Earlier this year, GM announced a new voluntary separation program, or VSP, wherein certain employees would be eligible to receive pay, health coverage, and other benefits for a limited time in exchange for voluntarily leaving the company. The VSP was announced as a part of an effort to reduce fixed costs and achieve $2 billion in savings over the next two years. Now, it’s been reported that roughly 5,000 salaried workers have opted to take the offer.
According to a report from CNBC, about 5,000 white-collar workers have opted to participate in the new GM VSP. GM CFO Paul Jacobson indicated that the VSP will result in a roughly $1 billion charge during the quarter, while also indicating that the program opt-in rate was in line with GM expectations. Some of the program costs may spill into the second quarter.
Last month, GM CEO Mary Barra said that if the VSP did not have enough takers, the automaker would resort to layoffs to achieve the reduced headcount desired. However, according to Jacobson, the results of the VSP are shaping up to avoid layoffs going forward.
The majority of employees participating in the VSP will depart GM by the end of June.
“This was a tool to get us to really accelerate the attrition curve; got a pretty quick payback,” Jacobson said. Roughly 30 to 50 percent of the savings realized in the cost-cutting program are expected this year.
As GM Authority covered previously, the VSP was offered to all U.S. salaried employees with at least five years of service, as well as all global executives with at least two years of service. U.S. salaried employees were offered one month of pay for every year of service, up to 12 months, as well as COBRA health coverage, a pro-rated team GM performance bonus, and outplacement services. Global GM executives were offered their base salary, incentives, COBRA, and outplacement services. The VSP offer concluded March 24th, 2023.
Further details on the VSP are expected during the upcoming Q1 earnings call later this month.