By Michael Elkins
General Motors (NYSE:GM) announced Tuesday that around 5000 salaried workers took buyouts to leave the company as part of a cost cutting move that, according to CFO Paul Jacobson, will save the company $1 billion on an annual basis.
The voluntary buyouts cover 6% of GM’s 81,000 white-collar employees and should allow the Detroit automaker to avoid involuntary dismissals, Jacobson said Tuesday. The cuts should also deliver roughly half of the company’s broader goal of saving $2 billion a year.
GM set a goal of cutting $2 billion from operating costs by the end of 2024, with 30%-50% of the total being achieved this year. The response to a buyout program means GM will be at the higher end of that 2023 goal, Jacobson said during a Bank of America conference.
GM CEO Mary Barra said in a memo to employees on Tuesday that February job cuts of a few hundred jobs and 5,000 buyouts "have provided approximately $1 billion towards" the $2 billion target. She added, "a company-wide involuntary separation program is not a consideration at this point."
Jacobson said GM is now allocating 75% of its annual capital spending toward electric vehicle projects and that the company is in a good position to benefit from U.S. electric vehicle subsidies under the Inflation Reduction Act because of its investments in North American battery, raw materials and EV assembly.
GM will further cut costs through reducing vehicle complexity, expanding use of shared subsystems between gas-powered and electric vehicles, focusing investment in growth initiatives with near-term benefits and decreasing "spend levels across all parts of the company, including travel and marketing," Barra said.
Shares of GM are down 0.42% in pre-market trading on Wednesday.