GM union workers to get cash infusion
10/25/2007The Toledo and Defiance areas are each about to get a $5 million to $6 million infusion to their economies today as $3,000 bonuses that are part of the new UAW contract with General Motors Corp. begin showing up in worker paychecks.
About 2,035 hourly workers at GM's Toledo Powertrain Plant and an additional 1,540 workers at the Defiance Powertrain foundry are scheduled to get the cash payments, one of four bonuses under the new United Auto Workers pact with the automaker and a key selling point in the four-year deal.
That amounts to about $6.1 million in Toledo and $4.6 million in Defiance.
"You're going to take care of food and clothing. Durables and cars would be further down that list," said Henry Rennie, a business professor at Heidelberg College in Tiffin.
"But there would be less important uses for this money because in this sense, a bonus is extra and you tend to spend extra on things you want and have postponed rather than on your weekly expenses," Mr. Rennie said.
"It won't be spent on frivolous things, but mainly things much lower down on your spending scale."
About three-quarters of the bonus money should remain in the local economy and will have a rippling effect of about $7.5 million in Toledo and $5.7 million in Defiance, as the autoworkers spend it on goods and services, at places where other workers would respend that money.
The Detroit automakers typically pay a profit-sharing bonus to their workers in years that they make money, but GM did not pay one last winter.
Autoworkers are anticipating the bonuses this week, but it isn't foremost in their minds, said Ray Wood, president of UAW Local 14 at Toledo Powertrain.
Of greater concern, he said, is how the plant - and their jobs - will fare in the future as GM struggles to regain its market share.
"I don't mean to downplay it.
Extra cash is always welcome," Mr. Wood said, "But in the bigger picture, we kind of like being a leader and we want to get more work here and be able to hire more workers off the street."
He guessed that many would use the bonuses on holiday shopping.
In Defiance at UAW Local 211, president Dwight Chatham said there were several issues with the local plant contract with GM that need to be resolved, and workers seem more interested in that right now than bonuses.
"Bonuses are nice, but new business is what we want," he said.
Stores may not be ready to handle an influx of workers spending bonuses.
A store manager at Best Buy, who would not give her name, said the retailer has a good selection of product, but won't have its Christmas inventory for a few more weeks.
"We have no more quantity than normally we would have. But we can order or find things from another store if we don't have what someone wants," she said.
In Defiance, the bonus bounce might be more noticed.
"It's good for us because our research shows that over a third of the expenditures at our retailers come from outside the Defiance area," said Timothy Small, president of the Defiance Chamber of Commerce.
"If the trends are as we think, the community should enjoy some of that windfall," he said.
Contact Jon Chavez at:
jchavez@theblade.com
or 419-724-6128.