Job cuts are coming at General Motors, even after a year of record earnings that gave hourly workers their highest-ever profit-sharing checks. Though there aren’t layoffs yet, GM is now looking to cut $2 billion in expenses by the end of next year. Earlier this week, the automaker announced voluntary buyouts in its salaried workforce.
GM isn’t the only company seeking to cut its workforce after record earnings. Ford is seeking cost cuts of over $3 billion by 2026, and Stellantis idled its Cherokee plant, placing some 1,350 workers on indefinite layoffs. This all comes ahead of negotiating new UAW contracts, which UAW officials have indicated a desire for higher wages considering the huge profits some automakers are seeing. With that rise in wages, automakers will seek to cut workers to bring overall costs to parity with previous contracts.
Automotive News reported that CEO Mary Barra believes that these voluntary cuts will be enough to avoid involuntary cuts like layoffs. Barra also said the automaker will seek cost reductions through redundancies in engineering and production, and by sharing more common parts across EVs and internal combustion cars. Though the potential is still there according to Barra, which she said in a company memo. “Taking this step now will help avoid the potential for involuntary actions."
GM did not say how many buyouts it is targeting, but only certain salaried employees are eligible. Salaried workers have to have at least 5 years of service for the automaker, and global executives need at least two years. Workers who take buyouts will receive one month of pay per year with the company for a maximum of one year, outplacement services, prorated performance bonuses, as well as COBRA health insurance for the same period. Executives are eligible to receive base salary, incentives, COBRA, and outplacement services.
GM expects the buyouts to cost $1.5 billion in pretax costs, though it depends on how many employees choose to leave.
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