GM offers most of its US salaried employees cash to leave company

As GM spends billions on the shift to electric vehicles, it is slashing costs elsewhere. PHOTO: REUTERS

BENGALURU – As General Motors spends billions on the shift to electric vehicles (EVs), it is slashing costs elsewhere and on Thursday offered the majority of its US salaried workers cash to leave the company to avoid layoffs in the future.

The largest US automaker expects to take a pre-tax charge of up to US$1.5 billion (S$2 billion) to cover the costs of the voluntary staff buyouts.

GM had about 58,000 salaried employees in the United States at the end of 2022.

The announcement comes as layoffs by US companies in the past two months touch their highest since 2009, with the technology sector accounting for more than a third of the more than 180,000 job cuts announced.

GM in January disclosed a US$2 billion target for cost cuts, including reducing employment through attrition.

Under the terms of the buyouts, all US salaried employees with at least five years of service and all global executives with at least two years of service will be offered lump sum payments and other compensation to exit the company, GM said.

US employees who are approved for the buyout will be granted one month’s pay for every year they worked, up to 12 months, as well as health coverage. They also will receive prorated team performance bonuses and outplacement services. 

GM chief executive Mary Barra said in a memo to employees seen by Reuters that the automaker was outlining the “biggest opportunities” to reduce its structural cost, including reducing “vehicle complexity and expanding the use of shared subsystems between existing internal combustion engine and future EV programmes”.

She also cited decreasing discretionary spending and “reducing salaried staff through attrition, primarily in the United States”.

“By permanently bringing down structured costs, we can improve vehicle profitability and remain nimble in an increasingly competitive market,” Ms 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.”

Eligible employees interested in the voluntary programme must sign up by March 24 and those agreeing will leave GM by June 30. “Taking this step now will help avoid the potential for involuntary actions,” Ms Barra added.

The buyouts are separate from job cuts the company made last month.

A GM executive in February said the company was cutting hundreds of executive-level and salaried jobs. Peer Ford Motor said it planned to eliminate 3,800 product development and administration jobs in Europe in the next three years.

Ford has said it will spend up to US$20 billion reorganising for EVs on top of the US$30 billion it already planned to spend developing electric and autonomous vehicles, while GM said it planned to spend US$35 billion and that it aimed to make the EV business profitable by 2025. REUTERS

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