The New York Times has been leading the media attack on General Motors, suggesting that senior management knowingly sold cars to people that killed them. The story line was been clear and persistent.
But a funny thing happened on the front page of the Gray Lady today. It put a smiling picture of CEO Mary Barra on the front page (in the print editions) along with the following story. The story suggests GM has done the right thing for victims of defects in its vehicles–and it is proving to be generous in sharing profits with workers. And we know the Times loves the United Auto Workers. Suddenly, big bad General Motors isn’t the incarnation of pure evil. I wonder whether this story will mark a shift in the Times’ coverage of the company I wrote about in, “Why GM Matters.”
DETROIT — To cope with the gravest safety crisis in its history, General Motors has spent freely — almost $3 billion — to compensate accident victims and recall nearly 30 million vehicles.
But when the company closed the books this week on last year’s recall-plagued financial results, Mary T. Barra, its chief executive, had one more costly decision to make: Should the decade-long failure of executives, engineers and lawyers to address deadly defects in millions of cars result in a smaller annual bonus for G.M.’s blue-collar workers?
On Wednesday, G.M. chose to once again open its checkbook. For the first time since emerging from bankruptcy in 2009, when it received a $49 billion bailout from taxpayers, G.M. gave its 48,000 union workers a bonus greater than their contract called for.
Each worker will receive up to a record $9,000 in profit-sharing, even though the company’s actual profits were diminished by the cost of more than 80 recalls and warranted a payment that would be about $2,400 smaller.
“I thought the recalls were going to kill us,” said George McGregor, president of the United Automobile Workers local at G.M.’s Detroit-Hamtramck plant. “We had the big check coming. We shouldn’t have to pay for their defects.”
Ms. Barra was unavailable for interviews on Wednesday. A company spokesman, Tony Cervone, said that the decision to bolster profit-sharing came after executives concluded that excluding its avalanche of recalls, G.M. had reached its financial targets and needed to reward factory workers who punch the clock in its plants.
“If the targets were not met, then obviously no consideration would have been given,” Mr. Cervone said. “The decision was ultimately Mary’s, and it’s fair to say she led it.”
The higher payout also helps G.M. negotiate a new union contract this summer without being accused of shortchanging workers for problems they did not cause.
The U.A.W.’s new president, Dennis Williams, said the profit-sharing checks were important to the long-term relationship between the nation’s largest auto company and its plant workers.
浡General Motors’ announcement today leaves no doubt about the strong, stable environment the G.M.-U.A.W. collective bargaining agreement created,” Mr. Williams said in a statement.
The bonuses are another example of G.M.’s willingness to spend money over the last year as it grappled with a safety crisis.
The automaker, for example, reserved $400 million to compensate victims of faulty ignition switches that could cut off engine power and disable airbags in millions of its small cars. So far, the lawyer hired to administer the compensation program, Kenneth Feinberg, has made settlement offers to the families of 51 people killed in switch-related accidents.
G.M. also offered financial incentives to consumers to bring recalled cars in for repairs, and spent heavily on outside lawyers to investigate how engineers, executives and others failed for years to fix an ignition switch they knew was defective.
Internally, the company incurred significant costs for legal fees and adding new safety personnel, as well as to pay secret severance agreements to people who were dismissed or retired in the wake of the ignition-switch scandal.
G.M. said that its ultimate decision was not based on a formula in the contract. Instead, the company said that the $9,000 figure was a combination of regular profit-sharing in addition to a $2,000 performance bonus.
The additional bonus was highly unusual, said Art Schwartz, a labor consultant who worked for G.M. for more than 20 years. But it represented something of an admission that G.M. management had caused the company’s safety woes, he said, and not the workers on the line.
“It’s an acknowledgment of that,” he said. “If nothing else, it is a good-will gesture that takes the whole recall issue out of the equation.”
Outside the cost of the recalls, G.M. had a strong year financially, particularly in North America, where it said it earned a pretax profit of $6.6 billion. But without the recalls, the pretax earnings were $9 billion. One reason for the company’s health was the bankruptcy itself, which allowed G.M. to shed money-losing assets and restore its balance sheet, thanks to the bailout.
The company’s contract with the United Auto Workers union calls for it to pay about $1,000 in profit-sharing for each $1 billion in pretax earnings in North America.
