Why This General Motors Restructuring Effort Could Be Different Than Before

If you look at the automotive industry, you see automakers raking in profits. However, General Motors and others are trying to position themselves before the market sours, which it almost always does after years of booming growth. The auto industry is cyclical, and everybody seems to recognize that. There’s a market contraction coming, and General Motors, along with its competitors are racing to position themselves to survive the storm. That’s why GM is offering 18,000 salaried employees voluntary buyouts by the end of the year.

“Our structural costs are not aligned with the market realities nor the transformational priorities ahead,” CEO Mary Barra wrote employees in a memo on October 31, according to The Detroit News. “Profitability is only part of what’s required for our transformation. To achieve what this company is truly capable of—and to win—we need to be even more agile and faster to market. And we need to do all of that against a backdrop where those outside our company are skeptical of our ability to manage through an eventual downturn in the economy—skepticism we see in our stock price, which has recently been trading below our initial public offering price.”