5,000 GM employees accept buyouts saving the company $1B

58,000 salaried workers remain after 5,000 employees at General Motors accepted buyouts on Tuesday in Detroit. GM says that the company will save about one billion dollars in costs from these buyouts, half of the two billion dollars the company aims to cut down on this year.

GM among other car manufacturing companies is in precocious times as the automotive industry is in a transition phase, moving from internal combustion to electric vehicles. Like many automotive companies, GM has announced plans to have an all electric fleet of cars on sale from 2035.

The move to electric is obviously not an easy one. GM is in a stage where the company is making huge investment plans to build the foundation for its new electric vehicle production facilities in parallel with continuous production of gas powered cars and trucks.

The Detroit based company believes that the steps it’s taking is in the right direction to ensure that it keeps momentum towards its EV goals in 2035 while maintaining agility and competitiveness in the market.

The buyouts were offered to the white collar workforce at GM who have served in the company for at least five years. Those who wanted to avail the exit package had to sign up by March 24, and will have to leave by June 30 if approved.

Workers in the US are offered a month’s pay for each year of service at the organisation, up to 12 months. They will also be able to claim their COBRA health care as a part of bonuses they would receive this year.

On Tuesday, CFO Paul Jacobson said the company will take a charge worth one billion dollars this year but will save one billion dollars per year, in the years to come as the workers leave later in the year. He said the goal was to make attrition go faster.

Even though the buyouts seem like a great solution to the issues GM has been facing they are yet to deny the possibilities that the company will resort to layoffs if need be.