by Scott McClallen
General Motors says it bought out 5,000 salaried positions to avert layoffs as it pivots to electric vehicles and others that require less human labor.
In March, The Center Square reported that the automaker is looking to cut $2 billion in fixed costs by 2024 as the company transitions its manufacturing operations to produce electric vehicles.
GM said the reductions mean it will avoid layoffs and aim to realize $2 billion in cost savings by 2024.
“GM today confirmed that approximately 5,000 U.S. salaried employees and global executives will depart the company through the recently-announced Voluntary Separation Program (VSP) as the company strives to accelerate attrition and achieve $2 billion in cost savings by the end of 2024,” GM told The Center Square in an email.
A statement from GM said the company is confident that it will realize at least 50% of the targeted savings in 2023 and achieve at least $2 billion of savings in 2024.
In the statement, GM said, “Given the results of the program, company-wide involuntary separations are not a consideration at this point. The steps we are taking will allow us to maintain momentum, remain agile, and create a more competitive GM.”
The automaker says it will continue to cut costs, including travel and marketing.
University of Michigan-Flint economics professor Chris Douglas said the 5,000 buyouts are a small fraction of Michigan’s workforce and of GM workers statewide.
“It is likely that a good share of these people who elected to take the buyout were close to retirement and those that didn’t likely have new jobs lined up,” Douglas wrote in an email. “With that said, the state has been heavily subsidizing electric vehicle and battery production without anything to show for it.”
Douglas said if consumers wanted electric vehicles, taxpayers wouldn’t have to subsidize electric vehicles with billions of dollars.
“If there was really a market demand for electric vehicles, these subsidies would not be needed,” Douglas wrote in the email. “This round of buyouts is just the latest in various rounds of buyouts and layoffs in the auto industry. Given the lack of success of previous rounds of battery subsidies, it is hard to see how the latest rounds of even more generous subsidies will result in large employment gains in the auto industry.”
Michigan has about 25,181 EVs registered statewide compared to 6.5 million vehicles with internal combustion engines.
As interest rates rise and consumer confidence falls, the automaker is bracing for uncertainty. GM said it cut 500 executive-level jobs in February.
The buyouts follow Michigan giving billions in subsidies to automakers.
As Ford reported $3 billion of losses on electric vehicles in 2023, Michigan taxpayers will foot $1.6 billion for Ford’s new BlueOval electric vehicle factory.
Another $715 million will fund a Gotion electric vehicle battery plant near Green Township.
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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.
Photo “General Motors Factory” by Joe Ross. CC BY-SA 2.0.
