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 jeff.bennett@wsj.com
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