Published - March 10, 2023 @ 3:32 PM (EET)
In a plan to cut $2 billion in annual costs and preserve profits, General Motors Co. (NYSE:GM) Thursday announced it will offer voluntary buyouts to most of its 58,000 US white-collar staff.
According to the regulatory filing, GM will offer the eligible employees lump sum payments and other compensation based on years of experience, which the Detroit company said is aimed at accelerating its normal attrition process.
While GM didn't specify how many employees are eligible for the buyouts, the automaker expects to take a pretax charge of up to $1.5 billion, with most of the buyout charges expected to be all-cash and occur during the first half of the year.
Earlier, Chief Executive Officer Mary Barra cut hundreds of management jobs to weed out underperformers and spur growth. However, the Voluntary separation program is not a layoff but instead gives employees who have spent five or more years at the company the option to leave.
Eligible and approved US employees will be granted one month's pay for every year they worked up to 12 months and COBRA health coverage.
"By permanently bringing down structured costs, we can improve vehicle profitability and remain nimble in an increasingly competitive market," reads the Barra memo.
Moreover, the automaker will offer buyouts to executives outside of the US with at least two years of tenure at the company and said that 30% to 50% of its expected savings should come this year, with the full amount anticipated in 2024.
The announcement comes as layoffs by US companies touch their highest since 2009 in the past two months, with the tech sector accounting for more than a third of over 180,000 job cuts announced.
In February, Ford (NYSE:F) announced 3,8000 job cuts in Europe over the coming years. Noting on its fourth-quarter earnings call, the automaker announced an operating profit loss of $2 billion.
