GM offers buyout to 18K employees
Company won’t say which jobs are affected.
General Motors is a technology company that makes cars, and the skills its employees had yesterday are continuously becoming outdated.
Experts say that is the underlying message of GM CEO Mary Barra’s move on Oct. 31 to offer voluntary buyouts to GM’s nearly 18,000 North American salaried workers with 12 or more years of experience with the company.
On the surface, it’s typical cost-cutting ahead of a potential dip in new-car sales and rising raw material costs. But look closer.
“GM is signaling a change in vehicle technology. If they go into electric more rapidly, then they do not need the same engineers they have now,” said Maryann Keller, principal of Maryann Keller & Associates in the New York area.
Consider that Barra hails from a human resources background, so targeting employees with long seniority and high pay grades is strategic when a company is moving toward the development of more electric cars, fuel cells and autonomous vehicles, experts say. It means redeploying the workforce and freeing up significant capital, said Marick Masters, professor of business at Wayne State University.
“Technology has changed so fast and is changing so fast that if you’ve been out of school 10 or 20 years, you’re not at the leading edge anymore,” Masters said.
❚ The new worker: Besides wanting to be futuristic, GM’s cost cutting is also a necessity.
Its current cost structure and product mix make it more vulnerable to a sales downturn than Ford and Fiat Chrysler, said market economist Jon Gabrielsen, an adviser to the auto industry. He said GM can afford to lose only a quarter of its current car sales in North America before going in the red.
GM won’t say which jobs or which areas of the business it looks to trim beyond saying the offers are voluntary – for now – and will go to employees with 12plus years experience. But GM has been adding a younger workforce with technology-heavy skills in recent years. In fact, only about 17,700 of GM’s 50,000 salaried workers in North America have the 12-plus years seniority to qualify for a buyout offer. Experts say that indicates the bulk of GM’s workers are new to the company, possibly with a focus beyond traditional vehicle design and engineering.
A GM spokesman confirmed that “about 40 percent” of its U.S. workforce has been with the company five years or less.
The company’s changing focus opens up opportunities to millennials, those ages 22 to 37, who might change their perception of GM from that of a stodgy carmaker bankrupt a few years ago to a technology company that offers some advantages over that of a startup, Wayne State’s Masters said. But for older workers, it means they must up their game, and continuous training is a requisite.
“Organizations do not guarantee lifetime employment anymore,” Masters said. “This is a statement that the world is changing.”
❚ A new company: The “new” GM will want workers who are highly creative and capable of working autonomously as well as collaboratively, Masters said. The future employee will take initiative and have a strong technology background, good communication skills and project-management capability. GM might do more contract hiring to keep fixed costs low and GM’s agility high, he said.
“China is taking the lead in electric vehicles. Ford has an aggressive plan to redeploy its investments along those lines, too,” Masters said. “So GM has to have the flexibility to free up staff and have the capital available to invest in this technology.”
GM has been on an aggressive hiring spree in part because it wants to be first to deploy a fleet of selfdriving electric cars in a city next year. In fact, the same day GM said it would trim its workforce, a GM spokesman told the USA TODAY Network’s Detroit Free Press that GM will continue to hire in certain areas it is expanding – namely engineering and technology for its work on self-driving and electric cars.
Two years ago, GM bought its self-driving vehicle arm, GM Cruise. GM Cruise employed 40 people at that time. Today it employs about 800, GM President Dan Ammann said. ❚ Wall Street woes: Since taking the helm in January 2014, Barra has yet to satisfy investors. Before reporting third-quarter results Oct. 31, GM shares traded about 6 percent below the $33 per share price at which they launched in 2010 in a post-bankruptcy initial public offering, according to Reuters. GM’s stock price hit an all-time high of $46.48 on Oct. 24, 2017, but closed Tuesday at $36.46.
Last month, Reuters reported it contacted several shareholders who said GM could face a third major action by activist shareholders in less than four years if the share price does not improve.