GM opens US voluntary layoff program to cut costs

General Motors said in January it would save $2 billion without planning layoffs. But on Thursday (9) it said it was looking for workers to leave voluntarily.

In a regulatory filing, the automaker said it was looking to save costs through attrition and a voluntary separation program in which eligible employees would receive a lump sum pay and other severance based on how long they’ve worked at the company.

The acquisitions would cost the company $1.5 billion before taxes this year.

The voluntary separation program will be offered to all salaried US employees with at least five years of service and global executives who have been with the company for at least two years, a GM spokesman told CNN.

In a statement, the company said employees are “strongly encouraged to consider” the program.

“By permanently reducing structured costs, we can improve vehicle profitability and remain agile in an increasingly competitive market,” a GM spokesman said in a statement.

The news follows the elimination of hundreds of salaried jobs earlier this month. A person familiar with the plans told CNN that these job cuts would affect a few hundred white-collar workers around the world.

GM has 167,000 employees globally, with 124,000 in North America. This includes over 42,000 members of the United Auto Workers union.

The company recently reported record annual profit for 2022 and also announced plans to cut costs by $2 billion over the next two years, including cutting corporate overhead.

But at the time, CEO Mary Barra told investors, “I want to be clear, however, that we are not planning layoffs. We are limiting our hires to only the most strategically important roles and will use attrition to help manage overall headcount.”

GM is spending a significant amount of money to shift production from traditional gasoline-powered vehicles to a lineup of pure electric vehicles.

While this ultimately reduces labor costs, as EVs don’t take as many man hours to produce, it does require billions of dollars in upfront investment. GM has said it will invest $35 billion between now and 2025 in shifting to EVs. Its goal is to have an all-EV lineup of passenger vehicles by 2035.

In a related move, Ford announced plans in February to cut 3,800 jobs across Europe, citing tough economic conditions and its big push towards electric vehicles.

The plan is part of the company’s efforts to create “a leaner and more competitive cost structure for Ford in Europe”, it said in a statement, adding that it intends to achieve job cuts through voluntary layoffs.

– Chris Isidore and Peter Valdes-Dapena of CNN contributed to this report