GM says 5,000 employees are making acquisitions, expects $1 billion in first-quarter prices

A GMC pickup truck is displayed for sale on lot at a General Motors dealership January 05, 2023 in Austin, Texas.

Brandon Bell | Getty Images

DETROIT – Approximately 5,000 employees at General Motors decided to participate in a buyout program announced last month to reduce the automaker’s global headcount and fixed costs.

GM CFO Paul Jacobson said Tuesday the company expects a charge of about $1 billion during the quarter as a result of the program. The job cuts were part of GM’s plans to reduce structural costs by $2 billion by the end of 2024.

Jacobson said the opt-in rate for the “Voluntary Separation Program” is in line with the company’s expectations and “enables” GM to avoid layoffs.

“I think we’re capable of doing that,” he said Tuesday during a BofA Securities conference.

According to a spokesman, GM expects the majority of employees who participated in the program to leave the company by the end of June.

GM CEO Mary Barra said last month if not enough employees participated in the program, involuntary action would have to be taken.

The deals were offered to a majority of the company’s 58,000 US employees. To qualify for the program, employees had to have worked for the company for five years as of June 30 of this year. For employees at managerial level, the qualification was exercised for two years.

“This was a tool that really pushed us to accelerate the attrition curve; it paid for itself pretty quickly,” Jacobson said.

GM announced the $2 billion cost-cutting program in January and said between 30% and 50% of the savings are expected during 2023. At the time, executives said they planned to downsize through turnover, not layoffs.

Jacobson said Tuesday that GM is now likely to be at the “high end” of that percentage range for 2023. “We feel like we’ve got off to a really good start,” he said.

GM said last month it expects a pre-tax charge of up to $1.5 billion related to the acquisitions, according to a public filing. The majority of the charges are expected to be in cash and will occur in the first half of the year, the company said.

GM is “working through” the full extent of the charges, Jacobson said, and may see charges spill over into the second quarter.

The company will provide more details about the buyout program during its first-quarter earnings call on April 25, Jacobson said.

Shares of the company lost about 2% in midday trade.

Comments are closed.