GM, Ford workers to see big profit-sharing checks
Business in North America has been very good for General Motors and Ford. As a result, hourly workers at GM can expect as much as $7K in March. Ford workers may get more than $8K.
The United Auto Workers has told its members at General Motors (GM) and Ford Motor (F) to expect big profit-sharing checks early next year. According to The Wall Street Journal, Ford workers can expect $8,000 each. GM workers can expect as much as $7,000.
Details were not available for workers at Chrysler Group.
Last year, GM paid out $7,000 in profit-sharing, while Ford awarded about $6,200. About 26,000 Chrysler workers received around $1,500 each in profit-sharing checks.
For the GM and Ford workers, the profit-sharing checks will represent 11% to 14% of the typical autoworker's annual wage of about $58,500. For entry-level workers, it's a much bigger percentage of their wages.
The profit-sharing checks are a sign of how far the domestic auto industry has come back from the 2008-2009 financial crisis. GM and Chrysler were forced into Chapter 11 bankruptcy to reorganize their finances. Thousands of workers lost their jobs.
The UAW agreed to cost concessions at Ford, GM and Chrysler. The key provision was a new $14 hourly wage for entry-level workers -- half of what veteran workers had been making. The union also gave up some health benefits and cost-of-living pay adjustments, with profit sharing negotiated to help offset the cuts.
Profit-sharing bonuses for GM and Ford workers are based on how much operating profit the two companies make in North America. In the first three quarters of 2012, GM's North American unit made $5.55 billion, while Ford's North American business earned $6.47 billion. Both are expected to post substantial profits for the fourth quarter, too. Barclays forecasts Ford will generate another $1.89 billion in North America for the quarter. Because of that success, about 50,000 GM hourly employees will likely receive payments ranging between $5,500 and $7,000 each, The Journal said. Ford's eligible hourly workers, estimated at 44,000, could get paid more than $8,000 each. The estimates are based on terms of their UAW contracts that essentially have eligible workers receiving $1 extra for every $1 million in operating profit Ford or GM generates in North America.
The final amounts won't be known until both companies close out the fourth quarter and announce their financial results. Checks would go out in March.
Edmunds.com is forecasting that automakers will share a 1.36 million annualized sales rate for December, up 9.6% from a year ago and up 19.1% from November. For the year, the industry will probably sell 14.5 million cars and light trucks, up 13.5% from 2011 and the best performance since 2007.
The health of the North American business is in sharp contrast to heavy losses the companies are suffering in Europe.
Sales growth may soften in 2013, Edmunds says.
GM shares were up 6 cents to $27.72 at 1:15 p.m. ET on Wednesday and are up nearly 37% in 2012. Ford shares were up 12 cents to $12.52 and are up nearly 17%.
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