After promises of new jobs, former GM plant remains empty

Elio Motors by the numbers
Former General Motors plant where Elio Motors plans to produce its 3-wheeled vehicle. (Source: Eric Pointer/ KSLA News 12)
Former General Motors plant where Elio Motors plans to produce its 3-wheeled vehicle. (Source: Eric Pointer/ KSLA News 12)
(Source: Eric Pointer/ KSLA News 12)
(Source: Eric Pointer/ KSLA News 12)

SHREVEPORT, LA (KSLA) - It's been 4 years since the General Motors assembly plant in Shreveport shut down. And when those doors shut, hundreds of jobs disappeared.

Caddo Parish bought the plant 3 years ago to try to bring jobs back. Today, the plant is still empty.

The promise of more jobs was the driving forces behind the Caddo Commission's decision in 2013 to use public money to buy the GM plant for $7.5 million.

"We were told we were doing this for jobs, jobs, jobs and those jobs were supposed to materialize a long time ago and they haven't materialized," said Caddo Commission President Commissioner Matthew Linn.

About 100,000 square feet of the facility is leased to Elio Motors, which promised to bring 1,500 jobs to build their 3-wheeled vehicle. They are held to that job promise by RACER Trust and must meet a deadline or else face financial penalties. RACER Trust is the organization that acquired the plant then sold it after GM went bankrupt.

According to Elio Motor's most recent filing with the Securities and Exchange Commission, the company has zero revenue. Elio has been using money from selling equipment from the Shreveport plant, stocks, loans, and vehicle reservations to fund the company. Their operating expenses skyrocketed by 341 percent for the first 6 months of this year compared to last.

Here is a snapshot from their SEC filing of what they spent their money on this year compared to last:

  • Engineering, research and development increased by $11.4 million dollars.
  • General and administration expenses increased by $1.89 million.
  • The company also spent an extra $1.3 million on sales and marketing.
  • The company's accumulated deficit is more than $111-million dollars.

Despite the staggering debt, the SEC filing also reveals Paul Elio has been paid a salary of $250,000 a year for the past three years. Two other board members also are making six-figure salaries, including one who received a $25,000 raise this year.

In addition to his salary, Elio received a cash advance of $74,966 in 2014. In 2015, he received a cash advance from the company of $328,014. According to the SEC filing, Elio paid back his advances in May 2016.

The company claims it needs $312 million more to fund the completion of prototypes, testing, tooling and facility fit-up in order to move into production.

According to the document, Elio says his team is working to raise the money and taking steps closer toward production. Currently, prototypes of the 3-wheel car are being built in Detroit.

Considering Elio is only leasing a portion of the plant, why hasn't the rest of the Shreveport plant been leased yet?

To try to understand who is actually behind the wheel here, you have to look at the power structure.

The Caddo Commission appoints members of the Industrial Development Board (IDB). The commission gave the green light for the IDB to purchase the plant. From there, the IDB then leased the building to Industrial Realty Group (IRG), also known as Shreveport Business Park LLC. That company is tasked with finding companies to sublease and fill the plant with jobs.

Stu Lichter is the president of IRG and serves on Elio's board as a director. Licther is a huge financial backer for the company. He told KSLA News 12 in 2015 that, besides Elio, there are "3 very serious potential users" for the plant. "Dozens and dozens of companies have been through that facility," Lichter said over the phone last year. But when KSLA News 12 called to follow up for this story, he did not return our call.

Linn thinks the commission has little control over what happens to the plant since the IDB handles that. "We are being told, as a body, we have no input as to what the IDB does. Then the IDB is told that they have to listen to us. Then I'm wondering who is really handling the direction of the IDB."

A recent audit classifies the IDB as a "component unit" of the commission.

"A lot of people don't know what they [the IDB] do. A lot of people don't know where we meet. A lot of people don't know what is going on," Commissioner Steven Jackson said. "A lot of people don't know that this board has the ability to redirect millions of local tax dollars."

Jackson introduced an idea during a commission work session Oct. 3 to require the IDB to hold its board meetings in public places to help with transparency. Currently, the IDB holds its meetings at Superior Steakhouse in Shreveport.

"You had the Elio Motors deal, you had CPERs, you had a lot of things taking place outside of the public eye. And we need not be reactionary, as opposed to being proactive."  But Jackson was met with resistance.

Parish attorney Donna Frazier advised the commission not to interfere.  "This is a slippery slope for you all to go down for all boards," she told commissioners. "This is not something there is legal precedence for, and I think it is also something that will hurt you in the long-run."

Assistant Parish Attorney Henry Bernstein also emphasized to the commission that the IDB operates independently. He explained the IDB insulates the commission from liabilities. "Statutorily, the way it is set up, it is clear once this entity is created as a separate non-profit corporation, it goes off and does business on its own," Bernstein told the commission.

Ultimately, Jackson's action failed to get enough votes. "I'm deeply disappointed that more of my colleagues didn't support it. It seems like they are for good government one day, or at least they say they are for good government one day, then the action is, let's do something else."

IDB attorney David Wolf told KSLA News 12 that although Jackson's suggestion failed to get enough votes, the IDB board took note. "The IDB members heard what he has to say, and future meetings won't happen at Superior Steakhouse," said Wolf, adding that the consensus is the board should have its meetings in a government meeting room moving forward. Wolf also said the public is always welcome to its meetings.

As far as filling the plant with jobs, if the commissioners have no control over the IDB, then Linn says the commission has no power to fix the problem.  "Ultimately, until the commission body has 7 votes demanding control, then there is nobody in charge, except for administration, the IDB and, I guess, the Shreveport Business Park."

Mark Jones has owned J-Mart Chevron for 31 years. The shop is around the corner from the former GM plant in west Shreveport.

His business has suffered as a result of the plant closing.  "Business was much better before it closed, you know. We had a whole lot more traffic. My business has dropped tremendously."

Jones said the loss of business has caused him a lot of stress and has him wondering why jobs have not returned to the plant.

"I just wonder what is going on? It just seems like ignorance or corruption or both. I don't know what to say."

Until the plant is filled with businesses again, the people ultimately feeling the burn are people like Jones and others who need work. "I thought for sure we would have some jobs out there by now."

For him, the constant promise of the return of jobs has him feeling disillusioned. "Nothing ever happens, I'm kind of beside myself, I mean all I can do over here is keep cutting expenses and, finally, I'm not going to have any more to cut."

As tough as it is, Jones said he's trying to stay afloat.  "I am holding on because I have hope, I'm trying to stress positive thinking."

To date, according to the SEC filings, Elio Motors has continued to defer lease payments on the Shreveport plant. IRG has granted Elio Motors another extension that will end in July 2017.

RACER Trust sued IRG/Shreveport Business Park in August 2015.  According to that petition, RACER Trust took issue with Elio Motors' sale of movable (machinery, equipment trade fixtures, vehicles, etc.) and immovable property at the plant. Essentially, RACER Trust sued because it believed some of the material removed from the plant may not have fallen under its agreement with Elio Motors and IRG/Shreveport Business Park.

That lawsuit reportedly is pending a settlement.

A RACER Trust spokesman, citing pending litigation, refused to comment.

The IDB reportedly will receive $100,000 of any settlement money. However, Wolf also declined to comment with details.

Calls to IRG have not been returned.

The issues surrounding the former GM plant and the lack of jobs have caught the eye of Louisiana lawmakers.

Rep. Thomas Carmody, chairman of the state Committee on Commerce, will tour the facility Oct. 26 and afterward will meet with local and state leaders to get more information about the situation.

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