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GM says 5,000 workers take buyouts, expects $1 billion charge in Q1

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A GMC pickup truck is displayed for sale on a lot at a General Motors dealership on January 05, 2023 in Austin, Texas.

Brandon Bell | Getty Images

DETROIT – About 5,000 white-collar workers at General Motors opted to participate in a buyout program that was announced last month to lower the automaker’s global headcount and fixed costs.

GM CFO Paul Jacobson said Tuesday the automaker expects to take a roughly $1 billion charge during the quarter as a result of the program. The headcount reduction was part of the company’s plans to cut $2 billion in structural costs by the end of 2024.

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Jacobson said the opt-in rate for the “Voluntary Separation Program,” or VSP, was in line with company expectations, and puts GM “in a position” to avoid layoffs.

“I think we’re in a position where we’re gonna be able to do that,” Jacobson said Tuesday during a BofA Securities conference.

GM CEO Mary Barra last month said if not enough employees participated in the program, involuntary actions would need to be taken.

The buyouts were offered to a majority of the company’s 58,000 U.S. white-collar employees. To qualify for the program, salaried employees needed to have worked at the company for five years as of June 30 this year. For executive-level employees, the qualification was two years worked.

“This was a tool to get us to really accelerate the attrition curve; got a pretty quick payback,” Jacobson said.

GM announced the $2 billion cost-cutting program in January, saying between 30% and 50% of the savings were expected during 2023. At the time, executives said they were planning head count reductions through attrition rather than layoffs.

Jacobson said Tuesday that GM will likely now come in on the “higher end” of that percentage range for 2023. “We feel like we’ve gotten off to a really good start on it,” he said.

GM last month said it expected to take a pretax charge of up to $1.5 billion related to the buyouts, according to a public filing. The majority of the charges are expected to be all-cash and occur during the first half of the year, the company said.

GM is “working through” the full extent of the charges, Jacobson said, and may see costs spill over into the second quarter.

GM will offer additional details about the buyout program during its first-quarter earnings call on April 25, Jacobson said.

Shares of the company were down about 2% in mid-morning trading.

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