GM offers buyouts as the company seeks to cut operating costs.
“We are doing this while our company and economy are strong,” GM stated as it announced its voluntary severance program to a third of its salaried employees in North America. The company posted strong financial results in the third quarter of 2018, with earnings of $2.8 billion in North America. However, as The Detroit News reports, this move could be in preparation for an industry downturn – thanks in part to recent tariffs – as well as a shift in resources toward new technologies, like self-driving cars.
Salaried employees working with GM for 12 years or more have until November 19th to decide if they want to accept the buyout. If enough employees don’t take the offer, the company may resort to laying off employees. The company also mentioned in a statement, “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.” While it is offering the buyouts, there’s no word at the moment that GM plans to make immediate cuts to its staff.
Shifting resources toward autonomous vehicles
Per a CNN Money report, the company didn’t disclose exactly what the buyout offer entails. However, the report notes buyouts typically follow a formula that figures out a weekly pay rate based on how long the employee has been with the company. Steel and aluminum tariffs hit GM’s bottom line to the tune of about $300 million last quarter. Next year, commodities costs could increase to $1 billion. While it is staging buyouts in certain parts of the company, GM is also investing heavily in autonomous development. This year, GM Cruise has spent $534 million on development.
At the moment, only white-collar, salaried employees are part of the buyout deal. Currently, the company employs around 50,000 salaried staff in the U.S. GM hasn’t announced any plans to offer buyouts to its hourly production workers, as that would require making an agreement with the United Autoworkers Union (UAW).