Retailers buoyed by auto bonus bucks

Brian J. O'Connor
Detroit News Finance Editor

The timing of an estimated $488 million in autoworker bonuses being paid out in Michigan couldn’t be better for the people who sell motorhomes.

Wednesday’s announcement that United Auto Workers members will get $11,000 from General Motors Co. followed earlier notices that Ford Motor Co. workers will get $9,300, and Fiat-Chrysler hourly staffers will receive $4,000. All those bonus reveals came just days before the Detroit Camper & RV Show opens Wednesday in Novi.

“I’ve been told numerous times what a shot in the arm it is,” said Tim DeWitt, executive director of the Michigan Association of Recreation Vehicles and Campgrounds, which produces the show for 13 RV dealers and 65 campground operators. “We’ve been watching the reports of all the Big Three releasing their numbers on their bonus checks, and I will tell you, it does happen.”

Even at the shallow end of the bonus pool, the extra money is enough to spark an RV purchase, said Dennis Anderson, marketing director at General RV Center in Wixom.

“Four thousand dollars will get you into any trailer that you want,” Anderson said. “Every year, it absolutely plays a role around when they get the bonuses.”

Steve Kopitz, chairman of the three-store Summit Sports chain in Oakland County, said he expected a bump as well.

“We’re a big-ticket purchase, especially our two biggest categories, which are skis and kayaks,” Kopitz said. “With those kind of amounts, it should help out in-store sales.”

The recreational vehicle industry and others who make and sell big-ticket leisure items such as boats, ski gear and snowmobiles look forward to bonus season because consumers need to have a a healthy amount of discretionary cash available to feel comfortable making that kind of non-essential purchase.

But that doesn’t guarantee that all those dollars will be spread around.

“People look at the check as a nice little bonus, but I don’t think they’re overly impressed by it,” said Alex Wassell, a 32-year veteran UAW skilled tradesman who works at Fiat-Chrysler’s Warren Stamping Plant. “A lot of people bank it or they put it in their 401(k)s, and others take care of current expenses.”

While it’s nice to get the extra cash, the bonuses aren’t guaranteed every year and amounts aren’t consistent. None of the automakers paid bonuses from 2006 to 2008. At other times, the payouts have fluctuated from as much as GM’s $11,000 this year to as little as $160 Ford granted in 2002.

“It’s been a sort of a wageless recovery and people need a little bit more in their pocketbooks to make things work,” Wassell said. “I believe people would have much preferred a big raise in their paycheck every week than a bonus once a year that may or may not reflect all the hard work they do. There’s no euphoria in the plant over it.”

Even though the total of all auto bonuses amounts to less than one one-thousandth of a percentage point of Michigan’s gross domestic product, if the extra cash boosts the confidence and sense of financial security of the autoworkers who get those checks, it will be reflected in the state economy, noted Kurt Rankin, an economist with PNC Bank.

“We’re starting to see sustained confidence that low gas prices are here to stay for the next year to two years,” Rankin said. “Whereas last year, a bonus of this size would have been saved, this bonus could go back into the economy and support some job growth, especially in industries such as leisure and hospitality or construction.”

One area where a bonus might show up is in home sales, Rankin added. Mortgage interest rates are staying low, and the added payouts can give potential home buyers who’ve been sitting on the sidelines the final shot of cash they need for a down payment before home prices and mortgage rates head up.

“With the fundamentals of the U.S. economy not facing a deterioration and no concerns about the economy taking a turn of the worse, this could kick off sustained growth through the year, as opposed to being a one-time shot in the arm.”

Whether the extra money ends up in the bank, paying off bills or going for the splurge, the bottom line is that there’s no real downside to a bonus.

“Bonus time always seems to make people smile a little more,” Rankin said. “Any wage growth or income is good.”

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