General Motors Co. is cutting salaried and executive staff positions as part of a move to lower costs, the auto maker said Tuesday.
The decision comes roughly a month after company executives said they weren’t “planning layoffs.” The Detroit News, which reported the news earlier in the day, said 500 employees would lose their jobs.
GM
GM,
representative David Barnas, when reached, would not confirm a specific number. But he said the move affects a “small number” of positions. GM, at the end of last year, had around 81,000 salaried employees and 86,000 hourly employees, according its most recent annual report.
The auto maker said the U.S. employees losing their jobs would receive severance. But it also characterized the cuts as performance-related. GM said the cuts reflected a “performance calibration” and efforts to manage an “attrition curve” as its competitors — and their margins — gained strength and the company tries to save $2 billion in costs within the next two years.
“We need a culture shift that enables us to hold ourselves accountable for achieving the higher levels of operating that are now required,” Arden Hoffman, GM’s chief people officer, said in a memo to employees.
“We are looking at all the ways of addressing efficiency and performance,” Hoffman continued. “This week we are taking action with a relatively small number of global executives and classified employees following our most recent performance calibration. They will be departing the company starting from today.”
The moves would follow the auto industry’s efforts to pivot to electric vehicles, as well as a chaotic two years for the sector, during which a chip shortage squeezed production and sent prices for new cars soaring, then used cars, as customers sought cheaper options. With availability limited, U.S. auto sales finished 2022 at their worst level in more than a decade.
However, GM, the Wall Street Journal noted, reported the rare sales increase for the industry over that time. And the auto maker at the end of last month reported fourth-quarter results that beat expectations and gave an optimistic profit outlook.
During GM’s fourth-quarter earnings call, Chief Executive Mary Barra said that hitting the company’s $2 billion savings target would require “continuing to reduce complexity in all of our products, and reducing corporate overhead expenses across the board.”
But she said layoffs weren’t on the horizon.
“I do want to be clear, though: We’re not planning layoffs,” she said. “We are limiting our hiring to only the most strategically important roles and will use attrition to help manage overall head count.”
Ford Motor Co.
F,
over the summer said it was laying off around 3,000 staff and contractors.
Shares of GM are down around 17.1% over the past 12 months. By comparison, the S&P 500 Index
SPX,
has fallen 9.2% over that period.
