A new report from CNN Money is claiming that there is a strong possibility GM factory workers will get smaller bonuses for 2014. The reason that has been cited is the record number of safety recalls the automaker has endured. The financial repercussions of those recalls has been to almost completely negate any profits the company brought in for the first half of the year, plus the establishment of a new fund for the growing number of identified victims from the infamous ignition switch recall.
Nothing is for sure right now, simply because GM’s fiscal year is still going on. While not likely, the company could see a huge financial windfall or suffer ever more financial setbacks. The third quarter was better, with a $1.4 billion profit that helps but does not counteract the $2.5 billion in recall costs CEO Mary Barra revealed during a recent interview with the Detroit Free Press.
The news is a real kick in the teeth of autoworkers employed by GM, who have grown accustomed in the past few years to getting bigger checks from profit shares. In fact, the average worker last year received $7,500 in bonuses. Of course, that was after the company raked in $7.5 billion in profits for 2013. The bonus program was part of an agreement the United Auto Workers union hammered out with GM, foregoing base pay increases.
While the massive recalls certainly haven’t sunk GM, they have hurt quite a bit. The unfortunate truth is that the financial pain doesn’t stop with those who are ultimately responsible for the record number of recalls.