GM reports 104 percent increase in earnings
By Kalea Hall
LORDSTOWN
General Motors’ 104 percent year-over-year increase in third-quarter earnings is good news for the automaker and its workers.
The company reported Tuesday total net income of $2.77 billion, compared with $1.35 billion in the third quarter of 2015.
“We are on track to deliver a record 2016 on top of a record 2015 and very strong 2014,” said Mary Barra, GM’s chairwoman and chief executive officer, during an earnings conference call.
In North America, GM’s earnings before tax and interest were $3.48 billion, compared with $3.29 billion in the third quarter of 2015.
“It’s always good when our company is making money,” said Glenn Johnson, president of United Auto Workers Local 1112, which represents 3,000 assembly plant workers at GM Lordstown.
For every billion made in North America, GM gives $1,000 to its hourly employees in profit sharing, according to the automaker’s contract with the UAW.
In 2016, the company made $11 billion in the U.S., and 49,600 GM U.S. hourly employees were eligible to receive up to $11,000 – the most employees ever received in profit sharing.
But this year could top that.
For the first nine months of the year, the company has made $9.42 billion in North America, compared with $8.25 billion during the first nine months of 2015.
“Each of us prosper if our company does well,” Johnson said.
But profits represent more than money.
“It shows confidence in the products in which we are building,” said Robert Morales, president of UAW Local 1714, which represents 1,400 fabrication plant workers at GM Lordstown. “You want to see the company do well because we are making the cars for the company.”
Total GM sales in five regions were 2.4 billion in the third quarter, up 3.8 percent from last year.
Sales in North America for the third quarter were down 1.2 percent. GM China reported an increase in sales of 17.3 percent.
The automaker is focused on retail sales – or sales to individual customers – more than it is fleet sales.
“Rather than just chasing volume, they are going after more profitable volume, which might lessen overall sales volume,” said Jack Nerad, executive market analyst and executive editorial director at Kelley Blue Book.
Trucks and larger vehicles are what’s leading the charge for GM and other automakers. Kelley Blue Book analysts say the compact-car segment currently makes up 12.42 percent of new auto sales, while the compact SUV/crossover accounts for 17.55 percent and the full-size pickup truck segment makes up 12.55 percent.
“Nobody’s sedans are doing very well,” Nerad said. “It’s difficult for all the manufacturers because they are still geared up to build those sedans.”
The Lordstown-built Chevrolet Cruze is a compact car in its second generation, and its sales have been on the positive side lately. In August, the Cruze saw a more than 50 percent year-over-year increase; in September, it had an 8.4 percent increase.
“Clearly, we recognize the industry is increasingly competitive,” said Chuck Stevens, GM chief financial officer. “We remain absolutely committed to our disciplined retail focus.”
The auto industry could achieve another record-breaking year of up to 17.6 million sales or it could dip down to 17.3 million sales. Last year, the industry had its best year with 17.47 million sales.
“We are in unprecedented territory,” Nerad said. “We are in the seventh year of growth. At some point, they dip.”