May 8, 2019 / 4:43 PM / 18 days ago

CORRECTED-UPDATE 1-Under pressure from Trump to save jobs, GM acts in Canada, Ohio

(Corrects Ohio location to Moraine instead of Lorain, paragraph 4)

By David Shepardson and Tyler Choi

WASHINGTON/TORONTO May 8 (Reuters) - Under political pressure not to cut jobs, General Motors Co announced on Wednesday it would maintain some operations at a Canadian factory, and U.S. President Donald Trump touted the automaker's expected sale of its Lordstown, Ohio, plant to an electric truck-building company.

The decisions came after GM faced months of criticism over its plan announced in November to close five North American plants and cut 15,000 jobs. GM's decision to close the small-car Ohio assembly plant in a key state in the 2020 election had already become fodder for several Democratic presidential candidates.

GM did not immediately comment but said it planned to make an announcement later in the day.

Trump, in a tweet, said the sale of the Ohio plant to Workhorse Group Inc will require the approval of the United Auto Workers union. Trump said GM will invest $700 million in three other Ohio facilities and add 450 jobs. A person briefed on the matter said GM will make investments in its Toledo, Parma and Moraine operations.

Trump spoke to GM Chief Executive Mary Barra earlier on Wednesday before the company announced plans to keep some operations in place in Canada.

Trump in June 2017 advised workers in nearby Youngstown, Ohio, that factory jobs were not leaving. "Don't move, don't sell your house," he said.

GM does not yet have a final agreement to sell the plant to Workhorse and there are many issues that will need to be resolved before a sale could be completed, two sources said.

It is not clear how many people Workhorse may employ, whether they would make as much as the UAW workers at Lordstown or if GM will have a continuing business relationship with Workhorse. It is likely it would take at least a year or two before the plant, which halted production in March, could reopen, the sources said.

Workhorse shares jumped nearly 70 percent on Trump's tweet and were briefly halted. At midday on Wednesday the shares were up 43.6 percent at $1.21.

Separately, GM and the largest union representing Canada's auto workers have reached a deal to partly rescue an Ontario car-making plant slated to close this year by turning it into a parts-making facility, the automaker said in a statement.

The transformation of GM's Oshawa site, which would also be used to conduct advanced vehicle testing, would save 300 jobs and have "the potential to grow and generate significant additional jobs in the coming years, as the business attracts new customers," the U.S. automaker said in a statement.

Canadian union Unifor, which had fiercely opposed the shutting of the plant's doors, had previously said the closure was contrary to a contract that stipulates there would be no plant closure.

"There are 300 families that are better off than they would have been in December,” said Unifor President Jerry Dias in Toronto.

Flavio Volpe, president of the Automotive Parts Manufacturers' Association, said, "GM’s decision to keep their Oshawa facility operating is unexpected and allows for the emerging automotive technology ecosystem they are building locally to perhaps lift that region again one day." (Reporting by David Shepardson in Washington, Tyler Choi in Toronto and Allison Lampert in Montreal Additional reporting by Ben Klayman in Detroit Editing by Matthew Lewis)

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