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Caitlyn Rosen
By Caitlyn Rosen October 25, 2019

General Motors profits have been record-setting, but not in recent years

The United Auto Workers union and General Motors are voting to finalize a tentative agreement to end the month-long strike of almost 50,000 hourly workers.

The vote is set to end Friday. Union workers’ demands have centered around health care benefits, better wages and job protection. Some of the deal’s terms for hourly workers include a 3% wage increase in an employee’s second and fourth year with the company, a $60,000 bonus for 2,000 eligible production and 60 skilled workers who are set to retire, and protections on vacation time.

Part of the argument made by UAW Local 2250 President Glenn Kage was that the union has helped GM remain financially stable over the course of the past decade. Local 2250 is the UAW chapter for the Wentzville, Missouri GM plant that manufactures full-sized vans.

"General Motors is making record profits," Kage said in a Sept. 16 interview with the Missouri Times, "and they can’t do so without the hard work of our members who have earned pay increases, earned better benefits, earned for our temporary workers to be converted to permanent workers, earned job protections."

Whether GM is making record profits depends on the time period.

"My first question would be: for when? Because profits, as an accounting concept, is measured over a period of time, like a quarter or a year. So when someone just says record profits, they're leaving something (out)," said Tim Howald, an adjunct accountancy and finance professor at the University of Missouri.

In 2014, GM's quarterly profits were moving in a steady upward direction, eventually leading into a record year in 2015.

According to GM’s Securities and Exchange Commission filings, GM’s income was $9.7 billion for 2015, up from $2.8 billion in 2014. The increase leveled off in 2016, when income was $9.4 billion.

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The increased profits in 2015 can be attributed, in part, to the increased demand for high-margin pickup trucks and utility vehicles. The so-called Detroit Big Three manufacturers — GM, Ford and Fiat Chrysler — specialize in these vehicles.

They are popular at a time when "we’re selling the most expensive vehicles we ever have," said Bernard Swiecki, director of the Automotive Communities Partnership at the Center for Automotive Research.

"Then within that is the move towards trucks and also crossover vehicles, which are cars that look like trucks," he said. "Essentially because they are more profitable than sedans, that's driving higher profits for all automakers, but for the Detroit three in particular, because they dominate pickup trucks."

Part of what drove the profit increase also led to the strike.

"GM had about a million units of unused sedan capacity," Swiecki said. "That brings us right back around to why they're making money — the market moved to trucks and that's good, in a way, because you get a more profitable GM. But (it’s) bad if you happen to be a GM manufacturing employee who’s in a sedan plant."

Comparatively, in 2017, the company lost $3.9 billion. This was due, in part, to adjustments to new tax laws. GM recovered in 2018 with a net income of $7.9 billion, but that wasn’t record-setting.

Our ruling

Kage said, "General Motors is making record profits." According to GM’s SEC filings, GM had record profits in 2015, but not in the past two years, when GM’s profits have actually been decreasing. Although the recent years’ profits are higher than they were in the early to mid 2010s, they still aren’t considered record-setting.

With that data, we rate this claim Half True.

Our Sources

Email exchange with Tom E. Henderson, GM Finance Communications, Oct. 3 2019 

Interview with Tim Howald, University of Missouri accountancy and finance professor, Oct. 15 2019 

Interview with Glenn Kage, Local 2250 UAW President, Oct. 15 2019 

Interview with Bernard Swiecki from the Center for Automotive Research, Oct. 16 2019

Original story from the Missouri Times about the impact of GM strike on Wentzville plant , accessed on Oct. 23

GM’s SEC filings, for 2018 to 2016  (page 50) and 2015 to 2013 (page 52), accessed on Oct. 4 and Oct. 16. 

Senate Bill 68 which expands the Wentzville GM factory, accessed on Oct. 9

Specialization of Wentzville GM plant and the number of employees accessed on Oct. 9 

News of GM and UAW deal, accessed on Oct. 16 

Trend of GM’s profits, accessed on Oct. 17

UAW’s tentative agreement for hourly workers, accessed Oct. 23

News of UAW vote, accessed Oct. 23

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General Motors profits have been record-setting, but not in recent years

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