Even though GM reports their earnings on a quarterly basis and not monthly as some of the other companies do, the company did report an increase in quarterly profits thanks to high-margin pickup trucks and crossovers in the US market. The cost-cutting measures are taken, while met with the ire of the lawmakers in North America, have aided in allowing the GM brands to achieve their forecasted earnings for the entire year. The projected earnings for 2019 show GM increasing its shares in the market by 1.7 percent to offer stronger sales and more models on the higher end of the market.
All Profits Found Domestically for GM
GM is the leading US automaker and all of the profits came from the market in North America. GM is a global giant in the automotive world, but the overseas markets aren’t offering as lucrative a level of profits as in the US. Even though GM has a strong presence in both China and South America, these two markets didn’t add any profits to the bottom line of the company for the fourth quarter. The profits made domestically show a serious commitment to the larger vehicles that make a huge difference for the automotive market as a whole.
The Argument for the Cutbacks at GM
It would be difficult to argue that the cutbacks that are being made by GM, which includes closing five plants and cutting nearly 15,000 jobs, are not justified. Even though we want to believe that companies need to take care of their employees, GM had simply grown to a level at which they weren’t utilizing every aspect of every plant they own. The problem was a lack of utilization and the fact that the sedan market has slowed and is showing that we’re turning toward the larger vehicles for the drive we’re looking for.
These Changes Cost GM Money
Cutting back on the plants in operation and the models that are being offered doesn’t come with a hefty cost for GM. The pre-tax charges come to $3 billion to $3.8 billion to pay for the cutbacks and those taking the buyouts that are offered. Even though this action will cost GM in the short term, it should free up cash flow of an additional $6 billion by the end of 2020 to allow GM to invest in electric vehicles and increase the capacity of the plants in operation.
Scrutiny and Hard Decisions at GM
There’s no way to consider the actions that had to be taken by GM to be taken lightly or to think that the leadership at GM wanted to cut their workforce by 15,000 in the short term. Unfortunately, these tough decisions have to be made at times in order to continue to secure success for the company. As we move forward, hopefully, more plants will need some of the GM workers back, much the same way the Flint, MI has been able to add 1,000 new jobs back to the production floor, but a countrywide reshuffling and restructuring are never easy for any company the size of GM.
This post may contain affiliate links. Meaning a commission is given should you decide to make a purchase through these links, at no cost to you. All products shown are researched and tested to give an accurate review for you.
