Finance

General Motors Offers ‘Majority’ Of Salaried Staff Buyouts

03/10/2023
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Topline

General Motors is offering thousands of U.S. salaried employees buyouts, the company announced Thursday, months after the Detroit-based auto-maker said it was attempting to cut costs by $2 billion by the end of 2024 as it attempts to lead the competitive electric car market.

Key Facts

The voluntary separation program is being offered to salaried U.S. employees with at least five years of service, as well as some global executives who have been with GM for at least two years, GM announced Thursday.

The offer for salaried employees includes one month pay for every year of service, up to 12 months, pro-rated performance bonuses for the year and COBRA health care, GM said in a statement.

The goal of cutting costs is to “improve vehicle profitability” and “remain nimble,” in a competitive car market, according to David Barnas, a GM spokesperson.

The company also plans to cut costs by reducing the complexity of its vehicles, sharing parts between both internal combustion vehicles and electric vehicles, Barnas said.

In the past year, both Ford and Chrysler parent company Stellantis have announced U.S. layoffs prompted by the shift to electric vehicles—Ford cut 3,000 jobs in August and Stellantis laid off more than 1,000 in February.

GM, which generated $14.5 billion in profit in 2022, is moving full force ahead with EV vehicles, aiming to solely make electric vehicles by 2035, meanwhile Ford, which generated $10.4 billion last year, has said it plans to maintain manufacturing of internal combustion vehicles as well as EVs.

Big Number

58,000. That’s how many salaried employees GM has in the U.S., according to Barnas, with an additional 81,000 salaried employees globally, mainly in China.

Key Background

Last month multiple news outlets reported GM laid off as many as 500 salaried employees. The February layoffs came a few weeks after the company reported a better than anticipated Q4, with revenue increasing 28% year-over-year to $43.11 billion. At the time of the earnings report, AP reported GM CEO Mary Barra said the company was “not planning layoffs” but did plan to limit hiring. Barra also announced GM was collaborating with Lithium Americas and investing $650 million to develop a lithium mine in Nevada, giving GM exclusive access to the first phase of lithium production, a material crucial in electric vehicle batteries. GM is ramping up electric vehicle production as it aims to produce more than one million EV vehicles in North America in 2025, the New York Times reported. GM previously offered 18,000 North American salaried employees in 2018, according to the Detroit Free Press.

Further Reading

What’s Next For GM After A Solid Q4? (Forbes)

2023 Layoff Tracker: Meta Reportedly Cutting Thousands Of Employees (Forbes)

Source: https://www.forbes.com/sites/anafaguy/2023/03/09/general-motors-offers-majority-of-salaried-staff-buyouts/