Chrysler bonus to hit $1,300

Best profit-sharing payout since 1999 could be a big boost for the state economy.

By Brett Clanton / The Detroit News

After receiving little or no annual bonuses in recent years, Chrysler workers are set to receive the biggest profit-sharing payouts since 1999, which could spark a rash of local spending at a time when cash-strapped Metro Detroit needs it.

When it reports 2004 earnings results Thursday, DaimlerChrysler AG's Chrysler Group is expected to announce bonuses that typically will amount to $1,300 for 70,000 hourly and salaried workers represented by the United Auto Workers union, according to a senior company official. Some nonrepresented administrative and professional employees also will receive the bonus.

In addition, for the first time, the company is preparing to pay 9,000 middle managers bonuses similar to the larger windfalls the company's 1,350 senior executives receive. Before this year, Chrysler's mid-level supervisors were eligible for the same profit-sharing bonus that other hourly and salaried employees received.

While the latest bonuses still fall short of the $7,000-plus checks that Chrysler workers received during the 1990s, they come as good news after a few dark years for the automaker.

"It's not like the old numbers," said Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, "but it's going in the right direction."

Chrysler reported a net loss of $637 million in 2003 because of declining vehicle sales and heavy charges for plant closings and layoffs. As a result, the automaker paid no bonuses.

But the company is expected to post a healthy profit for 2004. Nine new vehicles, including the new Chrysler 300 sedan, helped drive sales 3.2 percent higher and boost the carmaker's U.S. market share to 13 percent last year, from 12.8 percent at the end of 2003.

"After the last couple of years of negligible profit-sharing, there will certainly be something this year that workers will see as a substantive check," said Chrysler spokesman Mike Aberlich.

"I'm looking forward to it," said Joe Wisniewski, a cutter-grinder at Chrysler's Mack One engine plant in Detroit. "I'm going to use my check to remodel my kitchen and bathroom."

Those plans are music to the ears of Detroit officials, who are facing a $230 million budget shortfall and are looking forward to tax collections that accompany a spending boom after Detroit automakers hand out bonuses.

"It never hurts to have it, no matter what time it comes," said Roger Short, budget director for the city of Detroit.

A surge in local spending could be especially helpful this year, not only because of Detroit's budget woes, but because Michigan's unemployment rate remains high and the state must close a $350 million budget gap this year.

"A lot of those checks go into spending on durable goods such as cars and home furnishings, so they have an important impact locally," said David Littmann, former chief economist of Comerica Bank in Detroit.

Before retiring last month, Littmann estimated the local economic impact from Chrysler bonus checks will be $100 million.

He projects that Chrysler bonuses will come in at $1,300.

Though Chrysler is bound by federal accounting laws from releasing its actual bonus figure before earnings come out this week, a senior company official confirmed that $1,300 is a good estimate.

Ford Motor Co.'s 76,000 U.S. hourly workers will receive profit-sharing checks that average $600 in March, more than triple the previous year's payout. General Motors Corp., meanwhile, said it will boost bonuses $25 to an average of $195 for 119,000 U.S. workers.

The formula used to calculate profit-sharing payouts is the same at all Detroit automakers, based on sales and profits from U.S. operations, including each company's domestic subsidiaries.

Foreign automakers with factories in the United States also pay annual bonuses to hourly workers, but use different formulas to calculate them. With the bonuses, workers in foreign-owned U.S. plants, all of which are nonunion, come close to earning what UAW-represented workers in Big Three plants take home for the year.

Toyota Motor Co.p.'s hourly employees in Georgetown, Ky., will receive a total bonus of $8,860, up from $8,580 last year. But the bonuses come in two payments -- six months apart -- and are based not only on the automaker's profits, but on a worker's performance.

Honda of America will pay $4,996 in "bonus sharing" checks to its U.S. work force, up from $4,608 last year. The Japanese automaker paid its first bonus checks of $2,704 to U.S. workers in 1986 and has paid bonuses every year since.

"Nineteen consecutive years of bonuses in the auto industry reflect well on the quality our associates build into our products, and on their dedication to the Honda way of doing things," said Honda spokesman Ed Miller.

Workers at Fuji Heavy Industries Ltd.'s Subaru assembly plant in Lafayette, Ind., received a holiday gift of $1,000 each.

BMW AG will pay its 4,600 hourly workers in Greer, S.C., bonuses equating to 10 percent of their base hourly wage for a year, said company spokeswoman Bunny Richardson. This will be the third year in a row that workers received a bonus of that size.

DaimlerChrysler's Mercedes-Benz unit also will pay bonuses this year to workers at its Vance, Ala., factory, though the company declined to disclose the amount, as did Nissan Motor Co., which operates plants in Tennessee and Mississippi.

Korean automaker Hyundai Motor Co., opening a new plant in Montgomery, Ala., this year, expects to pay its first bonuses next year.

You can reach Brett Clanton at (313) 222-2612 or bclanton@ detnews.com.