Automaker to save $4.5 billion through massive job cuts, but it's spent far more than that trying to boost stock price
When General Motors announced it was cutting up to 14,000 jobs and idling five automotive plants, it justified the massive cuts by citing long-term savings. The cuts would free up $6 billion in cash, for a net savings of $4.5 billion in cash by 2020.
The move will « make General Motors more agile, resilient and profitable » while the economy’s still revving, CEO Mary Barra told investors Monday. Wall Street seemed to believe her, with GM’s stock rising nearly 5 percent and one analyst on the call congratulating her « on getting in front of the curve here. »
But GM hasn’t exactly been tightfisted in recent years. The company has spent $10.6 billion since 2015 buying back its own shares, according to filings with the Securities and Exchange Commission. Stock buybacks do nothing for a company’s productive capacity. But because buybacks reduce the number of shares on the market and thus make a stock more valuable, they can be popular with many investors as well as senior executives who are paid largely in stock.
GM is far from the only company to spend money goosing its stock price . This year alone, corporations have announced some $955.6 billion in buybacks, according to TrimTabs Investment Research, and the figure for the whole year could exceed $1 trillion.
But GM started its stock repurchasing program back in 2015, less than six years after a bankruptcy process that cost U.
