General Motors (GM) outlines its plan to extract $2 billion in cost savings, and cuts to its workforce will be a big part of that.
“This voluntary program offers eligible employees the opportunity to change careers or retire early. We offer three packages based on enterprise level and service. Employees are strongly encouraged to consider the program,” a GM spokesperson said in a statement sent to Yahoo Finance. “By sustainably reducing structured costs, we can improve vehicle profitability and remain agile in an increasingly competitive market.”
GM will offer these buyouts to all US employees who have been with the company for at least five years and to global executives with at least two years of service. Employees who accept the offer will receive one month’s salary for each year of service with the company (up to 12 months), as well as COBRA health insurance coverage. Executives who take the package will receive a base salary, incentives, COBRA coverage and access to outplacement services.
In an 8-K filing submitted by GM on Thursday, the automaker says it expects to take a pretax charge of $1.5 billion and up to $300 million in non-cash pension reduction charges. before taxes. GM said the majority of the charges would likely be incurred in the first half of 2023.
GM says it instituted this Voluntary Separation Program (VSP) to “accelerate fixed cost reduction efforts,” which include such efforts as reducing vehicle complexity, expanding the use of sub- shared systems between gas-powered cars and future electric vehicles, and the decrease in discretionary spending, among others. things.
Just a few weeks ago, GM launched performance-based layoffs, which the company says did not constitute layoffs, for 500 workers, or less than 1% of the company’s 81,000 global employees. GM.
It came after GM reported strong fourth-quarter earnings, driven by record revenues. At the time, GM was adamant that the layoffs were not being considered.
“I want to be clear, we are not considering any layoffs as part of this ($2 billion in savings). We will manage the workforce through attrition and targeted hiring for our priorities, but ensuring that we are monitoring costs so that if we get into a weaker price situation or see consumer weakness, we can respond more quickly,” GM Chief Financial Officer Paul Jacobson said in a statement. interview with Yahoo Finance following the release of GM’s fourth quarter results.
At the time, GM’s insistence on no planned job cuts was an anomaly considering the entire industry at the time. Ford said it would lay off 3,800 workers in Europe as part of its cost-cutting plan, and Stellantis idled its Jeep Cherokee plant in Belvidere, NJ, leaving 1,350 factory workers permanently laid off as of the 1st of March.
GM shares were trading lower Thursday at noon.
—
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on instagram.
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app to Apple Or android
Follow Yahoo Finance on Twitter, Facebook, instagram, Flipboard, LinkedInAnd Youtube