“If you look at the equation, (recall costs) do have an effect,” Barra told The Detroit Free Press.
Per GM’s 2011 contract with the United Auto Workers (UAW), profit-sharing is based on the profits made by its North American division.
Barra declined to estimate the financial impact the recall will have on profit-sharing, stressing that the final amount is partly dependent on the GM’s performance in the fourth quarter of 2014. At that point, “We will evaluate that as the year ends,” she said.
When the UAW renegotiated its contract in 2011, one of the provisions was for profit-sharing for hourly workers to better reflect the profits/losses earned by GM. The new formula has been positive for workers overall, with UAW workers receiving as much as $7,500 in pretax profit-sharing for 2014, but they may feel the recall’s impact in the ensuing months. The current contract expires in September 2015.
“I think we are a business and costs are real,” Barra added. “It’s a company and it’s based on business results and the business results are what the business results are.”