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General Motors CFO Paul Jacobson said that nearly 5,000 salaried workers took buyouts to leave the company. The development is important for the company to achieve a $2 billion cost-cutting target.
The automaker aims to cut $2 billion from operating costs by the end of 2024 and intends to achieve up to 50% of the target in 2023.
GM raised prices in the U.S. over the last couple of years primarily due to supply chain bottlenecks restricting production. The company believes that raising prices further is not an option and cost cutting is an important and urgent matter.
According to a memo to employees from the company’s CEO Mary Barra, 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.”
Post-Covid, many large corporations have laid off employees due to slowing demand and tough economic conditions. Cost cutting is one of the main options to keep prices low.
In 2022, the company sold 5.9 million units in the U.S., a 5.6% decline from the previous year. In terms of sales amount, the company’s revenue was close to $157 billion.
GM is making inroads into the electric vehicle markets and is investing substantial funds to develop these vehicles. While the company already has three battery plants in North America, it is planning on opening a fourth one. The move will help the company add its own batteries to the electric vehicles as their sales grow in the future. It should help them keep costs lower in the future.
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