A letter from CEO Mary Barra sent to GM workers on Thursday offered buyouts to many of its 58,000 employees, saying the company plans to trim $2 billion in fixed costs over the next two years. GM announced its plan to cut costs in January, on the same earnings call where it announced a record income of $14.5 billion for 2022. GM plans to spend billions over the next few years transitioning to building electric cars and making other changes.
It’s not alone in making that shift either — Ford announced a split between its gas and electric automotive segments and followed that by laying off thousands of employees in the fall. Ford has said it will spend up to $20 billion reorganizing for EVs on top of the $30 billion it already planned to spend developing electric and autonomous vehicles, while GM said it planned to spend $35 billion and that it aims to make the electric vehicle business profitable by 2025.
So far, GM’s progress hasn’t gone smoothly — we dubbed its luxury electric truck a “bummer EV,” production has been slow, and there’s a Hummer EV sales freeze after reports of water found seeping into its Honda Civic-like battery.
A copy of the letter posted by Fox 2 News reporter Dylan Dulberg shows that the message is clear: “This program is designed to accelerate attrition in the U.S. Taking this step now will help avoid the potential for involuntary actions.” A filing for investors revealed the company expects to spend up to $1.5 billion on employee separation charges and up to another $300 million “in pre-tax, non-cash pension curtailment charges.”
The Voluntary Separation Program is available to all salaried US employees with more than five years at the company and all global executives with more than two. According to Dulberg, workers have seen offers of one month of pay and COBRA medical coverage for every year of service for up to a year.
As CNBC notes, the last time GM had a similar buyout plan was in 2018–2019, around the same time it closed several plants and laid off thousands of employees. In the letter, GM told workers, “By permanently bringing down structured costs, we can improve vehicle profitability and remain nimble in an increasingly competitive market.”