Blue chip automaker General Motors wants to cut $2 billion in costs over the next few years, and will offer ‘voluntary buyouts’ to employees as an initial measure.
The carmaker’s CEO, Mary Barra, sent an internal memo on Thursday offering U.S. salaried employees severance packages if they choose to quit their jobs. Domestic, salaried employees with at least five years at GM, as well as some international executives, can accept the buyouts, Automotive News reports.
Workers who accept the buyouts can stay with GM as employees until June 30, giving them ample opportunity to collect a paycheck prior to their severance while they line up a new job.
Salaried workers in the U.S. who opt for the offer will receive one month’s pay for each year they’ve worked at the company. The buyout caps at 12 months, however; though it does include COBRA health insurance, as well as a prorated bonus based on performance. Executives can also receive undisclosed bonuses plus the entirety of their base salary.
The buyouts follow a round of layoffs that Barra assures were performance-related, not savings-related. GM has publicly said that it does not want to terminate any employees as a result of budgetary concerns.
“The areas we’re focusing on include continuing to reduce complexity in all of our products and reducing corporate overhead expenses across the board […],” she said. “I do want to be clear, though: we’re not planning layoffs. We are limiting our hiring to only the most strategically important roles, and we’ll use attrition to help manage overall headcount.”
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Barra went on to say that the buyout opportunities for their roughly 58,000 domestic employees will simply help accelerate the natural attrition that any company faces. Instead of waiting a few more years to retire, many employees may decide to walk away early with an influx of investable cash.
GM stressed that the program is voluntary, but it also said employees “are strongly encouraged to consider the program.”
Like it or not, employees always represent the largest balance sheet liability for any company. Anytime a company, especially a blue chip company like GM, aims to contract its own workforce, that means it foresees a future reduction in assets on the horizon. As the economy and market stall due to inflation and rising interest rates, so far the tech industry has felt the squeeze of bloated overhead costs. But that trend could soon reach other industries, as well.
Remember, GM required a federal bailout in 2008 to remain solvent, and now wants to try to save a staggering $2 billion just as interest rates begin to rise. There’s no perfect roadmap for predicting the future of the economy, but the chickens always come home to roost. When major companies become bearish on their own balance sheet, it’s time to consider the fact that major economic contraction could be on the horizon.