About 47,000 U.S. hourly workers at General Motors will receive a profit-sharing check of $8,000 as the automaker reported a considerable hit to its annual and quarterly profits from the 40-day nationwide strike late last year.
The before-taxes payout that GM announced Wednesday for its UAW-represented workforce is down from $10,750 in 2018.
For the fourth quarter, GM said the strike impact cost it $2.6 billion in pretax profits. For the full year, the strike dinged GM's pretax profits by $3.6 billion.
The GM negotiated formula with the UAW for profit-sharing checks is $1,000 per every $1 billion in GM's North America earnings before interest and taxes.
For 2019, GM's North American pretax profit was $8.2 billion, down from $10.8 billion in 2018, it said in its earnings release. GM's results took a hit in the fourth quarter because of the six-week UAW strike and weak sales in China amid a slumping economy.
But for 2020, GM said it's well-positioned with new vehicle launches. lean inventory and ongoing cost savings to deliver good results. GM said it expects to sell about 16.5 million vehicles in the United States this year.
"We continue to transform the company for the future," said CEO Mary Barra in a statement. "GM is positioned for strong, long-term business results with a focus on sustainability, and we are confident that our (electric vehicle) and (autonomous vehicle) strategies will drive shareholder value while improving the environment."
Globally, GM reported that it made $100 million in pretax profits in the quarter, down 96.3% largely due to the strike. For the year, GM made $6.7 billion, down 17.4%.
GM's annual global revenue was $137.2 billion compared to $147 billion for 2018. For the fourth quarter, revenue was $30.8 billion, down 19.7% from the year-ago period.
For the quarter, GM's net income was $6.7 billion, up from $2.1 billion compared to the year-ago period.
Profit sharing
Like GM, Ford Motor Co. and Fiat Chrysler Automobiles also pay hourly workers an annual profit-sharing check based on the same formula. On Tuesday, Ford said its profit-sharing checks would amount to $6,600 on average for a majority of the company's 56,000 hourly UAW workers. FCA reports its results Thursday, but last year its union workers received an average of about $6,000 in profit-sharing checks before taxes.
Despite the smaller profit-sharing checks this year, it’s still a generous incentive and important for the company and the workforce in terms of motivating workers and attracting talent, said Adam Robinson, CEO of Hireology, a Chicago-based recruitment platform used by many car dealerships.
“Most importantly, the interest of the workforce and the interest of management are aligned,” said Robinson. “They are rewarded by a bottom-line results so workers and management must work together to achieve that.”
For the automaker, the program also helps attract high-quality talent to hire because “it’s all about the presentation of the program,” said Robinson.
“If I’m talking to a potential hire and I’m competing with other employers — I can say that you come here, you participate in the outcome because we have a generous profit sharing,” said Robinson. “It will make a difference in competing for talent.”
GM's Sales
Overall, the auto industry had a good year due to the robust economy, low unemployment, and low interest rates, said David Kudla, CEO of Mainstay Capital Management.
"And, consumers are buying up profitable SUVs, trucks, and crossovers, upping the average transaction price to record levels."
Also, around this time last year, GM reduced its North American white-collar workforce by about 8,000 total jobs between voluntary buyouts and cutting about 4,000 of of those salaried jobs. It also closed Lordstown Assembly plant in Ohio, Warren Transmission and Baltimore Transmission plants.
GM said that restructuring would increase its 2019 free cash flow to $4.5 billion to $6 billion. In its 2020 guidance, GM estimates its free cash flow will be $6 billion to $7.5 billion, it said.
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"We expect another strong year in 2020," said Dhivya Suryadevara, GM's CFO. "Our relentless focus on improving our operating performance will enable us to generate strong cash flow through the cycle and invest in our future."
GM China weathered a softening market. It reported equity income of $1.1 billion for 2019, down from $2 billion last year. For the quarter, Cadillac sold 53,000 vehicles in China, down from 58,000 last year. For the year, Cadillac sales were 214,000 up from 213,000.
GM Financial reported full-year record revenue of $14.6 billion, with pretax adjusted income of $2.1 billion, up from $1.9 billion last year.
GM said it sold 7.7 million vehicles globally, down from 8.4 million vehicles sold in 2018 largely due to the slump in China.
Contact Jamie L. LaReau at 313-222-2149 or jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter.
https://news.google.com/__i/rss/rd/articles/CBMia2h0dHBzOi8vd3d3LmZyZWVwLmNvbS9zdG9yeS9tb25leS9jYXJzL2dlbmVyYWwtbW90b3JzLzIwMjAvMDIvMDUvZ20tcHJvZml0LXNoYXJpbmctMjAyMC1mb3JtdWxhLzQ2NDU4MzIwMDIv0gEkaHR0cHM6Ly9hbXAuZnJlZXAuY29tL2FtcC80NjQ1ODMyMDAy?oc=5
2020-02-05 13:01:00Z
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