General Motors will attempt to cut
costs by offering buyouts to about 18,000 white-collar workers in North
America.
The company made the offer Wednesday
to salaried workers with 12 or more years of service.
The announcement comes on the same
day that GM reported a $2.5 billion third-quarter profit. The company says in a
prepared statement that although it is performing well, it wants to continue to
reduce costs while the company and the economy are strong.
The auto industry faces looming
troubles such as slowing sales in the U.S. and China and higher steel and
aluminum prices due to U.S. tariffs.
GM wouldn't disclose terms of the
buyout offers. The company has about 50,000 salaried workers in the U.S.,
Canada and Mexico.
Company spokesman Patrick Morrissey
wouldn't say whether GM is trying to reach a target number of employees. Those
who were given the offer have until Nov. 19 to make a decision, and they would
leave the company by the end of the year, he said.
"Even with the progress we've
made, we are taking proactive steps to get ahead of the curve by accelerating
our efforts to address overall business performance. We are doing this while
our company and economy are strong. The voluntary severance program for
eligible salaried employees is one example of our efforts to improve cost
efficiency," the company said.
GM has long talked about reducing
costs in preparation for an economic downturn. The company strives to continue
churning out profits through vehicle sales while, at the same time, investing
in new technologies such as electric or autonomous cars. The company is close
to delivering on a promise to reduce structural costs by $6.5 billion annually
by the end of this year.
Savings from the employee reductions
would come in 2019, after the buyouts take effect.
Morrissey wouldn't say if GM will
begin to lay employees off if too few workers take voluntary buyouts.
"We will evaluate the need to
implement after we see the results of the voluntary program and other cost
reduction efforts," he said.
Retired Chief Financial Officer
Chuck Stevens hinted at white-collar cutbacks in April of 2017 when he told
analysts that GM is looking for cuts as it simplifies its business after its
exit from Europe. Simplification "will allow us to take significant
structure out of the business, whether it's corporate staff, whether it's
engineering staff," he said on an earnings conference call.
Last year, GM sold its European Opel
and Vauxhall units to France's PSA Group.
Most of GM's salaried workers are in
the U.S., mainly in Michigan, at its Detroit headquarters, a huge technical
center in suburban Warren, a testing center in nearby Milford, and an engine
and transmission development center in Pontiac.
Shares of GM, which had risen about
7 percent after the company announced its third-quarter earnings Wednesday
morning, were up nearly 10 percent after news of the buyouts broke. Shares that
had been falling since June rose $3.20, to $36.73.
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