GM Said to Pay Workers Bonuses of More Than $3,000

GM Said to Plan Bonuses of More Than $3,000
A worker welds the frame of a General Motors Co. (GM) Chevrolet vehicle. Photographer: Marcos Issa/Bloomberg

General Motors Co. may pay its 53,000 unionized hourly U.S. staff record profit-sharing checks of more than $3,000 per worker, two people familiar with the plan said.

The company hasn’t determined a specific amount and may change its plans after completing accounting for 2010, said the people, who asked not to be named because the plans haven’t been publicly disclosed. GM’s previous highest payout was $1,775 in 1999, according to the Center for Automotive Research.

Sharing the U.S. auto industry’s prosperity will be a focus of contract talks this year between the United Auto Workers and GM, Ford Motor Co. and Chrysler Group LLC. UAW President Bob King has said he aims to recover some of the $7,000 to $30,000 in concessions each worker gave up since 2005 to help U.S. automakers survive the worst market in decades.

“This is probably more than workers were eligible for so that they’ll feel good going into negotiations, which makes this a pre-signing bonus,” said Sean McAlinden, a former auto worker who’s now chief economist for the Center for Automotive Research in Ann Arbor, Michigan. “Lump-sum payments like this could make up 12 percent to 15 percent of compensation in the next contract.”

GM rose 19 cents to $36.89 at 4:15 p.m. in New York Stock Exchange composite trading. The Detroit-based company’s shares have climbed 12 percent from their $33 price in an initial offering last year.

Ford, Chrysler

Ford, the only major U.S. automaker to avoid bankruptcy in 2009, said Jan. 28 it will pay its 40,600 hourly workers an average of $5,000 in profit-sharing checks. Ford posted 2010 net income of $6.56 billion, the most since 1999.

Chrysler, which lost $652 million in 2010, said last month it would give its unionized workers bonuses averaging $750.

The U.S. automakers are awarding bigger bonuses than profit-sharing formulas require to set the stage for talks on contracts expiring in September, said Harley Shaiken, a labor professor at the University of California-Berkeley.

“With these profit-sharing checks, it’s the hope of all three automakers that they are making a down payment on a more incentive-based pay system,” Shaiken said. “All three automakers have a desire to move in the direction of a heavier reliance on profit sharing for overall compensation.”

King has said he is willing to consider a new formula for profit sharing. His membership may want more than bonus checks for the role they played in helping the industry survive, said Gary Chaison, a professor of industrial relations at Clark University in Worcester, Massachusetts.

Reversing Concessions

“This won’t placate the union; there will be tremendous pressure to reverse concessions,” Chaison said. “They’ll argue that if times are good enough for profit sharing, then times are good enough to return to the past.”

The UAW will seek to restore annual raises to base pay and may ask to revive yearly cost-of-living increases, Chaison said.

Ford last year restored raises for its 20,000 salaried U.S. workers, which triggered a grievance filing from the UAW accusing the automaker of violating an “equality of sacrifice” pledge. On Jan. 13, Mark Fields, Ford’s Americas president, told salaried workers there would be no raises this year.

“These negotiations will be tense,” Chaison said.