General Motors will not cut more salaried jobs for now, having achieved a desirable amount of savings through recent voluntary buyouts.
Still, the automaker’s focus is on cutting as much cost as possible in the 24 months ahead in order to fund GM’s transition to electric vehicles. Given the volatile economy, raising prices on its vehicles is unlikely.
In an email to salaried employees Tuesday morning, CEO Mary Barra said the cuts GM did in February and the buyout program offered last month have provided about $1 billion in savings. GM has said it plans to cut $2 billion from its cost by the end of next year with 30% to 50% of it coming through steps taken this year.
CFO Paul Jacobson said later Tuesday morning during a Bank of America Securities interview, that GM is positioned to end up near the high end of that 30% to 50% savings target this year.
As the Free Press first reported in February, GM cut several hundred jobs from its global salaried workforce of 81,000 that day. Most were in the United States. GM told employees in a memo that the cuts were based on performance, saying the company needs to have a top-tier team to execute its transition to all EVs. About a week later, the Free Press reported GM offered the voluntary separation program to most global salaried workers, saying if it got enough takers it would prevent involuntary job cuts.
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In the Tuesday memo, which was obtained by the Free Press, Barra wrote, “Through the VSP (voluntary separation program) we’ll have roughly 5,000 U.S. salaried employees and global executives who are able to retire early or pursue other interests. These results confirm that a company-wide Involuntary Separation Program is not a consideration at this point. As always, leaders will continue to have the flexibility to manage their organizations to drive high performance and impact.”
Jacobson said he thinks GM will achieve its $2 billion savings target without layoffs, but he hedged that promise noting that, “the market is very volatile” and GM has not banked on increasing its vehicle prices this year to boost its balance sheet.
“The opportunity for raising prices isn’t there so we have to be more urgent with cost-cutting and there are structural costs we can cut,” Jacobson said, such as focusing more on GM’s growth businesses that will turn profits sooner than on those that might not be profitable for years to come. He did not list specifics.
In the memo, Barra said beyond the job reductions, GM will achieve cost cuts by: “reducing vehicle complexity and expanding the use of shared subsystems between ICE (internal combustion engine) and EV; focusing investment in growth initiatives with near-term benefits; and decreasing our spend levels across all parts of the company, including travel and marketing.”
GM spokesman David Barnas said: “The steps we are taking will allow us to maintain momentum, remain agile and create a more competitive GM.”
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Most of the 5,000 employees will depart GM by the end of June, Barnas said.
Jacobson said GM will release more cost-cutting details during its first quarter earnings call on April 25.
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.