In order to support a transition to all-electric powertrains across its light duty vehicle lineup by 2035, GM is enacting a slew of new cost-cutting measures, including a round of job cuts. Now, according to a new report, GM terminated “hundreds” of contract employees over the weekend, effective immediately. The terminations are part of an effort to reduce costs by $2 billion over the course of the next two years.
According to a report from Detroit Free Press, the contract terminations were put in place at GM’s Global Technical Center in Warren, Michigan, as well as several other GM locations. Although GM did not specify exactly how many terminations were made, a GM spokesperson did confirm that “several hundred” contract workers were terminated as of Saturday, most of which were full-time. The cuts are expected to be permanent.
“They’re in the global product development area in all different areas. It can be multiple different positions,” GM spokesperson Maria Raynal told Detroit Free Press. “It’s part of normal operations and it contributes to that saving, but we’re not sharing a specific number.”
Contract workers are considered separate from GM employees, and are ineligible to receive company benefits.
The terminations follow the GM’s voluntary separation program (VSP) announced in March, wherein certain GM employees were offered pay, health coverage, and other benefits for a limited time in exchange for voluntarily leaving the company. The VSP was available to all U.S. salaried employees with at least five years of service, as well as global executives with at least two years of service. Reports indicate that 5,000 white collar workers opted to participate in the program, and as a result, the automaker would not need to resort to employee job cuts going forward. Employees participating in the VSP are expected to leave the company by the end of June.
According to GM CFO Paul Jacobson, roughly 30 to 50 percent of the savings realized in the cost-cutting program are expected during the 2023 calendar year.