Daily Management Review

Salaried Employee Of GM Offered Buyouts, Automaker To Take As Much As $1.5 Bln Charge


Salaried Employee Of GM Offered Buyouts, Automaker To Take As Much As $1.5 Bln Charge
General Motors Co announced on Thursday that it is offering buyouts to the majority of its salaried employees and anticipates a pre-tax charge of up to $1.5 billion to cover the costs.
The announcement comes as layoffs by US companies have reached a two-year high, with the tech sector accounting for more than a third of the over 180,000 job cuts announced.
In January, the largest US automaker announced a $2 billion cost-cutting target, which included reducing employment through attrition.
According to the terms of the staff reduction plan, all salaried employees in the United States with at least five years of service, as well as all global executives with at least two years of service, will be offered lump sum payments and other compensation to leave the company.
In a memo to employees obtained by Reuters, GM CEO Mary Barra stated that the automaker was outlining the "biggest opportunities to reduce our structural cost," including reducing "vehicle complexity and expanding the use of shared subsystems between existing internal combustion engine and future electric vehicle programs."
She also mentioned reduced discretionary spending and "reducing salaried staff, primarily in the United States."
"By permanently bringing down structured costs, we can improve vehicle profitability and remain nimble in an increasingly competitive market," Barra wrote. "Now more than ever, we need to have a mindset of taking cost in everything we do. It needs to be built into our culture."
GM anticipates taking the majority of the charge in the first half of 2023.
At the end of 2022, GM had 58,000 salaried employees, despite its stock dropping 4.3%.
Employees who are eligible for the voluntary program must sign up by March 24, and those who agree will leave GM by June 30. "Taking this step now will help avoid the possibility of involuntary actions," Barra added.
The buyouts are distinct from the job cuts announced by the company last month.
In February, a GM executive announced that the company was eliminating hundreds of executive-level and salaried positions. Ford Motor Company (F.N) announced plans to cut 3,800 product development and administration jobs in Europe over the next three years.