General Motors Offers Voluntary Buyouts To Salaried Employees, Expects To Take On 1.5 Billion USD Charge
General Motors has been offering buyouts to many salaried workers in the U.S. and some global executives. The initiative has been taken to reduce costs as the company is transitioning to electric vehicles. The deecision has been taken to save costs.
General Motors has been offering buyouts to many salaried workers in the U.S. and some global executives. The initiative has been taken to reduce costs as the company is transitioning to electric vehicles.
The automaker has not yet revealed how many employees will be affected by the decision but confirmed that the move had been taken to fasten the rate of attrition to meet the last goal of obtaining a 2 billion USD in cost cuts by the end of the year. General Motors has addressed 58000 salaried workers working in the US.
The company has further stated that the decision has been taken to avoid any possible firings shortly.
Offers of buyouts will be given to regular employees having five years of service and global executives who have worked for the company for two years.
The buyouts allow the US worker of being offered one month of pay for every year of their commitment, up to 12 months. They will be provided with part of the bonuses and health care plan for health COBRA firm.
The decision to offer a buyout has come at an uncertain time in the automaker industry. The automobile industry has seen a transition from combustible engines to electric vehicles operated with lithium-ion batteries. General Motors has a goal of selling only electric vehicles by the end of 2035.
The transition has not come easy. The switch requires more search and spending in the developmental areas on both types of vehicles followed by massive capital expenditure for battery factories and updation of assembly plants, and spending funds for obtaining scarce materials.
Chief Financial Officer of General Motors, Paul Jacobson, stated in an interview that the buyouts are being conducted to prepare for any economic downturn or economic recession.
General Motors’s auto sales have remained rigid, the company has observed a reduction in the prices of the vehicles. They stated in a conference that they wanted to be cautious because they do not want to turn behind the macro signs. After all, if it happens, so they might regret that they missed the chance.
The cost reduction was announced by General Motors after the company realized fourth-quarter earnings in January when Jacobson stated that the procedure would be completed by filling the positions that have been vacated due to attrition.
Recently, the auto-maker company announced that it would lower the expenditure by minimizing the complexity of its vehicles and more sharing of components between the combustible and electric models.
GM has decided to reduce discretionary spending companywide and aim for growth initiatives to provide further benefits.
Employees seeking to accept the buyouts have to sign up by March 24, and they would have to leave the workforce by June 30.
Layoffs, Buyout, and Other Tactics Employed by General Motors To Prepare For the Worst-case Scenario:
Previously, General Motors announced that they would undergo a restructuring process. They have decided to let go of hundreds of executive-level and salaried jobs. A person familiar with the matter has stated that the global layoffs are in the low hundreds.
Chief People Officer Arden Hoffman has said in a letter to the employees that the automaker company is committed to saving 2 billion USD in cost-cutting by the next two years. The target was revealed in January. The automaker has previously mentioned that it did not plan to initiate layoffs and has not called them layoffs.
General Motors has further revealed that the cuts are based on performance calibration and have been initiated to manage the attrition curve and overall reduction of costs. He has added that the company must act and focus on maintaining efficiency in an environment where the competitor’s margins are improving.
They need a winning team to deliver the commitments and overcome the competition. The company demands a culture shift that allows them to hold them accountable for achieving higher rates of operating when required.
The shares of General Motors have closed at 1.5 percent.
The automobile industry has been undergoing a massive restructuring process. Ford Motors has stated that they are going through a restructuring process, and the change will impact one in every nine jobs in Europe. The cuts will be inclined toward product development and administration to reduce the costs in the region.
Edited by Prakriti Arora