Valley economy to get $30M lift from GM profits, workers to get $6,750
By Jamison Cocklin
Gains in North America were not enough to offset heavy losses in Europe for General Motors Co., but 2012’s profit still means an influx of more than $30 million for the Mahoning Valley’s economy — as Lordstown’s 4,500 workers will each receive $6,750 in profit sharing.
GM on Thursday posted a profit of $4.9 billion for 2012, down 36 percent from a year earlier, when it made $7.6 billion. Its net income fell because of European losses and a truckload of one-time accounting gains and losses in both years. Last year’s pretax profit, which excludes the one-time items, still dropped, but only by 5 percent to $7.9 billion. Revenue for the year rose 1 percent to $152.3 billion.
The company’s money machine, North America, made $6.9 billion before taxes for the year. But GM lost almost $1.8 billion in Europe, where it has too many factories and workers as sales slow in a faltering economy.
“It shows a strong recovery here when you look at North America. Right now, it’s the most profitable part of the company’s business,” said David Green, president of United Auto Workers Local 1714 at Lordstown.
“There’s clearly issues in Europe, but we have no ability to impact that, especially locally.”
The earnings in North America mean big bucks for GM’s 50,000 U.S. factory workers, who agreed to take profit sharing over pay raises in 2011 contract talks. The workers represented by the United Auto Workers union will get $6,750 each, down a little from $7,000 last year.
“There’s no telling what the trickle effect of that kind of money can do for our economy,” said Glenn Johnson, president of UAW Local 1112, also at Lordstown.
“It’s a huge influx of dollars into our community and when those kinds of numbers are tossed around, it helps to create and sustain jobs in other parts of the economy.”
Johnson said he expects workers at Lordstown to receive their profit share sometime in March along with their regular paychecks.
The European losses widened by more than $1 billion . They also wiped out the combined $1 billion made by GM’s auto loan and South American businesses, plus part of the $2.2 billion made by international operations.
Just about every auto- maker is seeing sales fall and losses mount in Europe as the economy there continues to unravel.
Still, GM executives are optimistic that cost-cutting and 23 new vehicles by 2016 will help Europe break even before taxes by the middle of this decade.
One of those new vehicles will be the Chevrolet Cruze diesel, which will hit the market this summer. Workers at Lordstown have been assembling test models for months now.
“The Cruze has been selling steadily,” Johnson said. “Anything that can enhance and give our customers another option is always a good thing, and the diesel Cruze certainly does that.”
The Associated Press contributed to this story