By on February 11, 2011

Bloomberg reports

GM plans to pay bonuses to most managers equal to 15 percent to 20 percent of their annual salary and as high as 50 percent to less than 1 percent of its 26,000 U.S. salaried employees, said one of the people, who asked not to be named revealing internal plans. Bonuses for Chrysler’s 10,755 salaried workers will average about $10,000, with a small group getting as much as half of their salary, one of the people said.

And with GM and Chrysler heading into contract negotiations with the UAW, this is not going to be winning the manufacturers many friends among the union.

“The union is going to be very angry about this,” Gary Chaison, a professor of industrial relations at Clark University in Worcester, Massachusetts, said in an interview yesterday. “If these kinds of bonuses are paid to salaried workers, then the union’s demands will increase, knowing management can’t claim an inability to pay.”

But wait, isn’t GM giving hourly workers the biggest bonuses in company history? What’s going on here?

According to the Bloomberg report

GM, which earned $4.77 billion in the first three quarters of last year, plans to pay its 53,000 unionized hourly U.S. staff profit-sharing checks of more than $3,000 per worker, two people familiar with the plan have said. That is about 5 percent of an hourly worker’s annual pay, said Sean McAlinden, chief economist for the Center for Automotive Research.

Chrysler, which lost $652 million in 2010, said Jan. 31 that it would pay each of its union workers a bonus averaging $750. That is about 1.3 percent of an hourly UAW worker’s annual pay. Chrysler Chief Executive Officer Sergio Marchionne said that all eligible employees would receive a performance bonus for 2010, when the automaker worked on introducing 16 new or refreshed models.

Ford, which posted 2010 net income of $6.56 billion, said it will pay an average of $5,000 to each of its 40,600 hourly workers, or about 8.3 percent of their base pay.

“If bonuses are a lot more on average for all of salaried workers, the UAW workers will be cheesed off and want a bigger signing bonus this fall,” McAlinden said in an interview yesterday. “It’s going to be tense down at the plant.”

So, the issue isn’t that workers aren’t being treated as well as they have been in the past… the problem is that their bonuses are smaller as a percentage of their salary. Meanwhile, the union isn’t the only voice being raised in opposition to large salaried bonuses for GM and Chrysler’s managers. Chaison adds

“Politically, it’s a bad thing to do. These companies are still not on solid ground yet, and it makes the auto companies look like banks” that distributed large bonuses.

If the anti-bailout crowd and the UAW agree to hate on something, you know it’s a feather-ruffler. But what’s a bailed-out automaker to do?

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21 Comments on “Will GM and Chrysler’s White Collar Bonuses Draw UAW Ire?...”


  • avatar
    Astigmatism

    I assume this means that the UAW retroactively wants to be treated the same as GM’s white-collar employees as regards their layoffs and pay freezes over the last five years or so?

    • 0 avatar
      slance66

      Terrific point.  How about giving up guaranteed cost of living raises to be more like salaried employees.   This is nonsense.  The suggestion that bonuses averaging 10k make them look like banks is absurd.  The average bonuses at some of the most egregious investment banks were in the hundreds of thousands.

    • 0 avatar
      SVX pearlie

      If the UAW guys were treated like the salaried guys over the past 10, 20 years leading up to the last 5 years, most likely, the cost savings from layoffs & freezes, etc, then GM wouldn’t have gone bankrupt in the first place.

  • avatar
    mikey

    As a retired hourly worker living on a frozen pension, I guess, I should be pi$$ed off. The security of my pension,depends on the success General Motors. If GM can afford to pay bonus money, contributing to the pension fund shouldn’t be an issue eh?

    Retaining “good”people comes with a price tag.  I personaly couldn’t give a rats a$$ what they pay them if it bring results.

    I left GM on December 19 2008, that would be the same day that George W wrote the first ” bail out” check. I took my retirement package,and figured I’d be lucky to see 6 months pension. We are at 25 months, and counting. Whatever GM is doing…..keep doing it.

  • avatar
    Detroit-Iron

    plans to pay its 53,000 unionized hourly U.S. staff profit-sharing checks of more than $3,000 per worker, two people familiar with the plan have said. That is about 5 percent of an hourly worker’s annual pay
    and
    it would pay each of its union workers a bonus averaging $750. That is about 1.3 percent of an hourly UAW worker’s annual pay.
     
    So the “average” worker makes $60k a year?  Mazel Tov.

  • avatar
    chuckR

    Far better that they equalize the % bonused to salaried and hourly workers. The two tier UAW can’t very well complain about disparity in base compensation. It would also be politically astute – ‘Just do your NSFW’ing job and be grateful the US and Canadian taxpayers made it possible for you to still have one’. Let’s see them get the stock price to a point where those taxpayers are made whole first. It’s just too soon to return to business attitude as usual.
     

  • avatar
    GS650G

    How about leaving the union job and getting a different job with bonuses?

  • avatar
    cackalacka

    Yeah, I don’t think that pointing to the ‘financial’ ‘services’ sector and saying, “Look, they’ve given themselves bonuses with an additional zero,” is a particularly wise or sympathetic course of action.

  • avatar
    tikki50

    Bah, I love the fact these companies completely drop contract workers from bonuses, nice. For all the contractors working in the white collar work force, welcome to getting screwed! Oh they want us for work, they ask us to work extra hours, we’ve been there for the company when the CEO’s walk out, we pick up the pieces just like an emplyee or salary person, maybe even more. Then when its time for bonuses………. cue up cricket sounds…….

  • avatar
    Lorenzo

    Aren’t GM and Chrysler salaried employees still under government-mandated salary caps? The bonuses look like a way around a dumb, politically motivated idea. Chrysler’s top people bypass that by remaining on Fiat’s payroll, and Ford is under no restrictions at all.
     
    Then there’s the total cost. Chrysler’s 10,755 salaried workers get an average of $10,000? Thats a total payout of $107.55 million. GM’s 53,000 hourly employees get an average of $3,000? That’s $159 million. Ford’s 40,600 hourly are getting $5,000? that’s $203 million. No number of Chrysler hourly workers was provided, only their $750 average, so I had to use salaried workers.
     
    The bottom line is that all three are paying bonuses to both salaried and hourly workers. The totals add up to no more than a few bucks in cost per vehicle.  With the exception of Chrysler alone being unable to wring even an EBITDA paper profit out of its books, there isn’t much of a problem here, unless somebody wants to manufacture a fairness issue ahead of collective bargaining.

  • avatar
    DearS

    Money does not work as a replacement for meaningful work, for enjoyable work. Those things are invaluable. As someone who has um…given himself a bonus and now many who have done the same, my worth is transcended through caring acts rather then incentives.

  • avatar
    jackc10

    The answer to the question posed is “Yes.”

    I do not support unions in any shape or fashion but the workers should be upset, and so should the informed tax payers.

    The rewarded employees have no place to go. They are not going to leave. Where would they go? Sell cars in Flint? Retrain in Pontiac. Move to Vegas?

    I presume they do no heavy lifting so their choices are limited to other auto manufacturers (which they have probably already applied, aircraft (Lockheed Martin and Boeing may not want them) and the Detroit City Government is shedding, not adding. No reason at all to pay bonuses to  people who have no other good choices available. They are not going anywhere for lack of a bonus.

  • avatar
    50merc

    Hey, Detroit, all together now:
    “So long sad times
    Go long bad times
    We are rid of you at last

    Howdy gay times
    Cloudy gray times
    You are now a thing of the past

    Happy days are here again
    The skies above are clear again
    So let’s sing a song of cheer again
    Happy days are here again”

  • avatar
    Omnifan

    1.  GM and Mopar owe the Government tons of cash
     
    2.  GM and Mopar employees lucky to still have a job after the bailout
    Thus:
    1-2=GM and Mopar skip the employee bonuses and repay the Government

  • avatar
    dusterdude

    Jackc10:
     
    +1.   Or if they feel they can get something better, then they can go for it — it is a free world.

  • avatar
    E-Z

    Ah the executive bonus, this is why I will never buy a Big 3 car again. Last GM car I Owned was a 99 Aurora and we departed in 2002 after orphan depreciation took hold.

  • avatar
    George B

    How about giving bonuses in the form of stock options?  The value of the options goes up with increasing stock value and the vesting schedule provides a “golden handcuffs” effect to retain employees.

  • avatar
    Zas

    It’s good that the lowly salaried employee, who had to sacrifice pay increases, bonuses, and everything else so that the union workers would be able to keep their job, are getting bonuses.
     
    Why does it surprise people that those workers are getting bonuses after sacrificing so much for the “better” of the company? Do they not deserve those bonuses simply based on the fact they are salaried and aren’t compensated for any over time when asked to work more than 40 hours? That they gave up their bonuses and incentives over the past 6 years so management could stay in place?

    I’d like to see the day when a union worker agrees to work overtime without pay like salaried workers do all the time…(even the LOWLY salaried worker gets asked to work overtime without pay).


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