GM offers salaried employee buyouts, will take up to $1.5 bln charge
General Motors Co (GM.N) on Thursday said it was offering buyouts for most of its salaried employees and expects to take a pre-tax charge of up to $1.5 billion to cover the costs.
The announcement comes as layoffs by U.S. companies in the past two months touch their highest since 2009, with the tech sector accounting for more than a third of the over 180,000 job cuts announced.
The largest U.S. automaker in January disclosed a $2 billion cost cut target, including reducing employment through attrition.
Under the terms of the staff reduction plan, all U.S. 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.
GM CEO Mary Barra said in a memo to employees seen by Reuters 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 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,” 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 expects to take the bulk of the charge in the first half of 2023.
GM, whose shares fell 4.3%, had 58,000 salaried employees at the end of 2022.
Eligible employees interested in the voluntary program must sign up by March 24 and those agreeing will leave GM by June 30. Barra added “taking this step now will help avoid the potential for involuntary actions.”
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 Co (F.N) said it planned to eliminate 3,800 product development and administration jobs in Europe in the next three years.