Published: Sat, November 03, 2018
Money | By Armando Alvarado

GM offers buyouts to 18,000 salaried workers, says layoffs possible

GM offers buyouts to 18,000 salaried workers, says layoffs possible

A notification was sent regarding the voluntary severance program to employees Wednesday morning, as the automaker reported a 25 percent increase in pretax profit in the third quarter and net income of $2.5 billion.

GM employees with 12 or more years at the company - about 18,000 of its 50,000 salaried staff in the United States - will be given the offer.

They were sent offers Wednesday morning and have until November 19 to decide, a company spokesman told Reuters. GM declined to disclose the number of people it wants to take the buyout offer or the buyout program's expected cost.

The company said in a separate statement that it would consider layoffs after it sees the impact of the buyouts and other cost cutting efforts. GM reached $6.3 billion in cost-saving measures by the end of the third quarter, she said.

"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 shares jumped more than 8 per cent to $36.34, their highest in nearly six weeks.

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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.

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

GM's global retail sales to individuals, on the other hand, dropped 15 per cent during the quarter, to 1.98 million vehicles.

GM was hit once again by costs associated with its giant recall for faulty ignition switches. That's down from 90,000 a year earlier, before GM sold its European operations to PSA Group.

GM reported that its Cruise Automation autonomous vehicle unit spent $263.19 million during the quarter and said spending likely will rise as the unit heads toward rolling out a self-driving ride-hailing service sometime in 2019.

GM, along with its rivals Ford Motor Co. and Fiat Chrysler Automobiles NV have all forecasted a substantial decrease in profits from rising steel and aluminum costs from tariffs imposed by the Trump administration. Retired Chief Financial Officer Chuck Stevens talked about the possibility of cutbacks in the workforce last April. GM has said it is aiming to save $6.5 billion in "cost efficiencies" through 2018. Simplification "will allow us to take significant structure out of the business, whether it's corporate staff, whether it's engineering staff".

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