Chrysler salaried and hourly employees were told they’ll be getting profit-sharing checks after the maker reported earnings of $1.8 billion in 2013. Based on a formula that UAW workers ratified in a 2011 contract, workers should expect a maximum profit sharing check of about $2,500 before taxes.
That would be the highest profit-sharing check for Chrysler hourly workers since 1999. Last year, Chrysler workers profit sharing checks averaged $2,250 before taxes.
While employees may be happy to get the extra cash, the amount is about a quarter of the $8,800 checks about 47,000 Ford employees are expecting to get. On Tuesday, Ford Motor Co. announced fourth-quarter earnings of $3 billion and a full-year profit of $7.2 billion. This year’s checks also surpassed last year’s average payout of $8,300.
General Motors workers are expected to receive checks of more than $6,750, which is what they received last year. GM reports year-end earnings on Feb. 6.
In all, the Detroit Big Three are expected to hand out a record-setting $800 million in profit sharing checks to 130,000 hourly workers, providing an economic boost in states laden with UAW-represented workers. Last year, 125,000 workers shared in $780 million in profits, which was the previous record.
The formula for determining profit sharing changed with the 2011 contract. At GM and Ford, the formula is based on automaker profits in North America, not just from the U.S. Employees get $1 for every $1 million in North American pre-tax profit, on average. At Chrysler, workers get $1 for every $1 million in profits, based on 85% of Chrysler’s worldwide profit.
It is the third straight year all three automakers have paid workers at least $1,500 on average while GM and Ford have done it for four consecutive years. Before that the automakers paid very little in profit sharing as they dealt with difficult financial situations, including the expedited bankruptcies of GM and Chrysler.