It’s been a bloody Monday at General Motors.
As part of the company’s bid to “accelerate its transformation for the future” it has announced dramatic production cuts and salaried job losses coinciding with plans to shut down three North American vehicle assembly plants. GM’s salaried workforce is expected to contract by 15 percent, with a 25 percent reduction in executive staff, as part of a massive restructuring that will cost upwards of $3.8 billion.
The targets stem from last month’s voluntary severance letter sent out to GM’s salaried workforce, targeting 18,000 positions. The General Motors buyouts were offered to salaried workers in North America and global executives with at least 12 years of experience, and can be worth as much as two months’ pay. The take rate has been reported to be stubbornly low.
The Detroit automaker officially confirmed Oshawa Assembly, Lordstown Assembly, and Detroit-Hamtramck will lose their product allocations next year, along with two additional plants outside of North America. The company is expecting cash savings of approximately $6 billion by year-end 2020 as a result of the slashing.
“The actions we are taking today continue our transformation to be highly agile, resilient and profitable while giving us the flexibility to invest in the future,” General Motors Chairman and CEO Mary Barra said in a statement. “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”
Most, if not all of the money saved will be poured into electric and autonomous vehicle programs as General Motors jumps headfirst into its “Zero Crashes, Zero Emissions, Zero Congestion” mantra. Some of the future moves will include expanding the use of virtual tools to lower development time and costs, more integration of vehicle and propulsion engineering teams, and consolidating global product development campuses.
Trading of GM stock was halted just prior to the announcement, but it has jumped more than 6.5 percent since resuming earlier this morning.