In an effort to slash expenses as it transitions to electric vehicles, General Motors(GM) is offering buyouts to the majority of its salaried workers in the United States and select global executives. The Detroit carmaker would not disclose how many jobs are at stake, but it did reveal that the move is intended to accelerate attrition in order to accomplish a previously announced goal of $2 billion in cost cuts by the end of next year. In the United States, GM employs around 58,000 salaried people.
According to the corporation, the offers are also intended to avoid any potential firings at a later date. Offers will be made to white-collar staff with at least five years of experience and global leaders with at least two years with the organization. Salary workers in the United States are granted one month’s compensation for every year of service, up to a maximum of 12 months. They will also be granted COBRA health insurance and a portion of the bonuses they would receive this year.
The decision to offer buyouts comes at a difficult time for the auto industry
The decision to offer buyouts comes at a difficult time for the auto industry, which is transitioning from internal combustion engines to electric automobiles. GM intends to sell only electrified passenger vehicles by 2035. The transition requires additional R&D spending on both types of vehicles, as well as large capital outlays for battery factories and modernizing assembly plants, as well as spending to obtain precious metals required for EVs.
The cost cutbacks were disclosed when GM posted fourth-quarter earnings in January, with Chief Financial Officer Paul Jacobson stating that they will be achieved in part by filling only strategically significant roles abandoned due to attrition.
The business also announced on Thursday that it will save costs by simplifying its vehicles and sharing more components between internal combustion and electric variants. To accelerate benefits, GM intends to reduce discretionary spending across the board and focus on growth activities.
Workers who want to participate in the buyouts must sign up by March 24, and those who are authorized must leave the firm by June 30.