GM profit share expected to boost local economy

By Kalea Hall | February 4, 2016 at 12:07a.m.

LORDSTOWN

General Motors Lordstown Assembly Plant hourly workers will receive the biggest profit-share paycheck from their employer this year in the amount of $11,000.

“I am excited for the members and for the company,” said Glenn Johnson, president of the United Auto Workers Local 1112. “It’s an outstanding and legendary turnaround [GM] has done since coming out of bankruptcy.”

On Wednesday, the Detroit automaker reported total 2015 net income of $9.7 billion compared with $2.8 billion generated in 2014.

Full-year earnings before interest and tax rose to $10.8 billion, up from $6.5 billion reported in 2014.

GM North America’s earnings before interest and tax hit $11 billion, up from $6.6 billion reported in 2014.

For every billion made in North America, GM gives $1,000 to its hourly employees, according to the automaker’s contract with the UAW.

About 49,600 GM U.S. hourly employees are eligible to receive up to $11,000 in profit share. Last year, employees received up to $7,500.

Johnson explained to receive the full amount, an employee must have worked the full year prior for a total of 1,850 hours. Anyone who hasn’t worked that full amount will receive a prorated share.

Temporary workers are not eligible to receive profit share.

UAW Local 1112 has about 2,900 to 3,000 members who work on the assembly side of the GM Lordstown plant where the compact car, the Chevrolet Cruze, is built.

The majority of Johnson’s membership will receive the full $11,000.

“Ultimately, it will continue to drive the economy in the [Mahoning] Valley,” Johnson said.

The 1,400 members of the United Auto Workers Local 1714, who work on the fabrication side of the Lordstown plant, are also all mostly eligible to receive the full $11,000.

“We want to give the credit to the membership for going out there and being dedicated to their jobs,” said Robert Morales, president of Local 1714.

In 2015, GM reported its third-consecutive year of record global sales with a total of 9.8 million vehicles sold in 2015.

North American sales increased 6 percent in 2015 with 3.6 million sales in cars, trucks and crossovers.

Chevrolet saw North American sales increase 6 percent and its retail market share in the U.S. grew faster than any full-line automotive brand, with total sales up 5 percent to more than 2.1 million cars, trucks and crossovers.

“GM has listened to its customers,” Morales said. “GM understands that for us to be essential, we have to move with times.”

People want to buy a quality car that offers enhanced technology and safety.

“The members of the UAW are committed to building that, and I think GM is committed to giving us the opportunity to build that car,” Morales said.

Johnson also believes the automaker is “staying ahead of the game” with its vehicle lineup, especially the all-new next-generation Cruze hitting sales floors this spring.

“I think [GM’s] styling has caught everyone off guard from what it used to be,” Johnson said. “Specifically in the Chevy line. [These are] small cars with big-car features.”

If 4,000 workers at the Lordstown plant receive $11,000 that means the area will see an influx of $44 million into the economy.

“That’s a lot of money being injected into Youngstown’s economy,” said Mekael Teshome, PNC Bank economist. “Some of it will be saved, and some of it will be spent. I would expect it to boost consumer spending.”

More spending at local establishments could then translate to more local jobs.

“In Youngstown’s case, it is a much-needed boost,” Teshome said. “We have been flat in terms of jobs for a long time.”

The Lordstown plant is listed by the Youngstown/Warren Regional Chamber as one of the area’s largest employers. It is “significantly vital” to the area’s economy, said Sarah Boyarko, senior vice president of economic development for the chamber.

“We always want to strive for our residents to make the most they can,” Boyarko said. “It goes full circle. That, in turn, supports other local business. It grows the economy.”

Excluding special items, GM earned $5.02 per share for the year, beating Wall Street estimates of $4.82. Full-year revenue fell just over 2 percent to $152.4 billion, but still beat analyst estimates of $144.9 billion.

For the fourth quarter, GM posted a profit of $6.3 billion, including the accounting gain in Europe. GM expects to break even there this year and took the gain because prospects for making money are good.

Contributor: The Associated Press