GM offers buyouts to 18K workers after posting strong profit

Daniel Fowler
November 3, 2018

"We sent a letter to employees saying any salaried employee in North America with 12 years or more experience will have the opportunity to take a voluntary severance program", GM spokesman Pat Morrissey said. Those who were given the offer have until November 19 to make a decision, and they would leave the company by the end of the year, he said.

Depending on how many workers take the offer and other cost-cutting efforts, Morrissey said, "we'll re-evaluate doing an involuntary program after the first of the year".

"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". The stock was up 8.6 per cent to $47.94, after mostly falling since June.

In the third quarter, GM said it was able to raise prices by $900 million in North America, in part because it is launching a new generation of its popular full-size pickup trucks, the Chevrolet Silverado and GMC Sierra. And its pretax profit in North America, its most lucrative market, rose 33 percent to $2.8 billion with a profit margin of 10.2 percent.

GM's USA rival, Ford (F), said in early October that it plans to thin the ranks of its salaried workforce by the second quarter of next year.

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Excluding one-time items, GM earned $1.87 a share in the third quarter, easily beating the $1.25 average analyst estimate, according to I/B/E/S data from Refinitiv.

Revenue in the quarter rose 6.4 percent to $35.8 billion, above the $34.85 billion analysts had expected.

GM International posted an operating profit of $139 million in the quarter, driven by record equity income in China of about $500 million despite the slowdown there. The automaker is also still on the hook for its deadly ignition switches and recorded a $440 million charge in the third quarter for the related ligitation. GM has said it is aiming to save $6.5 billion in "cost efficiencies" through 2018. Last year, GM sold Opel and Vauxhall to Peugeot and Citroën, exited the South Africa and India markets, pulled out of East Africa, cut employees in Singapore, and dismantled Holden sales and manufacturing in Australia.

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.

In July, GM lowered its full-year forecast, citing higher steel and aluminum costs due to tariffs. Simplification "will allow us to take significant structure out of the business, whether it's corporate staff, whether it's engineering staff", he said.

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