstown for at least 18 years.)
In November 2019, GM sold the plant to startup electric pickup truck maker Lordstown Motors.
In May 2020, media were reporting that the new plant owner was expected to hire 600 workers to build 20,000 pickups. The next month, Ohio Gov. Mike DeWine held a press conference at the plant declaring it “the future,” and later that year the state approved Lordstown Motors for $20 million in tax credits. The state’s JobsOhio economic development corporation would also pledge $4.5 million in grants to the prospective automaker. The company also asked the federal government for a $200 million loan.
(Perhaps coincidentally, Gov. DeWine’s 22-year-old grandson had been hired as a lobbyist by Lordstown Motors the same month that his grandfather held the press conference.)
Lordstown Motors went public that year, with General Motors taking a small stake of under 5%. After an initial lock-up period expired, GM sold its stake in 2021. A few months later, the startup notified federal regulators that it did not have enough money to begin production of its trucks.
In February 2022, Lordstown Motors announced that it only expected to produce and sell up to 3,000 EV pickups through the end of 2023, including just 500 in 2022. In the runup to going public, the company had said it expected to build 2,000 vehicles in the year it started production and then 32,000 during its first full year operating the plant.
The difference between the two sets of predictions, along with the discovery that the company had made misleading claims about the size and quality of preorders for its pickups, led to the resignation of its CEO and CFO and spawned an investigation from the Securities and Exchange Commission.
In May 2022, Lordstown Motors sold the plant to Taiwanese manufacturer and economic development cautionary tale Foxconn for $230 million. Foxconn said it would use the factory to build electric vehicles for auto brands like Fisker and Lordstown Motors itself. Media coverage reported that had Lordstown Motors not sold the plant, it would have run out of cash and potentially faced bankruptcy. At the time the plant was sold, it employed 400 people.
There are a lot of lessons in the Lordstown Assembly saga, but the most important is the simplest: Government subsidies can’t compete with the marketplace. GM’s production and employment numbers at Lordstown over the decades evolved along with the U.S. auto industry’s competitive environment and consumer demand regardless of the subsidies in place, and in the end the company decided it made more business sense to close the plant than keep its promises to Ohio’s taxpayers and its own employees. Then, despite the best efforts of all the politicians who stopped by Lordstown to get their pictures taken, government subsidies couldn’t ensure the success of a startup in the highly competitive and volatile electric vehicle industry.