Last month, General Motors announced a buyout program to lower its global headcount and fixed costs. Around 5,000 white-collar workers opted to participate in the “Voluntary Separation Program,” which is expected to result in a $1 billion charge for GM during the current quarter. The reduction in headcount is part of GM’s plan to reduce $2 billion in structural costs by the end of 2024. GM’s CFO, Paul Jacobson, stated that the opt-in rate for the program was as expected, and the company is “in a position” to avoid layoffs.
According to a GM spokesperson, the majority of participating employees are expected to leave the company by the end of June. The buyouts were offered to most of the company’s 58,000 U.S. white-collar employees who had worked for the company for at least five years or two years for executive-level employees.
Jacobson said the buyout program was a tool to accelerate the attrition curve and provide a quick payback. He also stated that GM would likely achieve the higher end of its expected 30% to 50% savings range for 2023. The company had planned headcount reductions through attrition rather than layoffs.
GM expects to take a pretax charge of up to $1.5 billion related to the buyouts, and the majority of the charges will likely be all cash and occur during the first half of the year. However, the full extent of the charges is still being worked through, and some costs may spill over into the second quarter.