For one city, it was the best of times. For the other, it was the worst. One city was located 22 miles west of Cleveland, the other 62 miles east.
Both cities were sold on the idea of locating major automotive manufacturing facilities within or close by their respective communities. Throughout the years, both economies grew extremely dependent on automotive manufacturing.
Last year, both were headed in totally divergent directions: or so it seemed.
After 52 years of producing more than 16 million new vehicles, General Motors (GM) announced last spring that its storied Lordstown facility would close its doors, and the Chevrolet Cruze sedan it produced was no longer a viable product.
It wasn’t quality issues that caused the auto maker to close the facility. Chevrolet’s Cruze simply wasn’t selling. Consumers had turned to SUVs and crossovers. Although some sedans were still selling, they weren’t selling at the same clip, nor profitability, of Chevy’s larger vehicles.
“It was doom and gloom,” says Tom Humphries, newly named interim CEO of the Youngstown/Warren Regional Chamber, in regard to the spirit of the community after it received word. “The last shift of GM was a very challenging time for our community. It was reflective of what had happened to the steel industry in the [Mahoning] Valley. There was the despair of not knowing what was going to happen. It was a difficult time.”
The closure took with it more than 1,400 well-paying jobs. More than 400 of the workers transferred to other jobs at GM plants around the country. Some took retirement, while others found employment with other plants in the Mahoning Valley. Still others headed to the unemployment line.
Late in 2019, all three of the nation’s major automotive manufacturers were involved in labor negotiations with the United Auto Workers (UAW). The most intense of those negotiations were with GM, with UAW Locals voting to strike to get concessions and pay increases. It was the longest auto workers’ strike in more than 50 years. But the outcome wasn’t exactly a victory for organized labor.
In addition to small pay increases, concessions on transitioning temporary workers into full time and announced factory investments (particularly at the Detroit Hamtramck factory), Lordstown would remain closed as a part of the deal reached late in October. It was as if the auto industry was turning its back on the Mahoning Valley. The decision also angered many rank and file members of Local 1112 in Lordstown, who felt the union had voted them out.
Meanwhile, to the west, and just seven days later, UAW Local 2000 and the city of Avon Lake had incredible news. The union had negotiated a deal that included $900 million investment for plant improvements and expansions at Ford’s Ohio Assembly Plant. The deal would create approximately 1,500 new jobs, which also included a new unnamed product line. The news was reported by every major print and electronic media outlet in Greater Cleveland. Everybody wanted good news, especially with the closure of Lordstown in the east.
So what was the new product?
“We’re not hearing anything out of Detroit, just crickets,” says a well-placed, but confidential, source within the Ford organization. “I suspect the news out of Avon Lake was a bit premature, people in the union who were anxious for good news after hearing about Lordstown. You know, ‘there but for the grace of God, go I.’”
For its part, Ford would not verify anything, even if it was good news for the community.
“We do not discuss future product and investment,” says Kelli Felker, manufacturing and labor communications manager for Ford. “We’ll have more to say at a later time.”
That doesn’t mean the story is false, or that Ford won’t be making big investments in the area in the near future. They just won’t say anything, at least for now.
The story found at least part of its genesis in a press release from the city of Avon Lake, which based its facts on a Contract Summary from the UAW, sent by the union’s national leadership which included Gary Jones, president of the International Union of the UAW and Rory L. Gamble, vice president and director of UAW’s Ford Department. The former had been directly involved in contract talks with Bill Ford, chairman of the company. However, you had to dig a little deep within that missive to find the news about the Ohio Assembly Plant, which is on the bottom of the seventh page of the summary.
“Let me clarify what happened. I talked to a person from Dearborn who is our contact at Ford, and this individual informed me that it would be $900 million with another $100 million that would be invested for equipment upgrades,” says Greg Zilka, mayor of Avon Lake. “We are not allowed to talk about information that we get from Ford until they give us permission. But, the person I was talking to said, ‘If the union releases it, you are certainly free to talk about it.’ Therefore, I did comment.”
The news coming out of the union was very similar to the information coming from the source at Ford, according to the mayor.
“Let me say one thing about that Friday, which was Nov. 1,” recalls Ted Esborn, economic development director for the city of Avon Lake. “When we released the news that day, we were very clear and careful about basing our news on that [union] document. Our release simply stated that the UAW had released a document that says the Ohio Assembly Plant is slated for a $900 million investment.”
With the local media, that had the effect of a snowball rolling downhill. Who can really blame them or the city for that matter? Indeed, the union still maintains there will be a significant investment.
“Ohio Assembly has been operating under capacity for some time,” says Herb Bennett, UAW plant chairman at the Ohio Assembly Plant. “We expected there to be major commitments to our facility this go around. There was a lot of activity even prior to negotiations starting. It was after negotiations were complete …that the details unfolded to the masses.
“The product/financial investment made to Ohio Assembly will employ upward of 1,600 additional employees. This will basically double our plant workforce.”
The addition would be a boon to nearby Lorain County communities that have seen their own economic challenges throughout the years, much like Lordstown to the east. And, the Ohio Assembly Plant is extremely important to Lorain County.
“The Ohio Assembly Plant is the largest employer in Avon Lake, employing between 1,700 and 1,800 people,” says Esborn. “Not all of those jobs are in Avon Lake, some of them are in Sheffield Lake and Sheffield Village because the plant is in three different cities. The plant is incredibly important to our community. Over the decades, its employees have bought homes in our growing city and helped make it the community that it is today.”
Avon Lake’s annual withholding total from Ford’s Ohio Assembly Plant has been approximately $2 million for the last few years, says Esborn. That accounts for about 25 percent of the withholding revenue that the city receives from all its businesses.
The plant also provides tremendous support to local businesses, such as shops and restaurants. There also is a specific impact on businesses located near the plant that work on the vehicles produced by the plant. Some of these businesses, for example, do “upfitting” of the Ford vehicles to get them suited for a particular purpose, like being part of a U-Haul fleet.
One of the rumors circulating out of the Ford plant expansion story is that a new product might be both commercial and electric. This, strangely, coincides with good news that is now coming out of Lordstown. GM has announced plans to build a $2.3 billion plant in the Lordstown area that will employ 1,100 people making electric vehicle batteries. It’s actually a joint venture between GM and South Korea-based LG Chem.
When the deal was announced in November, GM’s CEO and Chair Mary Barra said that workers from the shuttered Lordstown plant have been offered positions at other GM locations across the country. However, she also says that Ohio’s workforce will be instrumental in the corporation’s pursuit of an all-electric future.
“With this investment, Ohio and its highly capable workforce will play a key role in our journey toward a world with zero emissions,” Barra said when she made the announcement. “Combining our manufacturing expertise with LG Chem’s leading battery-cell technology will help accelerate our pursuit of an all-electric future. We look forward to collaborating with LG Chem on future cell technologies that will continue to improve the value we deliver to our customers.”
The batteries will be used in GM’s next generation of battery-electric vehicles, including an all-new battery-electric truck coming in fall 2021. There may also be a potential customer for the batteries right next door.
In what is a separate deal from the LG Chem/GM Joint Venture, a company called Lordstown Motors Corp. (LMC) has taken possession of the 6.2 million-square-foot Lordstown facility. Its new CEO, Steve Burns, is expecting the workforce to be union when the plant opens its doors later this year. Initially, the plant will employ about 400 workers, but the company plans to eventually build its workforce into the thousands in the years to come.
LMC is now in the process of seeking investment capital for the startup, which is going well according to all accounts. Indeed, it’s been reported in the automotive trade press that GM actually loaned LMC $40 million to help get the project off the ground. However, LMC is still seeking more than $450 million in capital, according to Mike Gibbons, senior managing director of Brown Gibbons Lang & Co., an investment banking firm headquartered in Cleveland.
“We are getting a lot of strong interest in Lordstown Motors,” says Gibbons. “So we are very confident that we will hit the goal. We probably don’t need that much, but that is what we have been tasked at raising and that is what we will do.”
Interest is coming from across the globe, says Gibbons, due in part to LMC’s projection that the plant will be up and producing within the year.
“The plant doesn’t need that much re-tooling,” he says. “When the last Cruze was made, they just turned off the lights and walked out. And, much of the facility is exactly what we need. We are in a very unusual position, versus the position of other electric vehicle manufacturers.”
According to Camin Flannery, vice president of Business Development for LMC, the recently idled plant is ideal for the all-electric (EV) technology developed by Steve Burns. It is also in production-ready condition and equipped with modern robotics, painting, assembly and robotics equipment.
There is also “a strong history of automotive production in the Valley, which can now be called the ‘Voltage Valley’ with a skilled labor force interested in re-engaging and using skills in the production of the first-to-market, all-electric pick-up truck, the Endurance,” says Flannery. “LMC believes that leveraging the region’s experienced, knowledgeable and technologically-capable employee and academic workforce will provide LMC with a significant advantage over any other electric vehicle facility
in the U.S.”
For his part, Burns has often talked on the record about toughness of people in the Mahoning Valley and wants those same qualities incorporated into the Endurance, which will be designed for fleets and other commercial working purposes.
“The Mahoning Valley is beginning to become the ‘Voltage Valley,’” says Burns. “We really think this is an opportunity to claim that the Midwest is where vehicles should be made. We can’t let California have all the fun.”
“The effect of Lordstown Motors on the Youngstown/Mahoning Valley will be considerable, bearing in mind the initial 2020 employment estimate of more than 400 with the related economic multiplier effect,” adds Flannery. “This is even being felt already in the local community with the reopening of offices and the re-establishment of contact with local vendors while the company prepares the Lordstown facility for production. In addition, LMC will eventually have a number of suppliers manufacturing certain components on-site in Lordstown.”
News of the LG Chem/GM JV and LMC plant, as well as the potential creation of the “Voltage Valley,” are music to the ears of Humphries at the Regional Chamber, as well as other local government officials. LMC officials are quick to praise the actions of local community leaders in getting the deal done so quickly. Humphries is now doing a little investigating and some math to calculate the increase in employment and its impact on the new “Voltage Valley” — something rarely seen in the Greater Cleveland area.
“We’re not sure how many more people it will be when all is said and done,” says Humphries. “There are basically four components: how many people took GM’s offer to relocate at other facilities; how many people were of retirement age and simply retired; how many people accepted other positions at employers in the area; and then how many people actually ended up in the unemployment line.”
Although Humphries is doing his analysis, he is confident that the predictions of future employment may also draw people into the Valley so they can be closer to the well-paying jobs offered by the two ventures. He is also confident that the area has the resources in terms of its location, infrastructure and workforce training to supply the current needs of the two companies. LMC has already been in discussions with leadership at Youngstown State University to form a partnership that would bring engineering and employee training opportunities to its business, says Flannery.
Naturally, such success stories bring out the politicians, all of whom played some part in bringing those two ventures into the Mahoning Valley. The duo who played the most important role could be Gov. Mike DeWine and Lt. Gov. Jon Husted.
“I know that even before he was even identified as our governor, Mike DeWine was already working on this,” says Humphries. “I know because I had personal meetings with him the summer before he ever got elected.
“He was working on doing something with the facility back then, and now he has Lt. Gov. Husted working with him on it as well. I still get at least two calls from the lieutenant governor every week, just checking up on the progress.”
This gives the story two potentially very happy endings, at least for now.
Eighty-four miles to the west, the Ohio Assembly Plant expansion would certainly be beneficial to the city of Avon Lake. However, both Esborn and Mayor Zilka are quick to note that the entire area would benefit if Ford moves forward with expansion plans and investment, which it may do in the very near future.
However, the real winner, in terms of an actual plant expansion and subsequent direct employment, might not be Avon Lake, but Sheffield Village. Fifty-two percent of the land owned by Ford at the site is actually a part of Sheffield Village.
John Hunter, mayor of Sheffield Village, knows the plant well.
“I was the president of the Local for 14 years before I left,” Hunter says. “In fact, I was the first charter member of UAW Local 2000 and was chairman of the plant in 1973.”
He was also the first employee to walk through the plant’s doors.
“Am I excited about a plant expansion? Obviously. Any time we can bring jobs into Lorain County, I am pleased, so when I heard the news, I was elated,” says Hunter. “But, I also don’t make announcements for the UAW or Ford. I haven’t been contacted yet, but I suspect a large part of what they do will be in Sheffield Village.”
So, when does the mayor think he’ll know when plans are concrete? He expects it might be as early as April or May.
“When they come into our office looking for building permits, that’s when we’ll know for sure,” the mayor says.
Ultimately, it is a tale of two cities. One whose demise has been grossly exaggerated, the other whose good fortune might be a bit premature. However, both stories are indicative of just how much the regional economy depends on the automotive industry and automotive manufacturing in particular.