General Motors is already seeing some savings come from its recently announced plan to cut 14,000 jobs and restructure the company, executives said Wednesday.
The automaker, which started handing pink slips to more than 4,000 white-collar workers Monday, expects its plan to save about $6 billion in cash through 2020 with about half of that coming this year. About $4.5 billion of that will be cost savings and another $1.5 billion will come from less spending on capital expenses. lower capital expenditure rate.
“We were also able to accelerate the execution of our transformational cost savings and started to see early benefits of these actions in the fourth quarter,” Chief Financial Officer Dhivya Suryadevara told analysts on a call after releasing fourth-quarter earnings Wednesday.
The plan though has drawn criticism from both the United Auto Workers union and several high-profile politicians in the regions affected by the cuts. GM said it spent roughly $1.3 billion during the quarter on “transformation activities,” which were excluded from its adjusted earnings results. GM said the charges included employee separation costs and accelerated depreciation.
The company eliminated roughly 3,750 salaried positions through buyouts and by cutting contract workers, leaving roughly 4,250 salaried workers and 6,000 hourly employees targeted for layoffs in North America.
The company has offered jobs to all 2,800 hourly workers affected in the U.S. About 1,000 have already accepted new positions at other plants, and 1,200 are eligible for retirement, GM said. The other 3,000 hourly workers in Canada are getting help finding jobs and training, a spokesman said.
In Canada, about 20 local employers have expressed interest in hiring GM’s laid off workers, and GM is providing out-placement services to the affected salaried employees.
GM made the decision to cut jobs at plants which the automaker said were only running at a fraction of their total capacity. The automaker chose to essentially stop producing several vehicles that have seen drops in sales, as consumers ditch sedans and passenger cars for SUVs and pickups.
The choice was difficult, but necessary, said CEO Mary Barra.
“Obviously we have work to do, but when we look at what we need to do from a market perspective, we can’t run at a 70 percent utilization,” she said. “We had to improve that.”
