GM to start laying off 4,000-plus salaried workers Monday

Nora Naughton
The Detroit News
As part of a larger restructuring effort, GM will start salaried workforce reductions in earnest Monday.

General Motors Co. will begin on Monday morning a weeks-long process of laying off roughly 4,250 salaried employees, The Detroit News has learned. 

As part of a larger restructuring effort, GM will start salaried workforce reductions in earnest Monday, with more involuntary separations continuing through February, according to a source familiar with the plans. It's not clear yet which departments will see cuts first.

The layoffs are the latest move in a sweeping restructuring of the automaker's global operations. They include indefinitely idling five North American manufacturing plants later this year, expected to save the company up to $2.5 billion in 2019 and a total of $6 billion by 2020. The plants facing potential closure include Detroit-Hamtramck Assembly, Warren Transmission, Baltimore Operations and Lordstown Assembly in northeast Ohio.

GM largely will complete an ongoing effort to cut some 8,000 salaried and contract jobs this month, the source said. As part of its restructuring, the automaker also is cutting its global executive workforce by 25 percent, but it's unclear where that effort stands.

"We are not confirming timing," GM said in a statement to The News. "Our employees are our priority, and we will communicate with them first."

Prior to moving to involuntary separations, GM offered buyouts to 18,000 employees on Halloween last year. In an internal memo obtained by The News after the deadline to accept buyouts, CEO Mary Barra said roughly 2,250 employees requested to take the voluntary separation offer. Reductions to GM's contract workforce were largely completed last year with some 1,500 workers let go. 

GM's plans to begin salaried layoffs, first reported by Automotive News, were referred to as "Black Monday" by David Kudla, CEO of Grand Blanc-based Mainstay Capital Management LLC. He told The News he expects layoffs to begin at 7:30 a.m. Monday, and continue on a "rolling basis."

The start to GM's layoffs comes days before the Detroit automaker is scheduled Wednesday to report fourth quarter and full-year earnings for 2018. At an investor event earlier this year, GM said it expects earnings per share slightly higher than the $5.80 to $6.20 initially forecast. The automaker also is expected to exceed its previously estimated $4 billion in free cash flow.

The effort generally has garnered praise from investors, but some on Wall Street are still skeptical.

"Many investors see GM as a ‘self help story’ that can cut costs faster than the pace of industry headwinds, leaving margins and cash flow supportive of strong cash flow and return of capital. We do not subscribe to this view," Morgan Stanley Adam Jonas said in a note after the Detroit auto show press preview. "We believe cost savings will be given back to the consumer in price …, something with which this industry has numerous precedents."

In reassessing its workforce and manufacturing footprint, GM is hoping to reposition for a future that it sees as driverless and emission-free — even as it continues to weight its current vehicle lineup more heavily toward profit-rich pickups and SUVs.

The automaker already is diverting investments into electric and fuel-cell powered vehicles ahead of a push to introduce 20 emission-free vehicles by 2023. And GM Cruise LLC, the automaker's autonomous vehicle development arm, has attracted billions in investment from Japanese investment firm SoftBank Investment Advisers and Honda Motor Co.

It's not clear yet which departments will see the deepest cuts as GM carries out its involuntary severance program. But the automaker is continuing to aggressively hire in growing spaces like autonomy, mobility and electrification at the same time it moderates future investment in gas or diesel engines.

GM's "regulatory investment" in gas- and diesel-powered engines is "largely done," GM President Mark Reuss told The News on the sidelines of the Detroit auto show. He was elevated to second-in-command this year to lead the automaker's product-driven transformation.

Twitter: @NoraNaughton