General Motors is cutting an unspecified number of white-collar jobs globally, part of its announced efforts to slash costs to remain competitive in the shift to electric vehicles.
“We are looking at all the ways of addressing efficiency and performance,” said Arden Hoffman, the company’s chief people officer, in a message to staff Tuesday. “This week we are taking action with a relatively small number of global executives and classified employees following our most recent performance calibration. They will be departing the company starting from today.”
A person familiar with the plans said the job cuts would affect a few hundred employees. GM has 58,000 salaried US-based staff and 46,000 US unionized hourly workers, making up the majority of its 167,000 employees worldwide.
GM just reported a record annual profit for 2022. At that time it announced plans to reduce costs by $2 billion over the next two years, including cutting corporate overhead across the board. But at that time CEO Mary Barra told investors, “I do want to be clear, though, we’re not planning layoffs. We are limiting our hiring to only the most strategically important roles and will use attrition to help manage overall head count.”
Hoffman’s statement to staff said these job cuts are part of “a fundamental cultural shift to be more performance-driven and accountable.”
GM is spending a significant amount of money to shift production from traditional gasoline-powered vehicles to a lineup of pure electric vehicles. While that will eventually reduce labor costs since EVs don’t take as many hours of labor to produce, it does require billions of dollars in upfront investment. GM has said it will invest $35 billion between now and 2025 in the shift to EVs. Its target is to have an all EV lineup of passenger vehicles by 2035.
Stellantis, which makes Chrysler, Dodge, Jeep and Ram vehicles, has indefinitely idled its Belvidere assembly plant as of Tuesday, where it built the Jeep Cherokee compact SUV. The closing plans were announced just before Christmas. It most recently had 1,200 workers on a single shift at the plant.
Production of the Cherokee, which had sales fall 55% last year, is being shifted to Mexico, according to the United Auto Workers union, although a spokesperson for Stellantis said no plans have yet been announced on where future production will take place.
Stellantis CEO Carlos Tavares said the closing of the plant is partly due to the need to cut costs as it looks at significantly greater costs of producing EVs in near term.
“Why are we doing this? Because we need to find a solution for the fact that the technology that has been decided is 40% more expensive than the conventional technology. That’s the situation,” he said at a recent media roundtable. “You have 40% more total production costs when we make an EV compared to a conventional vehicle. So what we do with this 40%? It’s a big amount of money. You cannot pass it to the consumer.”
Ford, which is also facing the cost of converting to a lineup of EVs, has been making much deeper job cuts in recent months, including axing 3,000 salaried roles announced in August; as well as cutting 3,800 jobs across Europe, announced earlier this year.
Both Ford (F) and GM (GM) face contract negotiations with the UAW this fall on new labor deals for their US hourly workers. The union went on strike at GM (GM) for six weeks in 2019 before reaching a deal on its current contract.
