Workhorse To Meet With Postal Service Over Lost Contract
Washington, D.C. — Last week, a small company that builds electric delivery trucks lost a contract with the United Postal Service. The United States Postal Service released a statement Monday that they would meet with the company, Workhorse Group, on Wednesday to talk over the decision.
After the United States Postal Service chose a competing company, Oshkosh Defense, for the bid to replace the fleet of over 229,000 right handed delivery trucks, shares for Workhorse have plummeted.
Chief Executive for Workhorse Duan Hughes had this to say about the situation, “This is not the result we had anticipated or hoped for. We intend to explore all avenues that are available to us.”
Hughes noted that the company is speaking with separate “parties and groups” without giving insight how Workhorse might convince the United States Postal Service to reconsider the decision. There has been a backlash from environmental groups and some lawmakers because many of the trucks under the bid with Oshkosh Defense will run on gasoline.
A major factor in the chances for a second bid opportunity for Workhorse relies heavily on whether the Biden Administration will remove the Postmaster General, Louis DeJoy, from his position. The Trump Administration instated Mr. DeJoy to the post in 2020. Since taking the post, Mr. DeJoy has taken steps in the name of efficiency and cutting overtime. Because of these decisions, many critics have stated there was a direct correlation in the significant delays in letter and package deliveries that are affecting the Nation as a whole.
Counteractive to the new executive order issued by the Biden Administration to replace the federal fleet vehicles that number over 645,000 with electric vehicles, Mr. DeJoy chose Oshkosh Defense to award the bid. This is a contract that is valid for ten years and is valued at $482 million. Oshkosh offered the production of gasoline-powered vehicles that could later be converted to run off battery power.
Upon the announcement of the bid decision for the contract, the Biden Administration put forth three new member nominees for the Postal Service Board. This board has the executive power to fire the Postmaster General.
Mr. Hughes made this remark after the Biden Administration’s involvement. “I think what you’re seeing is a speedup in what President Biden is doing to put the board of governors together in such a way to support his plan going forward.”
In anticipation that they would receive at least a partial contract with the United States Postal Service, Workhorse saw the company share price rise to more than $40 at the start of February, when it was less than $2 per share a year ago. When it was announced that Oshkosh Defense won the contract, Workhorse Group saw the value of their stock cut in half.
With a profit of $69.9 million in 2020, due mainly to the ten percent state the company owns in Lordstown Motors, worth $323 million. Lordstown Motors is a start up for an electric pickup truck founded by the former chief executive of Workhorse. As of Monday afternoon, Workhorse was trading shares at around $16.60, which is up roughly three percent.
With orders for about 8,000 electric delivery vans, Workhorse has struggled to ramp up productions. In the fourth quarter, the company produced only seven trucks. This was due to temporary halting of operations after nearly a third of their employees tested positive for COVID-19.
Currently, the company is hoping to increase production to three trucks per day by the end of the month, with a goal of ten trucks per day by the end of June.