GM offers buyouts to North American staff amid sales slump, tariffs

DETROIT General Motors will attempt to cut costs by offering buyouts to about 18,000 white-collar workers in North America.

The company made the offer Wednesday to salaried workers with 12 or more years of service.

The announcement comes on the same day that GM reported a US$2.5-billion third-quarter profit. The company says in a prepared statement that although it is performing well, it wants to continue to reduce costs while the company and the economy are strong.

The auto industry faces looming troubles such as slowing sales in the U.S. and China and higher steel and aluminum prices due to U.S. tariffs.

CEO Mary Barra said on an earnings call that GM is “taking steps to transform the workforce to ensure we have the right skill sets for today and the future while also driving significant efficiency.”

GM wouldn’t disclose terms of the buyout offers, including how many Canadian employees would be eligible for the package. It has about 50,000 salaried workers across North America, including about 2,000 in Canada.

Company spokesman Patrick Morrissey wouldn’t say whether GM is trying to reach a target number of staff. Those who were given the offer have until Nov. 19 to make a decision, and they would leave the company by year’s end, he 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. We are doing this while our company and economy are strong. The voluntary severance program for eligible salaried employees is one example of our efforts to improve cost efficiency,” the company said.

GM has long talked about reducing costs in preparation for an economic downturn. It is close to delivering on a promise to reduce structural costs by US$6.5 billion annually by the end of this year.

The efficiency push is a bid to stave off a repeat of its financial disaster in the past downturn, said Canadian automotive analyst Dennis DesRosiers. “This is a company that went through a harrowing experience with their bankruptcy ... so they’re doing the things necessary to make sure they never see that light again. So they’re addressing their cost structure.”

Industry staff also require significant skills upgrades as the automotive space looks to new technologies like self-driving cars and electrification, said DesRosiers.

“You’re not going to perform well in this industry unless you upgrade your skills, top to bottom.”

Savings from the GM employee reductions would come in 2019, after the buyouts take effect.

Morrissey wouldn’t say if GM will begin to lay off staff if too few workers take voluntary buyouts.

“We will evaluate the need to implement after we see the results of the voluntary program and other cost reduction efforts,” he said.