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General Motors (GM) Offers Voluntary Buyout to Reduce Costs
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General Motors (GM - Free Report) will offer “Voluntary Separation Program” to the majority of its 58,000 U.S. employees who have spent five or more years in the company as of Jun 30, 2023. Outside the United States, the buyouts will be offered to executives who have spent at least two years in the company. According to a letter sent to employees from GM CEO Mary Barra on Thursday, the aim of the program is to slash $2 billion in structural costs by the end of 2024.
According to a public filing, the legacy automaker expects a pretax charge of $1.5 billion related to the separation program. The major chunk of charges are expected to be all-cash and will take place during the first half of the year.
In the letter, CEO Barra mentioned that the program aims to accelerate attrition in the United States to avoid any involuntary action in the future. Last week, GM announced the termination of around 500 employees globally but did not disclose the reason for the layoff. On the last earnings call, GM CFO Paul Jacobson said, “I want to be clear, we’re not planning layoffs. We’re limiting our hiring to only the most strategically important roles and we will use attrition to help manage our overall headcount.”
GM also stated, “By permanently bringing down structured costs, we can improve vehicle profitability and remain nimble in an increasingly competitive market.”
U.S. employees eligible for the package will receive one month’s pay for every year of employment up to 12 months, COBRA health coverage, a prorated performance bonus and outplacement services. Global employees will receive a base salary, COBRA health coverage, outplacement services and additional incentives.
General Motors strongly encourages its employees to accept one of the three packages the company is offering. Interested employees must sign up for the program by Mar 24. If the employee signs up for the program and receives approval, they will depart by Jun 30. However, the spokeswoman of GM declined to disclose the number of buyout packages that the company is willing to accept. According to a public filing at the end of 2022, GM employed a total of 81,000 employees worldwide.
The last buyout program offered by GM in 2018-2019 targeted nearly 18,000 North American employees.
Zacks Rank & Key Picks
GM currently carries a Zacks Rank #3 (Hold).
A few top-ranked players in the auto space include Volvo (VLVLY - Free Report) , Wabash National (WNC - Free Report) and Modine Manufacturing (MOD - Free Report) , all of which sport a Zacks Rank #1 (Strong Buy).
The Volvo Group is a manufacturer of trucks, buses, construction equipment, diesel engines and marine and industrial engines. The Zacks Consensus Estimate for VLVLY’s 2023 earnings imply year-over-year growth of 6.25%.
Wabash is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimates for WNC’s 2023 sales and earnings imply year-over-year growth of 13.06% and 28.89%, respectively.
Modine operates primarily in a single industry consisting of the manufacture and sale of heat transfer equipment. The Zacks Consensus Estimates for MOD’s 2023 sales and earnings imply year-over-year growth of 11.43% and 43.09%, respectively.
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General Motors (GM) Offers Voluntary Buyout to Reduce Costs
General Motors (GM - Free Report) will offer “Voluntary Separation Program” to the majority of its 58,000 U.S. employees who have spent five or more years in the company as of Jun 30, 2023. Outside the United States, the buyouts will be offered to executives who have spent at least two years in the company. According to a letter sent to employees from GM CEO Mary Barra on Thursday, the aim of the program is to slash $2 billion in structural costs by the end of 2024.
According to a public filing, the legacy automaker expects a pretax charge of $1.5 billion related to the separation program. The major chunk of charges are expected to be all-cash and will take place during the first half of the year.
In the letter, CEO Barra mentioned that the program aims to accelerate attrition in the United States to avoid any involuntary action in the future. Last week, GM announced the termination of around 500 employees globally but did not disclose the reason for the layoff. On the last earnings call, GM CFO Paul Jacobson said, “I want to be clear, we’re not planning layoffs. We’re limiting our hiring to only the most strategically important roles and we will use attrition to help manage our overall headcount.”
GM also stated, “By permanently bringing down structured costs, we can improve vehicle profitability and remain nimble in an increasingly competitive market.”
U.S. employees eligible for the package will receive one month’s pay for every year of employment up to 12 months, COBRA health coverage, a prorated performance bonus and outplacement services. Global employees will receive a base salary, COBRA health coverage, outplacement services and additional incentives.
General Motors strongly encourages its employees to accept one of the three packages the company is offering. Interested employees must sign up for the program by Mar 24. If the employee signs up for the program and receives approval, they will depart by Jun 30. However, the spokeswoman of GM declined to disclose the number of buyout packages that the company is willing to accept. According to a public filing at the end of 2022, GM employed a total of 81,000 employees worldwide.
The last buyout program offered by GM in 2018-2019 targeted nearly 18,000 North American employees.
Zacks Rank & Key Picks
GM currently carries a Zacks Rank #3 (Hold).
A few top-ranked players in the auto space include Volvo (VLVLY - Free Report) , Wabash National (WNC - Free Report) and Modine Manufacturing (MOD - Free Report) , all of which sport a Zacks Rank #1 (Strong Buy).
The Volvo Group is a manufacturer of trucks, buses, construction equipment, diesel engines and marine and industrial engines. The Zacks Consensus Estimate for VLVLY’s 2023 earnings imply year-over-year growth of 6.25%.
Wabash is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimates for WNC’s 2023 sales and earnings imply year-over-year growth of 13.06% and 28.89%, respectively.
Modine operates primarily in a single industry consisting of the manufacture and sale of heat transfer equipment. The Zacks Consensus Estimates for MOD’s 2023 sales and earnings imply year-over-year growth of 11.43% and 43.09%, respectively.
You can see the complete list of today’s Zacks #1 Rank stocks here.