General Motors Co has announced a significant staff reduction plan as part of its strategy to achieve a $2 billion cost reduction target.
This move comes at a time when US companies have announced over 180,000 job cuts in the past two months, the highest number since 2009, with the tech sector accounting for more than one-third of these job cuts.
Under the terms of the plan, GM will offer buyout packages to the majority of its salaried employees, resulting in a pre-tax charge of up to $1.5 billion to cover the expenses.
All US salaried employees with at least five years of experience and all global executives with at least two years of experience will be offered lump sum payments and other benefits to exit the organization.
This strategy of minimizing employment through natural attrition will help GM streamline its operations and achieve its cost reduction target.
GM CEO Mary Barra has outlined several steps that the automaker will take to reduce its structural costs, including decreasing vehicle complexity and increasing shared subsystems between existing internal combustion engine and future electric vehicle programs. By streamlining its operations and reducing its costs, GM hopes to improve its bottom line and remain competitive in the automotive market.
The staff reduction plan by GM is a strategic move to minimize costs and remain competitive in the market. However, it may have a significant impact on the affected employees and their families, and the wider economic implications of the job cuts should be carefully considered.
General Motor’s Competitive Approach For Market In 2023
GM plans to reduce its structured costs by decreasing discretionary spending and minimizing salaried staff through natural attrition, primarily in the US. This move is aimed at improving vehicle profitability and making the company more competitive in the market.
GM expects to incur a pre-tax charge of up to $1.5 billion, with the majority of the charge to be taken in the first half of 2023. The automaker had 58,000 salaried employees at the end of 2022, and eligible employees interested in the voluntary program must sign up by March 24, with their departure from the company expected by June 30.
GM CEO Mary Barra emphasized the need to take cost into account in everything the company does, stating that it needs to be ingrained in the company’s culture. By taking this step now, GM hopes to avoid involuntary actions that may be required in the future.
In February, a GM executive announced that the company was reducing executive-level and salaried jobs, while rival automaker Ford Motor Co said it planned to eliminate 3,800 product development and administration jobs in Europe in the next three years.