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GM, Ford drive up profit-sharing checks for workers

Hourly workers at General Motors and Ford Motor Co.’s local plants are cashing in on their employers’ profitable 2013.

United Auto Workers members at the three plants will receive profit-sharing checks that combined add up to millions of dollars, generating a potential spending boost for the local economy.

GM hourly workers around the country, including here, will receive pretax profit-sharing checks of up to $7,500 – 11 percent more than last year – provided they met a requirement for the number of hours worked last year. Ford’s workers are receiving pretax checks averaging $8,800 – a 6 percent increase from a year ago.

The profit-sharing system is included in labor contracts between the automakers and the UAW. The payouts resonate in Western New York, home to two GM plants and one Ford plant.

“That will help the businesses around here, so that will certainly help everybody else,” said Arthur Wheaton, an auto industry expert at Cornell University’s School of Industrial and Labor Relations in Buffalo. “Car lots might start seeing a little more action, you might see a little more discretionary spending being able to go on.”

Combine that with people receiving their tax refunds, he said, “that could be good things for the Western New York economy.”

At GM’s components plant in Lockport, 780 regular full-time employees will receive the full $7,500, said Mary Ann Brown, a GM spokeswoman. That adds up to a combined payout of $5.85 million. Other eligible hourly workers who were on the Lockport plant’s payroll as of Dec. 31, but whose compensated hours fell below the contract’s requirement, will receive pro-rated amounts.

GM could not provide a figure for how many of the Tonawanda engine plant’s workers will receive the full $7,500. The plant had about 1,600 hourly workers at the end of 2013.

About 600 hourly workers at Ford’s parts stamping plant in Hamburg will receive profit-sharing checks of differing amounts, said Kristina Adamski, a Ford spokeswoman. Salaried workers there will receive undisclosed bonus payments.

Wheaton said the profit-sharing checks are a good sign of the health of the U.S. auto industry, as well as a boost for the UAW after losing the vote at a Volkswagen plant in Tennessee.

U.S. automakers have negotiated providing profit-sharing systems with workers in contracts as an alternative to wage hikes in contracts, to limit fixed labor costs from year to year.

“I think that’s going to be the trend [for workers] in the future,” Wheaton said. “I think they’re going to have more at-risk pay, so that in good times they get more money and in bad times they’re not an unnecessary burden on the company.”

The system also gives the workers a direct financial stake in the automakers’ performance. “Now if you can have GM become more profitable or Ford become more profitable, you actually share in that,” Wheaton said. The automakers have also simplified their formulas to make it clear to the workers what they stand to gain, based on their employers’ North American results.

Across GM, the automaker said 48,500 hourly workers were eligible for profit-sharing checks of some amount. GM in 2013 reported a record-high $7.5 billion North American operating profit, the figure which was used to determine the amount of the profit-sharing checks. The automaker’s white-collar workers are also receiving bonus payments, but those amounts were not disclosed.

GM workers’ maximum profit-sharing checks last year were $6,750, so this year’s amount increased 11 percent.

Ford’s formula generates a profit-sharing pool based on $1 for every $1 million of North America pretax profit and compensated hours worked by employees. Ford North America’s pretax profits of $8.8 billion are translating into record-high profit-sharing checks averaging about $8,800 for its 47,000 eligible hourly workers. Ford said its recipients’ amounts may be higher or lower based on their individual number of compensated hours. The workers are due to receive their payments on March 13.