GM offers buyouts to the “majority” of salaried employees in the United States

DETROIT, MI – According to a letter sent to employees Thursday by CEO Mary Barra, General Motors will offer voluntary buyouts to a “majority” of its 58,000 U.S. white-collar employees in order to cut $2 billion in structural costs over the next two years.

The “Voluntary Separation Program,” or VSP, will be available to all salaried employees in the United States who have worked for the company for five years or more as of June 30. Outside of the United States, the automaker will offer buyouts to executives who have been with the company for at least two years.

According to a public filing Thursday, GM expects to take a pretax charge of up to $1.5 billion related to the buyouts. According to the company, the majority of the charges will be all-cash and will occur during the first half of the year.

Barra stated in the letter on Thursday that the programme is “designed to accelerate attrition in the United States,” potentially assisting the company in avoiding “involuntary actions” in the future. The buyout offer comes after the Detroit automaker announced last week that it would lay off about 500 salaried employees worldwide.

The last time GM offered such a large buyout programme was in 2018-2019 for approximately 18,000 North American salaried employees.

“Employees are strongly encouraged to consider the programme,” General Motors said in an email to CNBC on Thursday. “By continuously lowering structured costs, we can improve vehicle profitability while remaining agile in an increasingly competitive market.”

GM announced the $2 billion cost-cutting programme in January, estimating that 30% to 50% of the savings would be realised by 2023. At the time, executives stated that they intended to reduce headcount through attrition rather than layoffs.

GM CEO Mary Barra speaks with the media before the start of the 2017 General Motors Company Annual Meeting of Stockholders on Tuesday, June 6, 2017, at the GM Global Headquarters in Detroit, Michigan.

Employees in the United States who are approved for the buyout will receive one month’s pay for each year worked up to a total of 12 months, as well as COBRA health coverage. They will also receive team performance bonuses and outplacement services on a prorated basis. Global employees will be paid a base salary, bonuses, COBRA coverage, and outplacement services.

Employees who are eligible for the programme must sign up by March 24. Those who choose a voluntary package and are approved will be able to leave by June 30.

A company spokeswoman declined to say how many employees are expected to accept the buyout packages. According to public filings, GM employed approximately 81,000 salaried employees worldwide at the end of last year.