New York (CNN) General Motors is cutting an unknown number of white-collar jobs around the world, as part of its announced efforts to cut costs to stay competitive in the shift to electric vehicles.
“We are looking at all the ways to approach efficiency and performance,” Arden Hoffman, the company’s director of human resources, said in a message to staff on Tuesday. “This week, we are taking action with a relatively small number of global executives and classified employees following our latest performance benchmark. They will be leaving the company effective today.”
A person familiar with the plans said the job cuts would affect a few hundred employees. GM has 58,000 employees based in the United States staff and 46,000 unionized hourly workers in the United States, making up the majority of its 167,000 employees worldwide.
GM just reported record annual profit for 2022. At that time, it announced plans to cut costs by $2 billion over the next two years, including cutting corporate overhead across the board. . But at the time, CEO Mary Barra told investors: “I want to be clear, however, we are not planning any layoffs. We are limiting our hires to only the most strategically important positions and will use attrition to help manage the overall workforce.”
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 large sums to shift production from traditional gas-powered vehicles to a line of purely electric vehicles. While this eventually reduces labor costs, because electric vehicles don’t require as many man-hours to produce, it does require billions of dollars in upfront investment. GM said it would invest $35 billion by 2025 in the shift to electric vehicles. Its goal is to have a range of fully electric passenger vehicles by 2035.
Stellantis, which makes Chrysler, Dodge, Jeep and Ram vehicles, closed its Belvidere assembly plant indefinitely starting Tuesday, where it built the Jeep Cherokee compact SUV. The closure plans were announced just before Christmas. More recently, there were 1,200 workers on a single shift at the plant.
Production of the Cherokee, whose sales fell 55% last year, is being shifted to Mexico, according to the United Auto Workers union, although a Stellantis spokesman said no plans have yet been made. announced on where future production will take place.
Stellantis CEO Carlos Tavares said the plant closure was partly due to the need to cut costs, as he envisions significantly higher production costs for electric vehicles in the near term.
“Why are we doing this? Because we have to find a solution to the fact that the technology that has been decided on is 40% more expensive than conventional technology. That’s the situation,” he said during a recent media roundtable. “You have 40% more total production costs when we make an electric vehicle compared to a conventional vehicle. So what do we do with that 40%? That’s a lot of money. You can’t do it. pass on to the consumer.
Ford, which also faces the cost of converting to a range of electric vehicles, has made much larger job cuts in recent months, including cutting 3,000 salaried jobs announced in August; as well as the cut of 3,800 jobs across Europe, announced earlier this year.
Both Ford (F) And GM (GM) facing contract negotiations with the UAW this fall on new labor agreements for their U.S. hourly workers. The union went on strike at GM for six weeks in 2019 before reaching an agreement on his current contract.