General Motors Co. has drawn about 5,000 claims for the buyout offer announced in early March, so for the present time it will not be proceeding with layoffs in its effort to save about $1 billion in annual operating costs. GM has not said how many voluntary buyouts it sought from among its 58,000 U.S. salaried workers, though earlier in 2023 it reported to analysts that 500 positions would be eliminated as part of its cost-cutting effort.
"The steps we are taking will allow us to maintain momentum, remain agile, and create a more competitive GM,” according to a statement.
GM is seeking to reduce operating costs by $2 billion by the end of 2024, offsetting some of its considerable capital investments to implement manufacturing capacity for numerous electric vehicles by 2025. Of that total targeted savings, 30-50% are expected to be achieved in 2023, GM indicated in January.
In a March letter from chairman Mary Barra, GM offered buyouts to U.S. salaried employees with more than five years of service, as well to global executives with at least two years of service. Barra wrote that the buyouts are “designed to accelerate attrition in the U.S.,” and to minimize the number of future “involuntary actions” to separate workers from the company.
U.S. employees who accept the buyout will be given one month’s salary for every year of employment (up to 12 months), COBRA health coverage, pro-rated team performance bonuses, and outplacement services. Non-U.S. employees will receive base salary, incentives, COBRA and outplacement services.
Earlier this week CFO Paul Jacobson told analysts and media GM will take a $1 billion charge for Q1 2023 to cover the buyouts, but that amount will be recouped later in the year as the workers depart.
A further $1 billion in savings are expected to be achieved by reducing vehicle complexity and expanding use of shared parts on internal combustion and electric vehicles, according to a GM statement. The automaker also will cut travel and marketing costs, among other corporate expenses.