GM offers buyouts to ‘majority’ of 35,000 salaried workers in Michigan
- GM is offering a buyout to most of its 58,000 salaried workforce, including 35,000 in Michigan
- The move comes as the Detroit automaker tries to cut $2 billion from fixed costs
- It also followed white-collar layoffs at Ford in fall 2022
Most of the 58,000 salaried workers at General Motors learned Thursday that they will be offered voluntary buyouts as the automaker hopes to reach $2 billion in savings this year and avoid layoffs.
The company is Michigan’s largest automaker and one of its top employers, with 35,000 salaried workers in the state. Among them, those with five years or more of experience will receive buyout offers.
“This voluntary program offers eligible employees an opportunity to make a career change or retire earlier,” GM spokesperson Maria Raynal said.
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As the buyout offers are considered, GM’s hiring also is paused to only the most critical positions.
“Employees are strongly encouraged to consider the program,” Raynal added.
Anyone who takes the offer “will be offered a combination of lump sum payments and other compensation based on their years of service,” GM said today in a filing with the Securities and Exchange Commission.
Details on the buyout offers were not available from the SEC or GM.
But the offers come as the $52 billion Detroit-based automaker fights alongside the rest of the automotive industry to reposition its legacy gas-fueled business into a relevant electric vehicle developer and manufacturer. GM is expanding its EV lineup and said it expects them to be profitable by 2025.
By 2030, half of all U.S. autos sales are likely to be EVs.
Michigan’s stakes in that platform switch are high, with both Ford Motor Co. — which shed 3,000 salaried workers last fall — and GM still building traditional vehicles here and committing to new EV investments.
The state is the headquarters for both GM and Ford, with corporate, engineering and product development all based here. The loss of what could be thousands more salaried workers in those types of jobs as the national competition for tech talent remains intense is likely to hurt the state’s goals for increasing higher-paid knowledge-based jobs.
“People need to understand that losing (thousands of) knowledge workers in the auto industry is not good for Michigan,” Lou Glazer, president of Michigan Future Inc. think tank, told Bridge when the Ford news broke. It’s “just like losing a battery plant.”
Michigan also has a direct financial stake in GM’s EV growth: It approved $842 million in incentives toward a combined $7 billion investment in expanding its Lake Orion factory and building a new battery plant in Delta Township, near Lansing, with partner Ultium Cells.
The buyouts follow GM saying on January 31 that it wanted to trim $2 billion in fixed costs by 2024, with up to half of the savings realized this year. Other strategies include reducing vehicle complexity, investing in growth initiatives and cutting discretionary spending.
“By permanently bringing down structured costs, we can improve vehicle profitability and remain nimble in an increasingly competitive market,” Raynal, the GM spokesperson, said.
The company expects to spend about $1.5 billion on the buyouts, with most of the payments in the first half of the year, it said in the SEC filing.
The buyout offers at GM follow several hundred job cuts in late February among its 81,000 global salaried workforce, the Detroit Free Press reported. Many of those workers were based in the U.S., the paper said.
The potential for thousands of salaried GM job losses in the state raises questions about how Michigan structures business incentives, state Sen. Mallory McMorrow, D-Royal Oak and chair of the Senate’s Economic and Community Development committee told Bridge.
For example, changes to the rules could add clawback provisions to rescind a portion of a state award, she said, if an individual project is creating jobs but the company overall sheds jobs in Michigan. That, she said, would prevent state dollars from funding a company if its net job growth is flat or negative.
“I think it is something that we should look at,” McMorrow said.
GM [NYSE: GM] is the state’s second largest public company, behind medical technology company Stryker. The automaker’s stock traded Thursday at $37.82, down about 5 percent on the buyout news, representing a $3 billion drop in market cap. The stock is up 12.4 percent so far in 2023.
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