LORDSTOWN - The Mahoning Valley economy will get a boost when General Motors Co. pays profit-sharing and bonuses to roughly 5,250 hourly and salaried workers at its Lordstown Complex, business officials said.
"It's one more piece of good news. When you put real cash into the hands of consumers, that does tremendous things," said Joe Bell, spokesman for Eastwood Mall owner The Cafaro Co. of Youngstown. "Some families might want to save it or pay down debt, but a lot of people will use it for goods and services, and that gets generated into the local economy."
"The economy and auto industry seem to go hand-in-hand. It's very encouraging to see the auto industry gaining momentum. We're starting to see light at the end of the tunnel," said Russell Banks, owner of R.D. Banks Chevrolet in Champion.
Most of the estimated 4,900 GM Lordstown hourly workers will be among 48,000 nationally to get a record $4,000 or more in profit-sharing, injecting about $19.6 million into the economy. The previous record profit-sharing was $1,750 in the boom sales year of 1999 before GM shed thousands of workers through retirement incentives and buyouts.
Some 350 salaried Lordstown workers out of 28,000 are expected to get performance bonuses of 4 to 16 percent of their base pay. About 3 percent will get bonuses ranging from 16 to 50 percent, with fewer than 1 percent slated for bonuses more than 50 percent, according to the Associated Press. The local salaried dollar impact could add roughly $2.8 million to the total, based on the AP's estimate using 8 percent as the midpoint of the bonus range and an average salary of $100,000.
GM, which sent letters to workers Monday announcing the payments, earned $4.2 billion in the first nine months of 2010 and is expected to soon announce a fourth-quarter profit.
Lordstown union leaders said the profit-sharing is part of the contract between the automaker and United Auto Workers, a pact that also required workers to take concessions in 2009 as the company was headed toward bankruptcy and a government bailout.
"Our members haven't received any increases. The last cost-of-living increase stopped in 2009. Before that, we had wage freezes," said Dave Green, president of the 1,400-member Local 1714 of the Lordstown West Metal Center. "Our members have worked hard, and I believe the corporation is on the right track."
Green refuted criticism about GM paying profit-sharing while still being supported by taxpayers' dollars from the bailout. He pointed out the company has the direct loan it received from the government, about $6.8 billion paid last spring. Overall, the government has been repaid $23 billion but needs $26.4 billion more to recoup its whole investment, according to the AP. The government still owns 500 million shares of GM common stock, which would have to sell for roughly $53 per share to get all the money back. "This money isn't going to the CEO. These are hard-working, everyday people," he said.
Jim Graham, president of 3,500-member Local 1112 at the Lordstown East assembly plant, said he doesn't expect any backlash about the profit-sharing because GM has repaid its loan.
"These people worked very hard to bring back GM, as did management," he said.
U.S. Rep. Timothy J. Ryan, D-Niles, said the announcement ''proves that General Motors has made dramatic progress in creating a sustainable company while paying back the federal government's investment in its operations. Not only will these checks put more money in the pockets of America's working families, but they are a significant indicator of GM's increasing profitability. The Lordstown-built Chevy Cruze is proving to be popular with critics and consumers alike - paving the way for GM's continued success."
U.S. Sen. Sherrod Brown, D-Ohio, said, "The disconnect between work and reward has grown too wide for more than a decade. Too often, we've seen workers get pink slips while CEOs get millions. The new bonuses to GM hourly workers-like those at Lordstown-are well-deserved and signal growth in the economy.''
Brown added he remains concerned about extravagant executive pay at companies that have received government assistance, as the (Troubled Assets Relief Program) panel concluded last week."
The Regional Chamber called GM's return to profitability "a major shot in the arm to the nation and to the Mahoning Valley in terms of job creation and stability and manufacturing growth."
The chamber said Lordstown is GM's largest operation in the U.S. and "is at the center of GM's growth," thanks to production of the successful Chevrolet Cruze compact car.
GM's recall of 1,200 idled workers last year to staff a third shift to build the Cruze helped the Valley post the sixth largest drop in jobless rate in the U.S. in 2010.
The extra cash comes as the Valley is getting infusions of $650 million from steel tube maker V&M Star's construction of a new mill, along with new work for other companies tied in with the Marcellus Shale natural gas market.
The area also appears to be in line for a $200 million horse racing track and slot machine casino, if all the pieces can be assembled.