What’s going on:
In January, General Motors announced that they would be able to save $2 billion without having to layoff any of their workers.
However, on Thursday, the company revealed that they had launched a voluntary separation program, which offered eligible employees lump sum payments and other severance benefits. In a statement, the company strongly encouraged its employees to consider the program.
This cost-cutting measure is expected to set GM back by $1.5 billion before taxes in the current year.
Why it matters:
A GM spokesperson recently informed CNN that a voluntary separation program is being offered to all U.S. salaried employees with a minimum of five years of service, as well as global executives who have been with the company for at least two years.
It looks as though General Motors is looking to cut costs elsewhere while it is investing heavily in electric vehicles. The eventual labor costs will be lower due to EVs taking fewer hours to create, but a huge amount of capital is required for the shift.
GM’s plan is to allocate $35 billion by 2025 to complete the transition.
How it’ll impact the future:
Globally, General Motors has a workforce of 167,000, with 124,000 situated in North America, including a whopping 42,000 members of the United Auto Workers union.
It’s yet to be known whether the company’s voluntary separation program will have the intended effect.
