More Than 5,000 General Motors Employees Opt For Voluntary Buyouts
Five thousand white-collar workers have taken buyouts from General Motors, sufficient to avoid layoffs. In a memo to employees on Tuesday, Mary Barra said the buyouts will save about $1 billion yearly, about half the $2 billion the company wishes to cut annually by 2024.
More Than 5,000 General Motors Employees Opt For Voluntary Buyouts
The company currently has about 58,000 salaried employees in the US, so a company-wide involuntary separation program is not being considered. It is uncertain times for the auto industry, transitioning from internal combustion to electric vehicles.
It’s GM’s goal to have only electric passenger vehicles on the road by 2035. All while making cars, trucks, and SUVs with gasoline engines, Detroit’s automakers spend vast amounts of money developing and building electric vehicles.
Furthermore, they spend significantly acquiring minerals and parts essential for EV batteries. Our actions will ensure that GM remains agile and competitive and maintains momentum, the company said in a prepared statement.
To save the remaining $1 billion, GM plans to reduce the complexity of vehicles and extend the use of shared parts.
In the United States, most of the automaker’s 58,000 salaried employees with at least five years of employment received white-collar separation packages on March 9, whereas departing executives needed only two years of service.
The buyout deadline passed on March 24, with more people opting in than the company initially expected. By the end of June, thousands of employees expected to leave the company with funds in hand.
As the SEC filing indicates, the buyouts have a pretax value of about $1.5 billion. Several employees have opted into a voluntary separation program, so Jacobson said involuntary layoffs are unlikely.
In addition to cutting travel and marketing costs, the company plans to reduce operating costs across the organization, the statement said.
As the workers leave later in 2023, the company will save $1 billion per year with the buyouts, according to Chief Financial Officer Paul Jacobson.
As Jacobson pointed out, the payback is pretty quick. As of this year, 30 per cent to 50 per cent of GM’s operating cost goal will have been achieved with $2 billion in savings by 2024. Jacobson said GM is likely to reach its 2023 goal after the response to a buyout program.
To maintain tight inventory control, GM will reduce production, Jacobson said. Fort Wayne, Indiana, was closed for two weeks earlier this year by the automaker.
Global executives and white-collar workers with at least five years of service were offered buyouts by General Motors last month. GM’s Jacobson said that the number of workers taking buyouts was about what they expected. Initially, he said the company made the offers without laying off anyone.
Our willingness to pay for voluntary programs was a vital component of incentivizing people to participate, especially those nearing retirement or those who were just interested in changing careers or lifestyles, while at the same time trying to avoid layoffs or involuntary transfers, he said.
Employees who want to take the buyout must sign up by March 24, and approved employees must leave by June 30. Salaried employees are offered one month of pay for every year they have worked, up to a year and a half.
This year, they’ll also receive a COBRA health plan and part of their bonuses. On Tuesday, GM published sales figures showing the company surpassed Ford to become the US’s second-largest seller of electric vehicles.
However, GM’s 20670 EV sales, while higher than Tesla’s 161,000 from January to March, are far below those of market leader Tesla.
Ford sold only 10,866 EVs despite retooling a factory in Mexico to increase production, mainly because it stopped making its top-selling Mustang Mach-E SUV.
In the third quarter, the company only built Mach-Es for seven weeks, reducing sales. During a pre-delivery test, Ford’s Lightning electric pickup caught fire, ending production. March 13 saw production resume after the problem was fixed.
However, Ford’s first-quarter EV sales rose 41 per cent over last year’s first quarter. GM delivered 19,700 Chevrolet Bolt hatchbacks and utility vehicles as part of its first-quarter sales.
Only 358 Bolts were sold last year, but 142,000 older Bolts were recalled due to battery fires, which prevented the company from selling more.
