General Motors employees with 12 years-plus experience will have the option of a buyout package. In total, 18,000 salaried employees will have the chance to voluntarily leave the automaker, but there’s more to the story than just cost cuts.
The Detroit Free Press reported Tuesday the job cuts underline a shift in the auto industry—one where the technology industry becomes increasingly more important to automakers. And today’s employees’ skills are likely becoming increasingly outdated.
Maryann Keller, principal of Maryann Keller & Associates in the New York area, said as GM rapidly invests in electric cars and self-driving vehicles, the programs require different skill sets than many engineers and designers may currently possess.
“The advent of electric vehicles has profound implications for employment in the auto industry’s competition and the skill sets needed to compete,” she said.
Thus, CEO Barra may strategically be reallocating resources and redeploying capital for programs that require the most attention. Employees with skillsets even 10 years old may not be nearly as relevant as they were five years ago, according to Marick Masters, professor of business at Wayne State University.
However, it may also give GM a unique opportunity. Masters added the automaker could bring on fresh talent with the skillset it desires, and that could really change things inside the company. And that’s a trend we’ve seen for years now. According to GM, about 40 percent of its workforce has been with the company less than five years.
Future GM employees will likely require a strong technology background with the ability to help bring future projects to life.
But, the buyouts are absolutely about a proactive cost-cutting approach. Market economist Jon Gabrielsen said GM could only lose a quarter of its new-car sales before it dips into losses. GM sees something on the horizon, whether that’s simply a slowing auto industry or an economic downturn. This time, it’s sounding the alarm early.
Comment
Just look at the time savings with 3D printing for prototype sample parts. Then you look at the improvements in engineering software, and you can do more with less design and engineering people. At the same time, GM has redesigned all assembly operations for flexible manufacturing.
The payoff is very big for GM, since they have so many models and Global brands.