A three-month strike could be enough to eliminate profit-sharing checks for auto workers. That and lower strike pay could make for a difficult holiday season.
Friday morning, the United Auto Workers went on strike at the Detroit-Three auto makers: General Motors , Ford Motor , and Chrysler parent Stellantis . The tab for the walkout is starting to accumulate. A three-month strike would stretch into early December and might be enough to eliminate most, or all, of annual profit-sharing checks coming from the Detroit-Three auto makers. Profit-sharing risk is another example of the high-stakes game of poker being played by the union and car companies.
Profit-sharing has been a nice boost to compensation for hourly auto workers in recent years. “Our full-time folks saw profit-sharing amounts of about $44,700 [per worker] over the last four years,” says Stellantis COO of North American operations Mark Stewart. Ford says it paid out about $9,000 per worker in 2022. GM paid out $500 million, or between $12,000 and $13,000 per worker, that year.
How much profit erosion a strike causes is the key question. The 40-day strike against General Motors in 2019 cost the company about $3.6 billion. It still earned $8.4 billion for the full year. At that rate of profit erosion, it might take a 20-week strike to eliminate all profit. Ford is a little less profitable than GM. Its profits could completely dwindle away in about 12 or 13 weeks.
Striking workers are eligible for strike pay. GM and Ford have laid off some workers after the UAW struck against specific facilities. It isn’t clear whether laid-off workers will get strike pay. The UAW didn’t immediately respond to a request for comment.
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