GM Will Repay $28 Million Tax Break to Ohio after Closing Plant

  • Ohio has ordered General Motors to repay $28 million in tax breaks because it didn’t fulfill plans to operate the Lordstown plant until 2037, in addition to investing $12 million in the Mahoning Valley, where the plant is located.
  • GM shuttered the plant in early 2019 after it discontinued the Chevrolet Cruze, which was assembled in Lordstown.
  • GM said it had agreed to repay the specified amount.

    When General Motors decided to build a plant in Lordstown, Ohio, the state gave the automaker a $60 million tax break, contingent on GM’s retaining 3700 employees at the plant until 2028, under the Job Retention Tax Credit. However, GM shuttered that plant in early 2019, and now Ohio is ordering that the automaker pay the state $28 million for reneging on its deal. The payments are due by December 31, 2022.

    Also part of the repayment plan is that GM violated its Job Creation Tax Credit agreement. The deal was that GM would create 200 jobs by 2010—which the automaker did—but also that it would maintain operations at Lordstown until 2037, which it did not. GM said in a statement that it has agreed to pay back the amount requested by the Ohio Tax Credit Authority, and that it will also give $12 million in community support to Mahoning Valley, the area where the plant is located.

    GM vehicle production at Lordstown ended when the automaker discontinued the Chevrolet Cruze sedan amid a push to refocus on larger vehicles, such as SUVs and trucks. The closing of the plant became a point of contention while the UAW was on strike, as up to 4000 people were losing their jobs.

    “While the decision to close the Lordstown plant was terrible news for workers and their families in the Mahoning Valley, today’s announcement will bring relief as well as investment by GM who has committed to investing $12 million in the local community for workforce, education, and infrastructure needs,” Ohio Gov. Mike DeWine said in a statement.

    “Today’s action protects taxpayer dollars, while also allowing for continued investment in the local community,” Lydia Mihalik, director of development and chair of the Ohio Tax Credit Authority, said in a statement.

    Shortly after General Motors decided to end production at the Lordstown plant, it sold the plant to Lordstown Motors, an electric-truck startup. Lordstown recently announced that its pickup, the Endurance, has received more than 40,000 preorders, amounting to over $2 billion in potential revenue for the startup.

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