General Motors to Offer Employee Buyouts

02 Nov General Motors to Offer Employee Buyouts

Nov. 1, 2018 – General Motors Inc., as a reaction to impressive third-quarter profits, has decided to take interesting steps with its salaried employees: buyout packages. Effectively standing in a commanding position, the Detroit-based manufacturer believes cutting costs on the heels of profit is an astute method for the future. Preparing for a predicted market slump, GM is effectively looking to put capital aside before the industry is in dire straits.

In 2008, the North American giants fell victim to federally-enforced bankruptcy, wherein they sacrificed half of their vehicle brands. In the midst of almost losing their headquarters, closing an enormous number of factories, they also offered buyouts. In this situation, however, it was essentially because they couldn’t afford to keep everybody on. These were difficult financial times, in contrast to today’s situation. Historically, the blue-collar mentality of the manufacturer has been to fight tooth and nail for every worker. As 2018 nears its end, GM is looking to secure their safety in case of potential troubles.

The news is encouraging for investors, as they saw an increase of more than 9% in share value. The salaried employees who qualify for the voluntary severance might not be quite as enthusiastic, as they are being optioned out of a progressively profitable company. Given until November 19th to make their decision, the 18,000-strong workforce members will bolster the value of the manufacturer exponentially.

If the company does not reach its projected financial savings – estimated at $6.5 billion – after the buyout period, the possibility of a layoff sweep will become more likely. Cost-cutting and restructuring have been the norm within GM lately. The increasingly unpredictable production and operation costs at home and abroad, as with trade and tariff uncertainties, agitates those accountable. CEO Mary Barra’s plan is to settle in while the iron is relatively hot.