About 5,000 white-collar workers at General Motors took the company’s buyout offers, which the automaker says is enough to avoid layoffs at this time.
GM said today that the offers will save about $1 billion per year in costs, about half of the $2 billion it wants to cut annually by the end of 2024. The company now has about 58,000 salaried workers in the U.S.
The buyouts come at an uncertain time for the auto industry, which is in the midst of a transition from internal combustion to electric vehicles. GM has a goal of selling only electric passenger vehicles by 2035.
The Detroit automaker and its competitors are making huge capital outlays to develop and build new electric vehicles, all while continuing to make cars, trucks and SUVs with gasoline engines. They’re also spending big to get scarce minerals and parts needed for EV batteries.
“The steps we are taking will allow us to maintain momentum, remain agile, and create a more competitive GM,” the company said in a prepared statement.
GM hopes to get the remaining $1 billion in savings by reducing vehicle complexity and expanding the use of shared parts on internal combustion and electric vehicles. It also plans to cut spending across the company, including for travel and marketing, the statement said.
At a Bank of America conference today, GM Chief Financial Officer Paul Jacobson said the company will take a $1 billion first-quarter charge because of the buyouts, but said it will save $1 billion per year as the workers leave later in 2023. “You’ve got a pretty quick payback,” Jacobson said.
Last month GM offered buyouts to white-collar workers with at least five years of service, and global executives who have been with the company for at least two years.
Jacobson said the number of workers taking the buyouts is about what GM expected. The company made the offers in an effort to reach cost goals without layoffs, he said.
“It’s important that we were willing to pay for the voluntary program to incent people to go who maybe were closer to retirement or had just decided they wanted a change in career or lifestyle, at the same time to do everything we can to try to avoid involuntary or layoffs,” he said. “And I think we’re in a position where we’re going to be able to do that.”
GM’s statement didn’t completely rule out layoffs in the future, though, saying that “involuntary separations are not a consideration at this point.”
Employees taking the buyouts had to sign up by March 24, and those who are approved for the packages have to leave by June 30.
U.S. salaried workers are being offered one month of pay for every year of service, up to 12 months. They’ll also get COBRA health care and part of the bonuses they would receive this year.