GM Recalls Will Cut Into Union Workers' Bonus Checks

October 28, 2014

For General Motors [NYSE: GM], this year’s record recalls—especially its ignition-related recalls—will almost surely end up costing not just the company, but the annual income of many of its hourly workers.

Based on GM’s current contract with the UAW, annual profit-sharing bonuses to UAW workers are directly based on the profits made by the automaker’s North American operations.

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The workers otherwise haven’t seen a raise in nine years.

"If you look at the equation, (recall costs) do have an effect," Barra confirmed to the Detroit Free Press.

Earlier this year, the paper reported, about 48,500 UAW workers for GM received profit-sharing checks of up to $7,500, pre-tax; that was based on a $7.5-billion 2013 operating profit.

GM has through September spent $2.7 billion on recall repairs affecting more than 30 million vehicles.

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