General Motors will offer voluntary buyouts to its 58,000 U.S. white-collar employees, as it aims to cut $2 billion in structural costs over the next two years, according to a letter sent to workers Thursday from CEO Mary Barra, CNBC reported.
The Voluntary Separation Program (VSP) will be offered to all U.S. salaried employees who have spent five or more years at the company as of June 30. Outside of the U.S., the automaker will offer buyouts to executives with at least two years of time at the company.
GM expects to take a pretax charge of up to $1.5 billion related to the buyouts, according to a public filing Thursday. The majority of the charges are expected to be all-cash and occur during the first half of the year, the company said.
Barra, in the letter Thursday, said the program is “designed to accelerate attrition in the U.S.,” assisting the company in potentially avoiding “involuntary actions” in the future. The buyout offer comes after the Detroit automaker said last week it would terminate about 500 salaried positions globally.
The last time GM offered such a large buyout program was for roughly 18,000 North American salaried employees in 2018-2019.
“Employees are strongly encouraged to consider the program,” GM said in an emailed statement to CNBC Thursday. “By permanently bringing down structured costs, we can improve vehicle profitability and remain nimble in an increasingly competitive market.”
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 headcount reductions through attrition rather than layoffs.
U.S. employees who are approved for the buyout will be granted one-month pay for every year they worked up to 12 months, as well as COBRA health coverage. They also will receive prorated team performance bonuses and outplacement services. Global employees will receive base salary, incentives, COBRA and outplacement services.
Eligible employees interested in the program must sign up by March 24. Those who elect to take a voluntary package and are approved will depart by June 30.