Published: Sat, November 03, 2018
Business | By Tara Barton

General Motors plans to cut costs with employee buyout offers

General Motors plans to cut costs with employee buyout offers

GM posted a blowout third quarter with net income of $2.5 billion-25 times greater than last year's third quarter-and almost $20 billion in cash.

"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", said GM Spokesman Pat Morrissey.

Eligible employees - roughly 36 percent of its 50,000 North American salaried workforce - have until November 19 to make a decision regarding the program.

GM reported good third-quarter results, proving that the automaker is "still in a good place in terms of our performance and the future", Morrissey said.

GM shares jumped more than 8 percent in pre-market trading. Ford, however, has an older product line, and said its net pricing in North America fell by $318 million in the third quarter.

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Earlier this month, Ford said it would cut its 70,000-strong global salaried workforce by an unspecified number and hoped to complete the cuts by the end of June 2019. Excluding one-time items, the company made $1.87, far exceeding analyst projections of $1.25 per share, according to a survey by FactSet.

Revenue in the quarter rose 6.4 percent to $35.8 billion, above the $34.85 billion analysts had expected. The Detroit automaker put up a record income of $500 million from July through September in China despite declining sales and rising trade tensions. And its pretax profit in North America, its most lucrative market, rose 33 per cent to $3.68 billion with a profit margin of 10.2 per cent.

GM was hit once again by costs associated with its giant recall for faulty ignition switches. He was referring to GM's sale of the European Opel and Vauxhall units to France's PSA Group. The company posted a $440 million charge as it updated estimated costs for legal claims.

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.

The program is in addition to the company's previously announced plans to squeeze $6.5 billion in cost efficiencies from 2015 to 2018. Retired Chief Financial Officer Chuck Stevens talked about the possibility of cutbacks in the workforce last April. 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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