GM is offering to pay its salaried workers a lump sum of money to leave the company. This is a very ominous sign for GM and is a sign of things to come for other legacy automakers.
How Many Are Affected?
The majority of salaried General Motors workers were offered a voluntary buyout by the automotive company on Thursday, March 9. How much of GM's work force is this? It's about 60%. This equals about 35,000 salaries workers in Michigan across 25 plants and offices.
If you've had at least 5 years of service at GM or are an executive with two years of service, you are being offered a voluntary separation package. In total, this offer is being offered to about 58,000 U.S. workers at GM.
Cost Reduction
GM needs to reduce costs, desperately, and this is part of a $2 billion cost savings plan. However, it's the wrong philosophy and approach. GM is slow in its adoption of EVs (electric vehicles) and that is where GM should be moving. All they have is the Chevy Bolt, which has not even broken 40,000 units sold per year yet.
GM wants to reach $2 billion in cost savings by the end of 2024. This is going to be too little, too late. GM is trying to accelerate attrition instead of accelerate its EV production. EVs are going to be more efficient, better, and cost less overtime. That is where an automaker needs to pivot.
Ominous Sign
GM is saying that these packages will bring down structured costs, so they can improve vehicle profitability and remain nimble in a competitive market. The reality is that they are losing sales and bleeding money and doing what most companies do when this happens - layoffs.
A company would be better suited to say, "How can we make a better product that more customers want?" Instead, GM is saying, "How can we reduce costs as fast as possible by laying off people?"
When times are good, companies become stagnant. This happened to GM in the early 2010s. That leaves room for disruption from other companies.
This is an ominous sign and shows things to come for GM and other automakers. Their demise is going to be swift and come like an iceberg to the Titanic. It will happen quickly and not slowly unless they adapt to the changing auto market.
What do you think of GM offering workers money to quit? Is this the right strategy?
Online writer since 2008. I enjoy writing and have written nearly a thousand tech related articles about electric vehicles, software, tech companies, hardware, gaming, tech related products, and company developments in tech.
