GM's U.S. hourly workers eligible for up to $10,250 in profit-sharing for 2021
Come their Feb. 25 paychecks, approximately 42,500 U.S. hourly workers at General Motors Co. will receive up to $10,250 in profit-sharing based on the Detroit automaker's strong 2021 financial results, the company announced Tuesday.
But workers at one plant that was idled for long stretches last year because of semiconductor chip shortages may not share in the full payouts — a prospect the automaker and the United Auto Workers sidestepped on Tuesday.
Despite GM's strong financial results, workers at the company's Fairfax Assembly plant in Kansas don't know how much they'll end up getting, and some are concerned it will be substantially less than $10,250. Extended downtime at the plant due to the chip shortage means many workers there were unable to meet the hours needed to be eligible for full profit-sharing payments. GM and the UAW said Tuesday they're in discussions on the issue but did not offer details.
GM reported pre-tax earnings in North America of $10.3 billion in 2021, a year in which auto production around the world was hampered by a global semiconductor shortage. The shortage forced many manufacturers to slash production, pushing new-vehicle inventories to historic lows and pushing prices to all-time highs — in turn underpinning automakers' profitability.
GM, for example, on Tuesday reported $10 billion in profit on revenue of $127 billion, up from 2020's $6.4 billion in profit on $122 billion in revenue.
“General Motors is proud to provide our hourly employees with among the highest profit-sharing payments in the auto industry," company spokesman David Barnas said in a statement. "In fact, eligible hourly employees have earned more than $72,000 each in profit sharing since 2015.
"The results we are achieving today are helping secure a strong future for all of our employees as we continue to invest billions of dollars in our U.S. manufacturing operations and create thousands of jobs across the country.”
Hourly workers receive $1,000 for every $1 billion GM makes in North America. They receive the full amount if they work 1,850 hours or more during the year, according to the contract between GM and the UAW. Last year, employees were eligible for up to $9,000 after GM made $9 billion in pre-tax earnings in North America in 2020. That was up from payouts of about $8,000 the year prior.
"It's always good to see more money go to Michigan workers," said Erik Gordon, a professor at the University of Michigan's Ross School of Business, via email. "And they spend most of their money at Michigan businesses."
Rival Ford Motor Co. is slated to release its 2021 financial results Thursday. GM and Ford have the same profit-sharing formula. Ford last year paid out up to $3,625 to eligible hourly workers, down 45% from the year before.
Operating in 2020 as Fiat Chrysler Automobiles NV, the transatlantic automaker Stellantis NV's profit-sharing payouts for that year averaged $8,010 for its 43,000 hourly workers. The automaker is scheduled to detail its year-end results later this month.
GM's Fairfax plant, which builds the Cadillac XT4 and Chevrolet Malibu and employs about 1,800 people, was down 32 weeks in 2021 because of the chip shortage. GM, like some of its competitors, kept more-profitable full-size pickup truck and SUV plants running as much as possible throughout 2021, allocating scarce chip supplies to those plants rather than plants like Fairfax that build lower-margin vehicles.
GM on Tuesday did not specify how it would handle profit-sharing payouts to Fairfax workers, but said in a statement that it "has developed a plan to recognize Fairfax team members impacted by the extensive downtime (32 weeks) in 2021. There will now be discussions with the UAW around the details and next steps."
In the past, adjustments have been made to compensate workers in years when profits were affected through no fault of their own. When GM's earnings took a hit in 2014 by recalls affecting 30 million vehicles, including those with the deadly ignition switch failure, the Detroit automaker gave autoworkers up to $9,000 in profit sharing — more than what was contractually obligated. The payment should have been about $2,400 smaller, the New York Times reported in early 2015.
"GM could rack up goodwill worth far more than the cost of sharing generously with the Fairfax workers who didn't cause the chip shortage, and other UAW members could show solidarity with their Fairfax brothers and sisters by sharing some of their bonus money," said Gordon.
Meanwhile, UAW Vice President Terry Dittes, director of the union's GM department, said in a statement Tuesday that UAW leaders "continue to talk to our local unions and General Motors about some of the unforeseen challenges UAW members faced this year.”
"This benefit was achieved through collective bargaining and our UAW members have earned a share of the prosperity that their skill, hard work and dedication created," he said.
Justin Mayhugh, who works in the Fairfax plant's trim department, told The Detroit News he hopes to see the company and the union agree to a payment as close to the full profit-sharing amount as possible. He's expecting a smaller amount, but feels it would be fair to give Fairfax workers the full $10,250 because the plant was down through no fault of their own, and the temporary layoffs were challenging for workers there.
“Ideally, I’d like to see the full profit-sharing, because it was GM’s decision to idle our plant for so long," he said. “We feel like, if we could have been in here working every day, we would have been, all year long."
"I know people are buying a lot of cars, so it’s not like they didn’t need the cars we build," he added. "GM always talks about us being a team, and Fairfax sacrificed a lot last year.”