General Motors cuts 500 salaried employees
- General Motors is cutting hundreds of salaried positions as it follows other major companies, including competitors, in downsizing headcounts to preserve cash and boost profits.
- The cuts affect about 500 positions, according to a person familiar with the plans, which were announced internally Tuesday.
The cuts affect about 500 positions, according to a person familiar with the plans, which were announced internally Tuesday. They will be across various functions of the company, said the person, who asked not to be named because the plans are not public.
The timing of the cuts, which were first reported by The Detroit News, is odd. They come roughly a month after GM CEO Mary Barra and CFO Paul Jacobson told investors that the company was not planning any layoffs.
In a Tuesday letter viewed by CNBC, GM Chief People Officer Arden Hoffman confirmed the company’s goal of $2 billion in cost savings over the next two years, which “we’ll find by reducing corporate expenses, overhead, and complexity in all our products.”
The letter said the cuts, which follow performance evaluations, would impact a “small number of global executives and classified employees following our most recent performance calibration.” The cuts started Tuesday and will continue based on location.
The company reiterated in an emailed statement that the cuts are a result of performance, saying they will assist in “managing the attrition curve as part of our overall structural costs reduction effort.”
At the end of last year, GM employed about 86,000 hourly workers and 81,000 salaried employees worldwide. The 500 job cuts make up less than 1% of GM’s salaried workforce.
Jacobson told investors last month that the company expected to reduce employee headcount through attrition rather than layoffs.
Until recently, the automotive industry was largely unaffected by job cuts that had plagued the technology sector in recent quarters.
Ford Motor earlier this month confirmed it would cut 3,800 jobs in Europe over the next three years to adopt a “leaner” structure as it focuses on electric vehicle production. Others such as Rivian Automotive also made salaried cuts, while Stellantis said it would idle a plant in Illinois.
GM cutting hundreds of executive, white-collar jobs amid electrification jolt
etroit — A month after CEO Mary Barra said General Motors Co. was "not planning layoffs," the Detroit automaker is cutting about 500 executive-level and salaried jobs, The Detroit News confirmed Tuesday.
The move, delivered amid impressive profitability, signals the evolving impact of electrification on legacy automakers like GM. The company isn't providing the exact number of employees affected in the United States and sites overseas: as of December 2022, GM employed about 86,000 hourly employees and 81,000 salaried employees worldwide.
“Today’s action follows our most recent performance calibration and supports managing the attrition curve as part of our overall structural costs reduction effort," spokesman David Barnas said in a statement. "This action impacts a small number of salaried employees and executives globally,"
The job cuts come as other companies and automakers also are offering buyouts, executing layoffs and making so-called "strategically important" hires amid economic uncertainty and increasing costs to electrify fleets. Last spring, crosstown rival Ford Motor Co. confirmed it was eliminating 2,000 salaried jobs and 1,000 contract positions in a bid to cut costs and boost competitiveness.
And late last year, Stellantis NV offered another round of buyouts to certain salaried employees but hasn't said how many employees accepted the buyout offers. CEO Carlos Tavares has warned the inability to absorb the additional costs of electric vehicles could risk layoffs by shrinking the market.
GM is currently investing billions on EVs. This year, the Detroit automaker expects its capital spending to total between $11 billion and $13 billion, which is up the $9 billion to $10 billion it previously expected to spend this year. Much of that is earmarked for EVs. GM is now expected to spend more than the $35 billion it previously said it would spend on EVs and AVs starting in 2020 through 2025.
"We continue to shift resources to EVs, with around 75% of our product-specific capital dedicated to EVs and AVs," GM CFO Paul Jacobson told investors during the Jan. 31 full-year 2022 earnings call.
Wedbush Securities analyst Dan Ives said in a statement that "GM is going through a major EV transition and cost-cutting is part of this process."
"It’s a fluid time for the Detroit stalwart as they make this EV transition in 2023 and beyond with margin stability a laser focus for GM," Ives said.
This year, GM is launching production of the electric versions of the Chevrolet Silverado, Blazer and Equinox. GMC has started production of the Hummer EV SUV and production is expanding on the pickup version of the Hummer, the Cadillac Lyriq electric crossover and BrightDrop electric delivery vans.
During its earnings calls with investors on Jan. 31, Barra and GM CFO Paul Jacobson said the company wasn't planning any layoffs this year despite economic pressures and its goal to achieve $2 billion in cost savings over the next two years. Jacobson added the automaker expected to have a slightly lower headcount by the end of this year.
“I do want to be clear that we're not planning layoffs,” Barra said at the time. “We are limiting our hiring to only the most strategically important roles, and we'll use attrition to help manage overall headcount.”
To achieve the $2 billion in cost savings, Jacobson said the company would focus on reducing "complexity in all of our products and reducing corporate overhead expenses across the board. I do want to be clear, though, we’re not planning layoffs. We are limiting our hiring to only the most strategically important roles and will use attrition to help manage overall headcount.”
For 2023, GM anticipates adjusted earnings to be in the range of $10.5 billion to $12.5 billion for the year. Last year, the company booked record pre-tax earnings of $14.5 billion.
To save $6 billion, GM launched a restructuring effort in 2019 that included cutting 6,000 jobs and idling an assembly plant in Lordstown, Ohio, and powertrain plants in Baltimore, Maryland, and Warren, Michigan. Oshawa Assembly in Ontario and Factory Zero Detroit-Hamtramck Assembly Center were also on the list to be idled but GM saved both.
In a Tuesday letter obtained by The News, GM Chief People Officer Arden Hoffman said: "We are looking at all the ways of addressing efficiency and performance. This week we are taking action with a relatively small number of global executives and classified employees following our most recent performance calibration. They will be departing the company starting from today."
Ford's cuts came after CEO Jim Farley publicly stated the company had "too many people." Shortly thereafter, he implemented a reorganization of the company into three separate business units focused on combustion engine vehicles, EVs and commercial vehicles.
Ford executives in recent months have referenced pervasive "dysfunction" within the business and the need for further cost reductions, saying that "everything is on the table." They've also disclosed what they believe is a $7 billion to $8 billion cost disadvantage compared to their legacy competitors. Those remarks from top executives came after the Blue Oval missed its earnings guidance for 2022 and posted a net loss for the year.
Farley has publicly discussed the challenges around pulling off what he calls a "double transformation" involving building out a new growth business around EVs and software, while at the same time repairing the legacy business that is underpinning the costly shift to plug-in vehicles.
Ford also recently announced plans to cut 3,800 jobs in Europe as part of a broader effort to revitalize its Europe business amid "rapidly changing market conditions" and an increasingly competitive EV market.
The push to cut costs comes as automakers are "spending enormous amounts of money on electric vehicle design, electric vehicle manufacturing, electric vehicle planning, but are not yet making any money with those electrical vehicles and that squeeze is affecting the rest of their operations," said Patrick Anderson, CEO of East Lansing-based Anderson Economic Group.
And automakers cannot avoid "the impact of reducing U.S. car sales from 16 million units to 14 million units or even 13 million units," he added. "The plain fact is that we're selling fewer cars."
Cox Automotive, an automotive services company, expects 14.1 million new light-duty vehicle U.S. sales in 2023, up from the 13.7 million vehicles when dealers had limited supply as a result of supply chain issues. Cox expects February sales to increase year over year with improving inventory levels and fleet sale increases.
GM cutting hundreds of jobs to reduce costs
The new GM logo is seen on the facade of the General Motors headquarters in Detroit, Michigan, U.S., March 16, 2021. Picture taken March 16, 2021. REUTERS/Rebecca Cook
Feb 28 (Reuters) - General Motors Co (GM.N) is cutting hundreds of executive-level and salaried jobs as it looks to cut costs and streamline operations, a person briefed on the matter told Reuters on Tuesday.
The global reductions are in the "low hundreds," the person said.
GM Chief People Officer Arden Hoffman said in a letter to employees on Tuesday the Detroit automaker is "committed to $2 billion in cost savings in the next two years, which we’ll find by reducing corporate expenses, overhead, and complexity in all our products."
GM disclosed the $2 billion cost cut target in January. The automaker said in January it did not plan layoffs and on Tuesday did not characterize the cuts as layoffs.
GM said the job action Tuesday "follows our most recent performance calibration and supports managing the attrition curve as part of our overall structural costs reduction effort."
Hoffman said "in an environment where our competitors’ margins are improving, it's imperative that we act now and focus on our own efficiency."
Hoffman added that "to deliver on our commitments and to beat the competition, we need to have the winning team, bar none. We need a culture shift that enables us to hold ourselves accountable for achieving the higher levels of operating that are now required."
GM shares closed down 1.5%.
Hoffman said "globally, employees and leaders will be equipped with options to address any issues with greater urgency, so we can achieve our boldest goals.... This is a fundamental cultural shift to be more performance-driven and accountable."
Earlier this month, Ford Motor (F.N) said it was cutting one in nine jobs in Europe, axing 3,800 roles in product development and administration as part of a drive to lower costs in the region and concentrate engineering know-how in the United States.
Stellantis (STLAM.MI) and unions on Monday signed an agreement to cut up to 2,000 workers from the carmaker's Italian operations this year through voluntary redundancies. On Tuesday, Stellantis indefinitely idled a plant in Illinois that employs about 1,350 workers.
