Majority Of Salaried U.S. Employees Offered Buyouts By General Motors

In an effort to reduce structural costs by $2 billion over the next two years, General Motors will provide voluntary buyouts to a "majority" of its 58,000 white-collar workers in the United States, according to a letter CEO Mary Barra addressed to workers on Thursday.

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The "Voluntary Separation Program," or VSP, will be available to all salaried workers in the United States who have worked for the corporation for five years or more as of June 30. Outside of the United States, the carmaker will give buyouts to executives who have been with the firm for at least two years.

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According to a public filing Thursday, GM plans to pay a pre-tax charge of up to $1.5 billion relating to the buyouts. According to GM, the majority of the charges will be all-cash and will occur in the first half of the year.

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Barra stated in the letter on Thursday that the initiative is "intended to accelerate attrition in the United States," perhaps benefiting the firm in avoiding "involuntary actions" in the future. The buyout offer comes after the Detroit carmaker said last week that it will lay off approximately 500 paid employees worldwide.

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GM last announced a big buyout program for salaried employees in 2019.

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"Employees are highly urged to examine the initiative," General Motors stated in an email to CNBC on Thursday. "By continuously lowering structural costs, we can increase vehicle profitability while being agile in an increasingly competitive market."

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GM unveiled the $2 billion cost-cutting scheme in January, estimating that 30% to 50% of the savings will be realized by 2023. At the time, officials stated that they intended to reduce personnel through attrition rather than layoffs.

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Employees in the United States who are authorized for the buyout will get one month's compensation for each year worked up to a total of 12 months, as well as COBRA health coverage. They will also earn team performance bonuses and outplacement services on a prorated basis. Global workers will be paid a base pay, bonuses, COBRA coverage, and outplacement assistance.

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Employees who are eligible for the program must sign up by March 24. Those who choose a voluntary package and are authorized will be able to go by June 30.

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A corporate representative declined to say how many employees are expected to take the buyout packages. According to official documents, GM employed around 81,000 paid employees worldwide at the end of last year.