The automobile market is experiencing considerable ups and downs due to shifting demands, and GM is the latest company to resort to cost-cutting layoffs. The automaker hasn’t revealed how many workers will be affected, but reports suggest that at least 1,000 employees worldwide will be eliminated from its forces.
Most of GM’s employee cuts are expected to be centered in the U.S. and will primarily affect white-collar workers. The United Auto Workers union confirmed that around 50 of its members have been affected by the layoffs. The company is said to be targeting $2 billion in fixed cost reductions this year.
The organization has around 150,000 employees worldwide and had around 76,000 white-collar workers at the end of last year.
Image: GM
GM’s Cost-Cutting Layoffs Are Expected to Affect Another 1,000 Workers
The 1,000 employees to be affected by General Motors’ workforce reduction plans have already been notified about the organization’s decision early last Friday. The company has not revealed too many details about the plan or the severance packages that may be offered to the employees, and we only have a statement to understand the company’s decision.
“We need to optimize for speed and excellence. This includes operating with efficiency, ensuring we have the right team structure, and focusing on our top priorities,” the statement explained. According to an anonymous source who spoke to CNBC, some of the job cuts were attributed to poor performance while other employees were targeted as a result of the company’s effort to reorganize its priorities.
Last month, the company saw a surge in its shares after it reported a $3 billion profit for Q3, which was good news for the business, despite being lower than the numbers it saw for the same period last year. The earnings were a surprise considering the 2.2% fall in sales in the U.S. This was associated with a lowered demand from fleet buyers but sales to individuals rose 3%.
Like other automakers, GM is expected to make a greater push into the EV market next year. Other automakers like Stellantis and Volkswagen have also set their sights on reducing and restructuring its workforce to better improve the business focus for the upcoming year.
This Is Not the First Time GM Has Made Employee Cuts This Year
A workforce reduction strategy to streamline the business is a common plan for most businesses, but it is particularly central to how the company has operated recently. GM laid off around 1,000 workers in its software department back in August. When the decision was announced, the company revealed that the job cuts were not due to a need to cut costs but instead stemmed from a review of the operations after the departure of Executive VP Mike Abbott.
Later in September, General Motors’ workforce took another hit, but this time it was the workers at the Fairfax Assembly plant in Kansas. Approximately 1,695 workers were to be affected in two phases of the layoff. Around 686 full-time workers and 250 temporary workers were marked to be let go in November, with the rest expected to lose their jobs in January. This layoff announcement was associated with plans to pause production of the Cadillac XT4 to focus resources on EV production instead.
In April last year, GM saw around 5,000 white-collar employees accept its buyout offer and leave the company. The automaker provided the buyouts to white-collar workers who had spent at least 5 years at the company as well as global executives with 2 years of service.
Now that the company is drawing closer to its goal of cutting $2 billion in fixed costs by the end of the year, it is a possibility that the layoffs will slow down.
