General Motors (GM) announced on April 4 that about 5,000 salaried workers had accepted the company’s buyout offers, which the automaker says is enough to avoid layoffs at this time.
The offers will save about $1 billion annually in costs, according to GM.
The automaker said the “voluntary separation program” is part of efforts to “accelerate fixed cost reductions.” However, GM didn’t completely rule out layoffs in the future.
“Given the results of the program, company-wide involuntary separations are not a consideration at this point. The steps we are taking will allow us to maintain momentum, remain agile, and create a more competitive GM,” the company said in a statement.
The Detroit-based auto giant set a goal of cutting $2 billion from operating costs by the end of 2024, with about half of the total being achieved this year.
The buyouts should allow the automaker to avoid involuntary dismissals, according to CFO Paul Jacobson. The company now has about 58,000 salaried workers in the United States.
Jacobson said GM is now allocating 75 percent of its annual capital spending toward electric vehicle (EV) projects and that the company is in a good position to benefit from EV subsidies under the Inflation Reduction Act because of its investments in North American battery, raw materials, and EV assembly.
GM hopes to get the remaining $1 billion in savings by reducing vehicle complexity and expanding the use of shared parts on internal combustion and EVs. It also plans to cut spending across the company, including for travel and marketing, the statement said.
Last month, GM offered buyouts to white-collar workers with at least five years of service, and global executives who have been with the company for at least two years.
During an appearance at a Bank of America Securities conference, Jacobson said the number of workers taking the buyouts is about what GM expected. The company made the offers in an effort to reach cost goals without layoffs, he said.
“It’s important that we were willing to pay for the voluntary program to incent people to go who maybe were closer to retirement or had just decided they wanted a change in career or lifestyle, at the same time to do everything we can to try to avoid involuntaries or layoffs,” he said. “And I think we’re in a position where we’re going to be able to do that.”
Employees who accepted the buyouts are expected to leave the company by June 30.
