General Motors Co. and Ford Motor Co. hourly workers likely will receive profit-sharing checks this year that are lower than the record amounts paid last year because of high recall costs and vehicle introductions.
But UAW-represented workers at FCA US LLC, formerly Chrysler Group LLC, could see checks of a similar amount or receive small increases over last year, possibly the highest payment for those workers under the UAW’s four-year contract that expires in September.
Payments for GM and Ford employees likely will remain more than double that of FCA US workers because of its lower margins. The three companies in total employ more than 135,000 hourly workers in the U.S. More than 40 percent work in Michigan. Almost all are eligible for profit sharing.
Last year, Ford hourly workers received up to $8,800, GM employees received up to $7,500 and FCA workers received up to $2,500 (with another $1,000 if plant targets were met). Check amounts likely will be down for GM and Ford by more than $1,000,
Profit sharing, typically paid at the end of February or early March, is based on each of the automakers’ North American pre-tax profits.
Ford will release its full-year profits Thursday. GM’s earnings come Feb. 4. Results for Fiat Chrysler Automobiles NV, parent company of FCA US, are released Wednesday, but the profit-sharing amount isn’t expected to be known until the domestic unit releases earnings Feb. 3.
The UAW and Detroit automakers would not directly comment when asked by The Detroit News whether an agreement had been reached on recall costs so as not to impact profit-sharing.
“Our members bargained in good faith with the auto companies, helped produce these record profits and it is not only fair, but right that our members should be rewarded for their loyalty, sacrifices and hard work,” read an emailed statement to The News from UAW President Dennis Williams on Tuesday.
In December, Williams said the union was “in continued discussions about the profit sharing versus the recall.” He did not provide details about the discussions. It’s likely the union is arguing that the cost of the recalls — many of which are for older models — shouldn’t take a bite out of members’ profit-sharing checks.
“Everybody got hit by recalls. Some more than others,” said Kristin Dziczek, Center for Automotive Research director of the Industry & Labor Group. “We also lost some production with retooling plants, and that also costs money to invest in the plants here.”
In a statement Tuesday, GM said until its year-end financial results are released, it “will not speculate” on a possible profit-sharing payout.
Through the third quarter, GM North America earnings before interest and taxes totaled $4.39 billion, down from nearly $5.6 billion in the same period in 2013. Analysts expect GM’s recall costs — which tallied $2.7 billion through the third quarter — will drive down North American profits and ultimately, how much ends up in autoworkers’ pockets.
Some analysts predict GM’s North American pretax earnings could reach about $6.3 billion for 2014, with a stronger fourth-quarter performance than in 2013. That would give workers checks of around $6,300, or about $1,200 less than last year.
In 2013, GM North America’s pretax earnings reached a record $7.5 billion.
UAW Local 2209 President Brian Hartman said hourly workers he represents at GM’s Fort Wayne Assembly Plant are awaiting word on bonus checks. GM has about 50,000 hourly workers in the United States, including about 19,000 in Michigan.
“They’re sitting waiting and watching just like everybody else is,” Hartman said.
Ford’s pre-tax North American profit through the third quarter also was down compared to the same months in 2013. The automaker’s North America region had posted a profit of $5.35 billion through the first nine months in 2014, down about $1.7 billion from the same period in 2013.
Ford’s fourth-quarter profits are expected to decline compared to a year ago because of recall costs and lower production volumes. Production was curtailed for the highly profitable F-150, so plants could be retooled for the 2015 pickup.
Ford has 50,000 U.S. hourly workers, including 22,500 in Michigan; FCA US has 35,700 U.S. hourly workers, with about 16,000 in Michigan.
FCA US saw overall operating profits rise about 20 percent through the first three quarters of 2014 to $2.5 billion. If it meets its predicted yearly guidance of $3.7 billion-$4 billion in pre-tax profits, eligible hourly union members could receive up to $3,000, or up to $3,250, respectively.
At FCA US, workers get $1 for every $1 million in profits, based on 85 percent of worldwide operating profit of FCA US. That percentage represents North American operations for FCA US.
At GM and Ford, payments are based on North America pre-tax profits. Eligible employees get an average of $1 for every $1 million.