GM Recalls May Impact UAW Profit-Sharing Payout - CEO

By Jeff Bennett

General Motors Co. (GM) Chief Executive Mary Barra told reporters Monday that recall costs will play a factor in how much the auto maker will reward its union workers in profit-sharing checks next year.

Ms. Barra said the charges the company taken to cover the expenses associated with recalling more than 30 million vehicles so far this year will impact the profit-sharing formula used to determine the size of the checks. General Motors has accrued $2.7 billion worth of costs through the end of September.

"It you look at the equation, (recall costs) do have an effect," the Detroit Free Press quoted Ms. Barra as saying. "We will evaluate that as the year ends."

A GM spokesman clarified that Ms. Barra never said if the profit-sharing checks would be smaller than the previous year and that recalls--like all costs--impact the profit-sharing formula.

United Auto Workers officials couldn't be reached for comment.

Profit sharing, according to GM's 2011 contract with the UAW, is based on the operating profit of the North American division.

Last year, workers received checks worth $7,500 after the company reported an operating profit of $7.46 billion.

This year, GM has reported an operating profit of $4.39 billion for the nine months ended Sept. 30, lagging last year's results of $5.58 billion for the same period last year.

GM will have to generate about $3.07 billion of operating profit during the fourth quarter in North America if it hopes to equal last year's operating profit. The company reported an operating profit of $1.88 billion for the final quarter of 2013.

Write to Jeff Bennett at [e-mail]

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