DETROIT — General Motors on Tuesday said about 5,000 of its salaried employees have elected to leave the company through voluntary buyouts.
CFO Paul Jacobson shared the number during a Bank of America automotive conference and said the program came in line with the automaker’s expectations as part of an effort to cut $2 billion in costs over the next two years. The number represents about 6 percent of the 81,000 salaried employees GM had globally at the end of 2022.
GM leaders told employees in a memo Tuesday that no layoffs or terminations are on the table for now.
“These results confirm that a company-wide Involuntary Separation Program is not a consideration at this point,” said the memo, which was signed by CEO Mary Barra, Jacobson and Chief People Officer Arden Hoffman. “As always, leaders will continue to have the flexibility to manage their organizations to drive high performance and impact.”
The leadership team plans to update employees further at a town hall meeting Wednesday, according to the letter, a copy of which was obtained by Automotive News.
“The steps we are taking allow us to maintain momentum, remain agile, and create a more competitive GM,” the letter said.
Jacobson said the company will achieve about $1 billion in cost savings on an annualized basis as the employees exit this year. Employees had until March 24 to consider the Voluntary Separation Program offer, and those who accepted will leave by June 30.
He added that GM believes it will reach the higher end of its goal to achieve 30 to 50 percent of its $2 billion cost-reduction target this year. More details will be shared on GM’s first-quarter earnings call later in the month, he said.
“We’ve gotten a really, really good head start on the $2 billion cost program,” Jacobson said at the Bank of America conference.
“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,” he added. “At the same time, [we wanted] to do everything we can to try to avoid involuntary layoffs. And I think we’re in a position where we’re going to be able to do that.”
Voluntary severance packages were offered to U.S. employees who have been with the company for at least five years and executives anywhere in the world with at least two years of service.
Nonexecutives who take the deal will receive one month of pay for each year with the company, up to 12 months, along with COBRA health insurance coverage, a prorated performance bonus and outplacement services. Executives are eligible to receive base salary, incentives, COBRA insurance and outplacement services.
GM said in a regulatory filing last month that the buyouts were expected to cost up to $1.5 billion in pretax employee separation charges, “substantially all” of that cash-based, and as much as $300 million in pretax, noncash pension curtailment charges. The final cost will depend on how many employees accept the buyout offer, GM has said, adding that most of the expenses would be incurred in the first half of this year.
Jacobson said Tuesday that GM is expecting a roughly $1 billion charge in the first quarter related to the buyouts.
In addition to employee attrition, the automaker plans to lower its costs by reducing vehicle complexity, increasing the sharing of subsystems between internal combustion engine and electric vehicle programs, investing in growth initiatives and cutting discretionary spending.
In February, GM eliminated a “small” but unspecified number of salaried and executive positions for what it said were performance-related reasons.
GM shares slipped 2.3 percent to $35.44 in midday trading.
