General Motors’ aggressive hiring plans for this year have cooled, but the automaker reaffirmed Wednesday that it has no plans to lay off any of its workforce.
On Monday, crosstown rival Ford Motor Co. said it was cutting 3,000 jobs across Canada, the U.S. and India. Executive Chair Bill Ford and CEO Jim Farley told Ford’s 31,000 workers in a memo that to “tackle all aspects of costs — from materials to those related to quality,” Ford will reduce its salaried workforce by 2,000 and agency employees by 1,000. A “significant” portion of the cuts will be in Michigan, Ford spokesman Mark Truby said. Truby could not say whether more cuts are coming.
In May, GM put its hiring plans to add 3,000 white-collar workers on hold for this year. At that time, GM told the Free Press, the company was ahead of schedule in its hiring. GM had already hired 7,000 new salaried workers this year, said spokeswoman Maria Raynal. The hiring is connected to GM’s transition to an electric vehicle software company by 2035.
In manufacturing, GM has hired more than 4,500 hourly workers in Michigan year-to-date, said Dan Flores, GM spokesman. That includes part-time and full-time temporary and direct employees for production and skilled trades at a variety of manufacturing locations and parts warehouses across the state.
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On Wednesday, Raynal told the Free Press, “We are not planning layoffs.” She said GM has been “proactively managing our cost structure all along.” That includes taking out “significant cost” by 2020 as GM transformed the company. In 2018 and 2019, GM cut about 4,000 salaried jobs, mostly in North America, as part of its restructuring.
In an interview with Bloomberg last month, CFO Paul Jacobson said, “We went through a fairly big restructuring back in 2018 in which the company, prior to my arrival, did an amazing job of saving $4 billion to $4.5 billion annually and paving the way for the investments that we need to make in the cost structure to produce EVs.”
In that interview, Jacobson also said that GM is “not contemplating any layoffs, we don’t have any plans to lay off workers” but it has identified $5 billion “of inflationary pressures year-over-year” that has forced GM to adjust some growth plan and to be disciplined with its fixed costs.
That means that, while no layoffs loom in the near future, GM is “being prudent in limiting our hiring to critical skill sets,” Raynal added.
In July, GM reported its second quarter income was about 39% lower than the year-ago period as ongoing production disruptions persisted due to supply chain issues and an industry-wide global semiconductor chip shortage. CEO Mary Barra assured Wall Street that the company is taking cost-cutting measures, such as dialing back on new hires, and is prepared to do more if needed. But Barra said there continues to be good demand for GM’s big pickups and SUVs, which deliver fat profits.
“There are growing concerns about the economy to be sure,” Barra said last quarter. “That’s why we’re already taking proactive steps to manage costs and cash flows, including reducing some discretionary spending and limiting hiring to critical needs and positions that support growth.”
GM has “modeled several downturn scenarios,” she said, and it’s prepared to take “more deliberate action when and if necessary.”
But GM is moving forward from a position of strength, Barra said. Last week, the automaker reinstated its dividend and said it would start doing stock buybacks. That is usually seen as a positive sign. Ford also said it would pay a 15-cent dividend in the third quarter. Ford reported second-quarter adjusted earnings of $3.7 billion — more than triple that of the same period a year ago, when the company had a gain of $1.1 billion.
Barra said last quarter that GM has “a foundation of strong earnings and cash flow, an investment-grade credit rating, historically low pension obligation and outstanding vehicles, services and pricing. I like our position, and I wouldn’t trade it with anyone in our industry. All of this will help us continue to execute our growth strategy and insulate it from short-term market challenges.”
Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber.