So much for the “Let Detroit go bankrupt…” meme in 2008. Oh, and add another gold star to the Obama greatest hits list…
Ford Motor Co.’s record North American profit in 2012 will have a ripple effect on auto communities across the country and especially here in Southeast Michigan.
Roughly 45,800 hourly United Auto Workers members who work at Ford plants in the United States will receive record profit-sharing checks of $8,300 on average in March.
“The expected increase in profit-sharing checks for autoworkers this March is good news for Michigan’s economy,” said Robert Dye, chief economist at Comerica Bank. “It will help to buffer households from the drag of higher payroll taxes,” which increased 2 percent for all working Americans on Jan. 1.
On average, the $8,300 profit-sharing check will have an economic impact of $20,750 per worker, when factoring a multiplying ripple effect, said David Sowerby, portfolio manager for Loomis Sayles in Bloomfield Hills.
“While we encourage savings for the long term, spending it locally, especially on made-in-Michigan products, is a bigger economic multiplier,” Sowerby said. “It gives us a decent boost.”
Dianne Reichel, a group manager with GreenPath Debt Solutions in Farmington Hills, said her clients are committed to paying down their debt and will use their checks to pay it down more quickly. But people who aren’t on a debt-reduction program will be tempted to spend it immediately.
“We all like that windfall. Because they’ve been struggling so long, and now they have the money at hand to get things, they don’t necessarily think through where the best place is to put that money,” she said.
The $8,300 profit-sharing check is a result of Ford’s profits and the most recent contract between the automaker and the UAW that was signed in 2011.
That dollar figure shatters the previous record for Ford UAW workers, which was $8,000 in 1999. It also breaks the all-time UAW profit-sharing record of $8,100 that Chrysler workers received in 1999, though adjusted for inflation that total would be worth nearly $11,000 today.
Individual profit sharing payments may be higher or lower based on the employee compensated hours.
In the past three years, Ford has doled out an average of $19,500 per worker in profit-sharing checks, rivaling a similar four-year run in the late 1990s, when Ford paid out an average of $25,200 per worker, according to the UAW.
The profit-sharing checks will also mark the fourth consecutive year of profit-sharing checks for Ford workers since the automaker staved off bankruptcy. Prior to that, profit sharing was suspended for four years.
“Fewer autoworkers may mean fewer total profit sharing dollars circulating in the Michigan economy compared to a decade ago,” Dye said. “But it is still good news to see an increase in the size of checks this year.”
- Record Profit-Sharing Checks for 45,800 Ford United Auto Workers (crooksandliars.com)
- Ford: UAW members to receive average profit sharing payments of $8,300 (mlive.com)
- Auto Workers Set for Big Profit Sharing at Ford and GM This Year (democraticunderground.com)
- UAW Chief: Right-To-Work Will Be Overturned (detroit.cbslocal.com)
- UAW, salaried Chrysler workers receiving bonuses or profit sharing checks (mlive.com)