By on October 31, 2018

Wednesday morning, General Motors announced third-quarter 2018 earnings “reflecting profitability in all core operating segments.” Operating profits were at $2.5 billion, with North American profit margins hovering around 10.2 percent thanks to healthy truck sales. All in all, things were looking pretty good.

Then GM announced a plan to extend buyouts to salaried employees in the region with 12 or more years experience in order to cut costs. Roughly 18,000 salaried employees are said to be eligible for voluntary severance packages. The reason? General Motors says it wants to do this while the company is still healthy, which sounds like a pretty strong hint that bad times are ahead. 

Eligible North American employees have until November 19th to opt into the program. The company has not released information on what the offer entails.

“We’ve been on a journey to transform the company, both in how we operate the business and in how we lead in the future of mobility. Even with the positive progress we’ve made, we are taking proactive steps to get ahead of the curve by accelerating our efforts to address overall business performance,” GM said in an official statement. “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.”

GM CFO Dhivya Suryadevara said the automaker plans to save $6.5 billion via cost efficiencies through 2018, which should be feasible after the third quarter earnings announcement. The company has already achieved $6.3 billion of the total efficiencies it targeted for the end of the year.

[Image: General Motors]

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49 Comments on “GM Offers Buyout to 18,000 Salaried Employees...”


  • avatar
    threeer

    I wish they’d address the performance of their vehicles…just turned in the 17 Cruze, again, to the shop for yet another repair. Offer reliable cars that aren’t built like they were slapped together by preschoolers and maybe they wouldn’t need to consider laying off (I’m sorry, “buying out”) 18,000 people.

  • avatar

    The economy is quite clearly preparing for a downturn. New home sales have been falling for 6-months straight. Stocks down. Tariffs are cutting the legs out from under small and large businesses. The national deficit is ballooning like crazy. Dig in people, hard times are coming.

    • 0 avatar
      NoID

      I’m making efforts to get my own personal finances in line in anticipation of this. On the plus side, should my company also need trimming there are a couple people on my team who are shoe-ins for retirement if we need to hit some sort of cut-back quota.

    • 0 avatar
      JimZ

      “The economy is quite clearly preparing for a downturn. New home sales have been falling for 6-months straight. Stocks down. Tariffs are cutting the legs out from under small and large businesses. The national deficit is ballooning like crazy. Dig in people, hard times are coming.”

      and of course, it will be Obama’s fault.

      • 0 avatar
        Lou_BC

        @JimZ – The blame game has already started: Central Bank… godless commie Chinese… illegals in caravans… deep state… violent mobs of liberals…

      • 0 avatar
        raph

        Of course it will JimZ, according to one of my relatives Obama is the most racist, treasonous, arrogant and economically ignorant president to have ever served.

        They are of course strongly addicted to the orange Kool-Aid and laughably the part of the family most dependent on entitlements.

        Heh… I should start sending them very ornate straight razors for Christmas.

        • 0 avatar
          JimZ

          it’s amazing, isn’t it? They’ll credit Trump with the 4% blip of the last quarter, but blame Obama (who hasn’t been president for 21 months now) for anything bad that happens hence.

          or, more likely, they’ll be *real* pieces of s**t and try to pin it on Pelosi even though the party she belongs to has been the minority party for a long damn time now.

          one of the reasons I’m glad I don’t have kids is because I’m not condemning anyone to live in this world where people can just make up their own reprehensible “facts” and relentlessly ram their vile falsehoods down everyone’s throats.

          • 0 avatar

            I am glad for you too.

          • 0 avatar
            golden2husky

            …one of the reasons I’m glad I don’t have kids is because I’m not condemning anyone to live in this world where people can just make up their own reprehensible “facts” and relentlessly ram their vile falsehoods down everyone’s throats…

            And there is one of the major problems. I can accept anybody’s position – my voice is just that, mine. What I can’t accept is the outright fabrication of nonsense that can’t sustain even the mildest sniff test. Yet people like Trump falsify and create absolute falsehoods and actually get people to not only believe it but accept it even when non-partisan sources clearly show that the “facts” are anything but. And they then vote accordingly. I actually can’t blame Trump because he knows that we as a society have become so divided. Politics is like Yankees vs Redsox today. You are on my team or you are not. Compromise is for wimpy pussies. He is good at playing that card. That means we are going to stagnate as a country.

            ajla – I don’t get the straight razor thing either.

        • 0 avatar
          ajla

          “I should start sending them very ornate straight razors for Christmas.”

          Why?

    • 0 avatar
      APaGttH

      Agreed. Tariffs are adding up, interest rate increases to help cap growing inflation also is adding up. Home sales down. Yes unemployment is at historically low levels but the jobs created pay nothing – the real wage increases promised to the middle-class haven’t come (beyond one time bonuses – suckers) and have been eaten by rising costs across the board.

      The real scary part for me? Consumer confidence is at the highest level since 2000. The masses have already forgotten 2001 and 2008. Stocks I’m watching closely are the fast casual dining stocks (Darden, Dine Brands, Bloomin’ Brands). These are the true canaries in the coal mine. As soon as consumer confidence starts to wane, the first place people cut back is eating out.

      Also moving around some debt and money to prepare for the coming downturn. I actually never moved my portfolio from a post-recession position of dividend stocks and near recession-proof investments (Home Depot, AutoZone, J&J, Verizon, Visa, Chevron, etc.) I’ve beaten the S&P500 every year with how I’m aligned and in a downturn I’m in mostly dividend stocks.

      I’m not worried to the point of taking up cash positions like I did in early 2008.

  • avatar
    DeadWeight

    The IMBECILES are back in charge running Guangzhou-Guadalajara Motors again, offering buyouts to 18,000 salaried employees (out of 50,000 in NA), this after they had hired 26,000 salaried workers in the past 4 1/2 years.

    Garbage Motors sees the writing on the wall as its sales volume in its two biggest markets slow appreciably (and it’s going to get much worse in the coming several years in both markets).

    This is being done for the same reason Ford is laying off many tens of thousands of salaried workers in its 11 billion dollar cost-cutting “fitness plan,” recently announced.

    Think about how incredibly inefficient these two moronic corporations must be, if they can cull this many salaried employees.

    It’s bad enough that Guangzhou-Guadalajara Motors vehicles, chock full of absolute lowest cost bidder Chinesium parts are, but the layers of lard that they have in their salaried, post-taxpayer bailed out ranks is truly amazing.

    • 0 avatar
      DeadWeight

      Last paragraph should read:

      Think about how incredibly inefficient these two moronic corporations must be, if they bad enough that Guangzhou-Guadalajara Motors vehicles, chock full of absolute lowest cost bidder Chinesium parts, are largely horrible and rolling dumpster fires, but the layers of lard that they have in their salaried, post-taxpayer bailed out ranks is truly amazing.

      GM Mark of Excellence SSDD (last D stands for DECADE).

      • 0 avatar
        redapple

        The reason GGM must go to the max on Chinesium content is the UNION.
        Total loaded pay for Hourly has to be around $45 /hour.

        It takes 3 guys to 2 jobs done. They work harder at screwing off than they do at working their JOB.

        PS- Before you slam me as stupid note this. I was a Skilled Trades Supv and Genl Supv for 10 years at a GGM Powertrain plant.

        • 0 avatar
          JimZ

          “PS- Before you slam me as stupid note this. I was a Skilled Trades Supv and Genl Supv for 10 years at a GGM Powertrain plant.”

          yeah, sure you were.

          On the Internet, nobody knows you’re a dog.

          • 0 avatar
            golden2husky

            Let Mikey have at him…we will find out if he is telling the truth or spewing “alternative facts”

  • avatar
    jkross22

    Perhaps the 18k people who have been offered an early retirement really are all expendable. If so, wtf was GM doing hiring them. If not, wtf is GM doing culling needed people?

    Maybe Barra and the board are thinking they’re going to offshore those jobs to India or Vietnam at 1/4 – 1/5 the salary.

    • 0 avatar
      NoID

      It’s been offered to 18k people, I’m sure they aren’t cutting 18k people.

    • 0 avatar
      highdesertcat

      ” they’re going to offshore those jobs to India or Vietnam at 1/4 – 1/5 the salary.”

      Always a possibility.

      But I’m more inclined to think that GM is going to pull those jobs back from Canada and Mexico and merge them into US production. It’s happened before. It will happen again.

      The trend under the current administration is to bring manufacturing jobs BACK TO THE US.

      And as long as President Trump is in power that is what will happen (as opposed to the outsourcing done under the previous administrations, starting with Clinton).

      If I worked for GM in Canada or Mexico, this would give me great reason for concern and worry about MY job security. The tide has turned. Good for the US.

      Not so good for others.

      • 0 avatar
        bd2

        Despite all the bluster from the Orange one, things aren’t as simple as he make it out to be.

        For instance, BMW had already taken steps to build its CUVs in South Africa and now China (instead of expanding production at its SC plant).

        And w/ higher prices for steel and aluminum, US manufacturers are at a disadvantage compared to overseas producers of similar products/components.

        Also, light manufacturing jobs had already started to return (mostly from China) under Obama due to higher labor costs, transport, etc. costs.

        But the difference is that these manufacturing jobs paid around $10-12/hr w/ little or no benefits or were taken over by greater automation.

        And oh, outsourcing was pushed by the Reaganomics Republicans w/ Walmart spearheading the charge into China.

      • 0 avatar
        Lou_BC

        @highdesertcat – I read somewhere that due to Canada’s socialized medical benefits it is cheaper for GM in Canada.

      • 0 avatar
        DenverMike

        @HDC – I doubt GM employees in Mexico have anything to worry about. They weren’t really mentioned here as Mexico isn’t even considered part of “North America” to corporate USA, Wall Street, etc, and most of those are straight hourly.

        Except 18,000 North American GM employees can be replaced by 9,000 Mexico employees doing twice the work per day at a small fraction of the pay.

        This could all be blowback for last time GM employees went on strike. GM needs to send employees the occasional reminder of who’s running the show.

        • 0 avatar
          highdesertcat

          DenverMike, we’re talking SALARIED employees who were offered this buyout, not the hourly-wage line workers.

          In the past such a reduction in salaried staff has resulted in dropped products along with these employees. This freed hourly labor to do other work or……..be let go.

          But what I’m thinking is that NEW products will be ginned up for US production as reductions are made elsewhere.

          With President Trump being a UAW/Union guy making good on his promise to improve the lives and status of employees in manufacturing, the emphasis now is on creating more jobs in America, even if that is more expensive than doing so someplace outside the US.

          But you know, the best laid plans are all shot to hell when the shooting starts, and so it could well be with the US economy, come election day next week.

          If Nancy Pelosi becomes Speaker again, we can look forward to another do-nothing Congress for the next two years.

          So, if President Trump’s economy has been good for you, like it has for me and mine, you better enjoy it while you still can.

          Because, this great economy too, shall pass. Maybe sooner than you think.

          In either case, there are changes coming in the auto industry. And a Reduction In Force at GM is just the beginning.

          • 0 avatar
            DenverMike

            @HDC – What I meant was most GM’s Mexico employees are hourly, so this isn’t about them, their jobs aren’t going anywhere.

            It doesn’t make sense though. Is GM about to cut down its line up of US cars? Is GM overstaffed by 18,000 salaried employees? Or just that inefficiently run?

            There’s no real explanation given.

          • 0 avatar
            highdesertcat

            “Is GM about to cut down its line up of US cars?”

            Well, something has to change with GM and at GM because even after the $11B bailout infusion of 2008, GM is still not competitive.

            And inefficiently run compared to Ford, Toyota and Fiatsler.

            So, the short answer is YES, GM has to streamline the line-up for the US. But what to build that people will actually BUY?

            Ford is doing it. Ford is going to focus its line-up with only cash cows like pickup trucks and SUVs, dropping most of its sedans in a spaced phase-out.

            And I doubt if we, the people, who bailed out GM, will ever get a real explanation.

            Especially in view of this failed experiment with handouts, bailouts and nationalization of dead automakers.

            Fiatsler stood for real change, especially with the help of their friends like Daimler.

            GM? GM is still GM. An automaker that died, and should have stayed dead.

            More to come on this as we merrily glide the downward spiral into another Bankrupture.

            Hey! There aren’t enough people on the planet to keep GM alive.

            Deja Vu of 2008 all over again.

          • 0 avatar
            golden2husky

            …Ford is doing it. Ford is going to focus its line-up with only cash cows like pickup trucks and SUVs, dropping most of its sedans in a spaced phase-out…

            Is that really a good strategy? In the short term (which is what Corporate America seems to care about) it might be. Surely Ford wants to remain in business. But what happens when consumer preferences change? Regardless of whether the change is driven by $5 gas or simply a change in tastes, any automaker that does not offer a variety of vehicles is going to be in trouble should that shift take place. It has happened before, and it is pretty much a given that it will happen again.

            I’ve noticed a bit of a change at major auto shows as they relate to the younger crowd. 10-15 years ago the young ones were all over trucks. Some were at the typical German snot brands of course, but trucks and SUVs were it. The last five years or so the “new” young crowd is mostly by the Germans, and mostly waiting inline to get into their cars. I think a one or two vehicle type lineup is not going to play well over the next decade. Time will tell…

          • 0 avatar
            highdesertcat

            golden2husky, as usual, you are right on all counts with your comment.

            But times are changing. Diminished sales are forecast. The OLD clientele is dying off, or already dead. The younger demographic is looking to buy radically different vehicles than their forebears did.

            Keep in mind that the younger crowd of 10-15 years ago is now 10-15 years older, and that there is a new younger crowd to be catered to.

            It remains to be seen if the current younger crowd is even into buying new cars.

            Yet the primary function and first&foremost responsibility for GM and other companies is to make money for their owners/shareholders. Nothing else matters. As a business they’ve got to make money or die, like GM and Chrysler did in 2008.

            So this is a long term venture to be implemented within the next 3-5 years and in this case will steer GM for at least a decade, if not two decades.

  • avatar
    Dan R

    Never assume that they have any notion of what they are doing. Reactive not proactive.

  • avatar
    Horace

    1. GM looking at steep US volume declines next year – in range of 15 per cent. 2. Barra et al really dislike having experienced people who know the industry and their jobs. This sort of experience leads to people not drinking the kool aid as formulated by people above who don’t know what they are doing but nonetheless demand mindless obedience. 3. Having conceded the company can’t compete in many parts of the globe (Europe, India, Russia, Australia etc) the company is going to continue to see global share decline. 4. It will join Ford next year in conceding that it cannot compete in US passenger car market and abandon it.

  • avatar
    mikey

    Interesting …. For the guys retirement eligible and sitting on the fence, you have 19 days to fish or cut bait. Depending on the details I can think of a few guys that will be all over this.

    Dropping “age penalties” is usually the most effective salary pension incentive. For the 50 somethings you also need to think no benefits .

    • 0 avatar
      APaGttH

      No more benefits and near impossible to find another job if needed. Ageism is very much alive and well.

      • 0 avatar
        raph

        Hah, I have a younger friend who flat out told me she wouldn’t consider hiring me since in her words “no offense but you old people are no good with computers” and by old she is referring to a nearly 49 year old guy.

        I laughed and told her I’m no data processing whiz or graphic designer but I build my own PCs and troubleshoot them and solve my own problems when it comes to network and software issues.

        I think she gets that impression from my phone. I’ve got a Galaxy S8 and its cool bit of hardware with some neat functionality but its not the central technology in my life.

    • 0 avatar
      highdesertcat

      Pure gold, mikey. Sage words of wisdom, as always.

    • 0 avatar
      SSJeep

      Yep, this exactly. “…buyouts to salaried employees in the region with 12 or more years experience” smells a lot like a class action age discrimination to me…

  • avatar
    APaGttH

    …General Motors says it wants to do this while the company is still healthy, which sounds like a pretty strong hint that bad times are ahead…

    Rising interest rates, tariffs, and a trade war with China are going to catch up with the economy. It isn’t Keynesian BS, it’s economics 101. The same people cheering tariffs scream against a set minimum wage. They apparently didn’t pay attention in econ 101. Wage or PRICE controls in large swings, outside of short-term emergency stabilization are bad for an economy. Period.

    A 5% tariff? The economy could absorb that – a 25% tariff is a big kick in the rocks and will add up.

    Corporate America sees a recession coming and we’re seeing more and more companies circling the wagons.

  • avatar

    more market share loss as Maximum Mary squanders resources rather than focusing on core business. so far she has lost over $20,000,000,000 in shareholder value.

    Red Ink Rick lost over $80B. she can’t get there before another BK

    • 0 avatar
      redapple

      Buick ++++

      TTAC Committee. I make a motion to make the above additions to our dictionary.
      Maximum Mary – credit Buickman
      Red Ink Rick – Credit Buickman
      Chinesium – the one, the only Deadweight.
      Gangzoo – Guadala whatever Motors (GGM)- Deadweight.

      Funny stuff.

  • avatar
    tomLU86

    Yes, they are ‘offering’ buyouts. If all 18k employees accept them and leave, the company won’t be able to run well for quite some time, if ever.

    So, rest assured, the company will ‘offer’ incentives, but have the final say on who can take them. So they will not get many takers…

    I’ve pointed out some of GM’s bad moves here. But GM, even FCA–even the old AMC, at the end of the day, must design, manufacture, and market cars. Even when the cars are ‘bad’, they cannot be complete inept. Showing 18k experienced employees is not smart.

    I also doubt GM is as inefficient as it seems. The major decisions are made by the few at the top, such as what the cars will look like, sell for, engines/features, etc. It take a LOT of people to execute.

    I predict today’s “Halloween” announcement, coupled with earnings that ‘beat expectations’ will prove the be one of the dumber major decisions GM has made. People will be distracted and do their jobs less well than they would have. This made Wall St happy, and it may help with negotiations with the UAW next year. GM does have too many plants, at least compared to Ford. GM also makes more money DESPITE that.

    If GM follows Ford and FCA and axes it’s cars, which this move would seem to presage, then when we have the next oil shock, only the Asians will have what people want….to GM’s detriment.

    The ‘electric vision’ is a long way out, and needs a lot of govt subsidy. It is over-rated and will be underwhelming.

    I don’t think this is a smart move on GM’s part, and time will tell–but they are not so STUPID as to can 18k salaried people out of 50k at once. That won’t happen.

  • avatar
    Hummer

    You guys are hilarious, I love the projecting I’m seeing.

    We go from 8 years of no recovery, extremely low interests rates, growth rates lower than any administration in the history of the country; hand all that to a new administration.
    To an economy that has much higher growth rates (muh magic wand), low unemployment(lowest in history for certain groups), fed continuously raising interest rates faster than the country should even be able to handle it, consumer confidence highest level since 2000 etc.
    Trump was handed an economy in shambles, its slowly getting better but no one claimed it wouldn’t be a bumpy road back up, of course this statement goes against “the narrative” so I guess facts < feelings.

    But the best part of this whole comment section is blaming this administration for a company that is not government owned finding itself in financial dire. Rather it is run by a group of inept activist that have destroyed GMs market share globally and is now offering 18k employees buyouts.

    Outside of a leftist utopian modern Soviet Union any company that makes crap products while other companies offer better products; will see its market share diminish. Very simple concept.

    Orange man bad
    Orange man mean

    Tl;dr
    Activists shouldn’t be CEOs, GM needs real leadership.

    • 0 avatar
      craiger

      Auto sales are in secular decline regardless of any cyclical economic trends.

      I hope that Powell and the OMC come to understand that the economy isn’t strong enough to withstand 4 more rate hikes over the next 14 months.

      The trade war with China is going to have casualties but it needs to be fought.

    • 0 avatar
      golden2husky

      Jesus, Hummer, take that orange pole out of your uh, mouth.

      https://www.macrotrends.net/2481/stock-market-performance-by-president

      Click on DJT and BO and compare performances. I might have the flu but I know BS when I see it. Obama was given an economy in shambles. And the FED operates out of the political circus by design. If left to the Orange one, he’d keep the rates as low as possible so his “numbers” will look good for his term, only to allow the economy to implode afterwards…like feeding 160 volts to a light bulb.

      Just wait till it comes time to reckon for the tax gift to the 1%. Mitch “jiggle jaw” McConnell is already eyeing Social security. Hope you are in the 1% bub.

    • 0 avatar
      nrcote

      Hummer > Trump was handed an economy in shambles,
      Hummer > its slowly getting better

      ROFL That’s pathetic. Try again.

  • avatar
    tomLU86

    Hummer, at this point in time, GM products overall are no worse than their competitors–perhaps they are even better, if one buys into JD Power and other surveys.

    GM 2018 is purveyor of excellent but boring cars–like most auto companies selling cars in North American. Lots of features, ‘best performance ever’, generally well-built. Like everyone from Kia to Mercedes (with the possible exception of FCA–but even their ‘less reliable’ vehicles are good by historical standards.

    GM is also typical of corporate America in wanting something for nothing. What are the ‘incentives’ they are offering their salaried workers? I suspect they are on the cheap end. If so, not enough people will take them. Then you will have the turmoil of ‘who will they cut?’ It won’t help the company’s quest for ever higher profits and ‘no emissions, congestion, or accidents’. Good luck!

    Craiger, if one is content or happy with their income and what it gets them, the economy is doing well; if one is unemployed or can’t make ends meet, it is doing poorly.

    Whatever the Fed does, will probably be wrong. Low interest rates have mostly helped the wealthy, as money has poured into the stock market…a little bit of that has trickled to middle America.

    The Feds are spending $3 for every $2 they take in. Maybe they can make it $4? It’s all good…till it isn’t.

    Our economy is an illusion, as long as most everyone believes it.

    When enough people don’t, and it won’t take many, it will be 2008 all over again.

    Enjoy the good times we are having… They won’t last. They never do. And usually the bad ones don’t either—but they can be very bad–just ask WWII survivors, or the people of Vietnam, or Depression survivors.


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