General Motors has announced a voluntary severance program for nearly 18,000 white-collar employees in North America. The move is intended to help the company reduce structural costs and comes just as it reported a healthy $2.5 billion profit in the third-quarter.
The Detroit automaker notes that company is performing well financially, but it still aspires to control its costs while the company and economy are in good shape. The logic, of course, being that if and when an economic downturn occurs, GM will continue to generate profits.
GM has not disclosed the terms of the buyout it is offering employees. The company has around 50,000 salaried employees in North America and is not stating if the goal is to hit a specific employee headcount target.
The automaker has long talked about reducing costs in preparation for an economic downturn. Part of discussion has centered around an announced cost reduction target of $6.5 billion by the end of this year. At last report, the company is on-target to achieve its cost reduction goal. This employee reduction is likely an additional effort since the cost reductions wouldn’t be accrued until 2019.
After announcing its third quarter earnings yesterday, GM’s stock climbed nearly 7 percent.