DETROIT – General Motors will offer voluntary buyouts to a ‘majority’ of its 58,000 U.S. white-collar workers as it aims to cut $2 billion from its structural costs over the next two years, according to a letter sent to workers Thursday by the CEO Mary Barra.
The Voluntary Separation Program, or VSP, will be offered to all U.S. employees who have spent five or more years with the company as of June 30. Outside the United States, the automaker will offer buyouts to executives with at least two years at the company.
GM plans to take a pretax charge of up to $1.5 billion related to buyouts, according to a public repository THURSDAY. The majority of the charges are expected to be all cash and occur in the first half of the year, the company said.
Barra, in Thursday’s letter, said the program is “designed to accelerate attrition in the United States,” helping the company potentially avoid “unintended actions” in the future. The takeover offer comes after the Detroit automaker said last week it would end approximately 500 salaried positions globally.
The last time GM offered such a massive buyout program for employees was in 2019.
“Employees are strongly encouraged to consider the program,” GM said in a statement emailed to CNBC on Thursday. “By sustainably reducing structured costs, we can improve vehicle profitability and remain agile in an increasingly competitive market.”
GM announced the $2 billion cost reduction program in January, saying between 30% and 50% of savings were expected in 2023. At the time, executives said they were planning workforce reductions through attrition rather than layoffs.
GM CEO Mary Barra speaks with the media prior to the start of the 2017 General Motors Company Annual Meeting of Shareholders on Tuesday, June 6, 2017 at GM’s world headquarters in Detroit, Michigan.
Photo by John F. Martin for GM
US employees who are approved for the buyout will receive one month’s pay for each year worked up to 12 months, as well as COBRA health coverage. They will also receive pro-rated team performance bonuses and outplacement services. International employees will receive base salary, incentives, COBRA and outplacement services.
Eligible employees interested in the program must register by March 24. Those who choose to follow a voluntary program and are approved will depart by June 30.
A company spokeswoman declined to disclose how many employees the company aims to accept buyout packages. At the end of last year, GM employed about 81,000 people worldwide, according to public records.