It's Profit Sharing Day for Tonawanda General Motors' Employees

Hourly employees are eligible to receive more than $11,000

February 23, 2018 - 5:45 am

by Brendan Keany

BUFFALO (WBEN) - Today is the day in which more than 1,300 employees of the General Motors plant in Tonawanda are eligible to receive profit sharing checks that could be worth as much as $11,750. This year's profit sharing checks are based on the full-year profits of the company from 2017, and GM believes 2018's profits will be around the same figure.

While the figure for this year is a fairly hefty sum, Art Wheaton of the Worker Institute at Cornell University in Buffalo, who is an expert on the auto industry in Western New York, says that workers have sacrificed money in other areas.

"It is a major deal, but you have to keep in mind that the profit sharing check was given in exchange for other raises," says Wheaton. "They haven't had raises in their general pay, some of them, for 10-15 years, so the pay increases have not been going to their regular hourly check."

Wheaton says this is a risk because much of the money they receive is based on how well the company is doing, which, he adds is generally a positive for the companies.

"It's good for both General Motors and Ford because they only pay the big checks if they're making the big profits," he says. "There's no guaranteed pay for the workers, so there is some element of risk that they have to work hard and make a good product, or they don't get those big checks."

The checks correlate to North American profit, which means the size of the checks don't vary from plant to plant. Wheaton says that the general rule is that for every $1 billion of profit, another $1,000 is added to the profit sharing, and he also noted a couple of reasons why General Motors is having success. The first reason is that gas prices have remained fairly steady and cheap when compared to inflation. Second is the current low interest rate. Because of these factors, Wheaton says consumers are opting for larger and more expensive vehicles, while signing longer loan options.

However, these are factors that are subject to change on the whim of the economy.

"Right now they're doing quite well," says Wheaton. "But if the economy changes, the interest rates start creeping up or credit gets more difficult to get, then it could have a direct impact on sales and a direct impact on profit sharing in the future."

Nevertheless, it appears the Tonawanda plant is doing quite well, according to Wheaton.

"I think the product that they're making in Tonawanda, their engines are doing very well, and as long as they're making the engines for mostly trucks and SUV's, their sales will continue to be strong," said Wheaton. "The other big sign for Tonowanda is that they keep investing in new engines. They don't invest a lot of money to build new engines unless that plant is going to be around because those investments are in the hundreds of millions of dollars for the product that they put in that plant. They don't put that money in some place they want to go away."

While a decent amount of money will be taken out in taxes, another benefactor of this year's checks, according to Wheaton, is local business. With extra money, Wheaton says that these employees may see this as an opportunity to make larger purchases.

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