One of the true benefits of our region's overly dependent relationship with the automotive industry returns today after an absence of several years as thousands of auto workers begin receiving bonus checks from the three domestic automakers.
It will mean a $14 million infusion, or more, into the region's economy, potentially benefitting area companies and other workers from added purchases of goods and services.
The 2,750 hourly and salaried workers in Chrysler Group LLC's three local facilities are scheduled to receive $750 "performance award payments" today, their first such payments since 2005.
Ford Motor Co.'s 600 hourly and salaried workers at its Lima Engine Plant are scheduled to receive profit-sharing payments averaging $5,000 next month. Published reports say General Motors Co.'s nearly 3,000 employees in its Toledo and Defiance plants are to receive bonus checks averaging approximately $3,000 in coming weeks, though neither the program nor its details have been confirmed by the automaker.
The unplanned extra money coming into the region has caused businesses to take notice and offer specials to try and capture some of that money.
"We're going to do a huge garage sale, inviting all the auto workers in here," said Jim Grzywinski, general manager of the Appliance Center in Maumee. "You figure, with the checks, what better thing to have than a garage sale?"
Deb Crow, a spokesman for The Andersons Inc., said the Maumee company's retail stores "view this time of year an opportunity, with it being tax and bonus season, for our local customers to pursue their home improvement needs, and one great opportunity to do that is to come to our home show where they could talk to vendors about what might work for them,"
Donald Grimes, an economist with the University of Michigan who specializes in economic forecasting and regional economic development, said bonus checks such as those being received by automakers don't have the same stimulative economic effect that new jobs do, but the investments are welcome.
"With any sort of check, it's really sort of an income multiplier -- what's called an 'induced effect' -- where they get the money, and they spend it," Mr. Grimes said. After taxes, the induced effect of what's left of the bonuses in the broader economy will add an extra 60 to 100 percent of stimulative spending, depending on how the money is spent, he said.
"The [economic] multiplier is bigger if they go out to restaurants versus, say, buying a Japanese car," he said. "They need to think about where the stuff is made. If you're buying something that's shipped in, then the money leaves pretty quickly, but if you use the money to buy a service or buy something that is made locally, that has a greater impact."
Area auto dealers are welcoming the return of bonus checks for auto workers because history has shown them that workers have a tendency to reinvest their windfall in the products they build.
"In the old days, it definitely impacted our business," said Denny Amrhein, managing partner of Charlie's and Grogan's Towne Chrysler Dodge Jeep Ram. "They tend to spend it on cars when they get it. This is the first time in a long time that they've gotten checks like this, and they're not as large as before, but it's still a great thing. Anything is better than nothing."
Chrysler workers, who will receive their awards today, last received a profit-sharing check in 2006, while GM workers last saw one in 2007 and Ford hourly workers in 2005.
The bonuses come as the domestic automakers prepare for talks this year with their largest union, the United Auto Workers, and prepare to ask that a greater degree of auto workers' compensation be tied to corporate profits. Some have questioned why GM and Chrysler workers are to receive bonus checks before the companies have repaid the federal government the tens of millions they received in government bailout money in 2009.
Contact Larry P. Vellequette at lvellequette@theblade.com or 419-724-6091.
First Published February 11, 2011, 6:11 a.m.
