GM Offers Buyout to 18,000 Salaried Employees

Matt Posky
by Matt Posky
gm offers buyout to 18 000 salaried employees

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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  • Buickman Buickman on Oct 31, 2018

    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

    • Redapple Redapple on Nov 01, 2018

      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.

  • TomLU86 TomLU86 on Nov 01, 2018

    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 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.

  • Hummer Hummer on Nov 01, 2018

    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

    • See 2 previous
    • Nrcote Nrcote on Nov 01, 2018

      Hummer > Trump was handed an economy in shambles, Hummer > its slowly getting better ROFL That's pathetic. Try again.

  • TomLU86 TomLU86 on Nov 01, 2018

    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.