GM invites 18,000 workers to quit
As General Motors report-ed a healthy US$2.5 billion third-quarter profit, the Detroit automaker ramped up its cost-cutting efforts by offering buyouts to 18,000 white-collar workers.
The company, while acknowledging it's in good shape now, said Wednesday it needs to be smaller to prepare for tougher times that might be ahead as it continues to get ready for a future of electric and autonomous vehicles.
"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," GM said in a statement. "We are doing this while our company and economy are strong."
The earnings and buyout news drove GM shares higher in Wednesday afternoon trading. The stock was up 8.6 per cent to US$36.43, after mostly falling since June.
Buyout offers were made Wednesday to salaried workers in North America with 12 or more years of service. GM spokesman Patrick Morrissey wouldn't say whether the company has a target number for employee reductions, nor would he say if there will be layoffs if too few employees take the buyouts.
"We will evaluate the need to implement after we see the results of the voluntary program and other cost reduction efforts," he said.
Workers have until November 19 to make a decision, and they would leave the company by the end of the year, GM said. The company has 50,000 salaried workers in North America.
The offers came as GM's earnings surprised Wall Street by riding strong prices for much of its model line-up across the globe, especially in the United States where it rolled out redesigned versions of its Chevrolet Silverado and GMC Sierra pickups.
"Our discipline came through this quarter," Chief Financial Officer Dhivya Suryadevara said, adding that she believes strong prices are sustainable as GM builds inventory of light-duty pickups and rolls out heavy-duty versions.
The average sale price of a GM vehicle in the US reached US$36,000, US$800 more than a year ago and a third-quarter record.
Even as auto sales started to ebb in the US, China and elsewhere, GM said it earned US$1.75 per share. Excluding one-time items, the company made US$1.87, far exceeding analyst projections of US$1.25 per share, according to a survey by FactSet.
Revenue jumped 6.4 per cent to US$35.8 billion, also topping forecasts.
The company was resilient in a declining Chinese market, where it posted record third-quarter income of US$500 million from July through September. And its pretax profit in North America, its most lucrative market, rose 33 per cent to US$2.8 billion with a profit margin of 10.2 per cent.
GM's global retail sales to individuals dropped 15 per cent during the quarter, to 1.98 million vehicles. But sales to dealers, the point at which GM books revenue, rose 4.5 per cent, to 1.13 million vehicles.