A storm is coming.
A once giant, General Motors at the moment is a shadow of its former self. Not only has the automaker, which is still a major player in the industry, ceded ground to countless competitors both at home and abroad, it’s been actively trimming its workforce recently.
Learn why Reuters thinks EVs won’t kill muscle cars here.
Per a report from The Detroit News, GM is axing “several hundred” contract positions to cut back on $2 billion in fixed costs. That might not sound like a big deal, although to those contractors and their families it absolutely is. Plus, in the grand scheme of things it signals GM is battening the hatches.
The official story about why GM has been scaling back its workforce, the same as Ford (an issue we covered recently), is the auto giant is preparing for the “EV revolution.” For its part, GM launched a “voluntary separation program” extended to employees as part of its $2 billion cost cutting scheme.
Later, the automaker reported the separation program was a success with 5,000 employees opting to leave the company. This move, according to a prepared statement delivered by a company spokesman, was to keep GM “nimble in an increasingly competitive market.”
According to GM CFO Paul Jacobson, trimming those 5,000 employees gets the company halfway to the $2 billion costs reduction. And while axing contractors surely moves the needle, it probably doesn’t by much. That means many more cuts are coming, whether in the workforce or otherwise.
Reportedly, on the chopping block is “discretionary spending” like corporate travel and marketing. After all, healthy companies don’t do much marketing, right? The fact such things are under consideration for cuts should be troubling.
As we pointed out before, GM is hardly the only automaker cutting back on costs. After a ridiculous car market created by covid restrictions globally, the years of plenty are waning and everyone who’s smart is getting ready for leaner times. That’s why Ford’s been hacking away at its European workforce and Stellantis says it will ask over 33,500 employees to take buyouts in the near future.
These moves aren’t in preparation for a glorious new electrified future but instead are companies realizing the economic seas ahead are going to be rough.
Images via GM