NEW YORK (CNN) – General Motors is shedding an unspecified number of white-collar jobs worldwide as part of its announced effort to cut costs to remain competitive in its electric vehicle transition.
“We are reviewing all options to address efficiency and performance,” Arden Hoffman, the company’s chief people officer, said in a note to employees on Tuesday. “This week we are taking action with a relatively small number of global executives and classified employees following our last performance calibration. You will leave the company as of today.”
A person familiar with the plans said the job cuts would affect a few hundred employees. GM has 58,000 employees in the US employees and 46,000 unionized hourly workers in the US, who make up the majority of the 167,000 employees worldwide.
GM just reported a record full-year profit for 2022. At the time, it announced plans to cut costs by $2 billion over the next two years, including cutting corporate overheads across the board. But at the time, CEO Mary Barra told investors, “However, I want to be clear that we are not planning any layoffs. We limit our hiring to the most strategic positions and will use turnover to manage the total number of employees. “
Hoffman’s statement to employees said these job cuts are part of “a fundamental cultural shift toward greater performance and accountability.”
GM is spending a significant amount of money to transition production from traditional gas-powered vehicles to a line of pure electric vehicles. While this will ultimately reduce labor costs because electric vehicles do not take as many man-hours to manufacture, it will require billions of dollars in upfront investments. GM has announced it will invest $35 billion in the EV transition by 2025. His goal is to have an all-electric vehicle portfolio by 2035.
Stellantis, which makes Chrysler, Dodge, Jeep and Ram vehicles, indefinitely shut down its Belvidere assembly plant where it built the Jeep Cherokee compact SUV on Tuesday. The closure plans were announced just before Christmas. Most recently, 1,200 workers were employed in a single shift at the plant.
Production of the Cherokee, which saw sales down 55% last year, will be moved to Mexico, according to the United Auto Workers union, although a Stellantis spokesman said plans have not yet been announced about where future production will take place.
Carlos Tavares, CEO of Stellantis, said the closure of the plant was partly due to a need to cut costs given the significantly higher costs of electric vehicle production expected 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 is 40% more expensive than the conventional technology. That’s the situation,” he said recently at a media interview. “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%? It’s a lot of money. You cannot pass it on to the consumer.”
Ford, which is also facing the cost of switching to a range of electric vehicles, has made much heavier job cuts in recent months, including cutting 3,000 paid jobs it announced in August; and the 3,800 job cuts across Europe announced earlier this year.
Both Ford (F) and GM (GM) are set to negotiate new labor arrangements for their US hourly workers with the UAW this fall. The union went on strike at GM for six weeks in 2019 before reaching an agreement on its current contract.