New York (CNN) General Motors is cutting an unspecified number of white-collar jobs globally, part of an announced effort to cut costs to remain competitive in the transition to electric vehicles.
“We are looking at all ways to address efficiency and performance,” Arden Hoffman, the company’s chief executive, said in a memo to employees Tuesday. “This week we are taking action with a relatively small number of global executives and classified employees following our latest performance calibration. They will leave 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 in the United States employees and 46,000 U.S. unionized hourly workers, who make up the majority of the 167,000 employees worldwide.
GM just reported a record annual profit for 2022. At the 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, but we are not planning layoffs. We are limiting our hiring to only the most strategically important roles and will use attrition to help manage the overall headcount employees.”
Hoffman’s statement to employees said these job cuts are part of “a fundamental culture shift to be more performance-driven and accountable.”
GM is spending a significant amount of money to shift production from traditional gasoline-powered cars to a line of pure electric vehicles. While that will eventually reduce labor costs since EVs don’t take as many man-hours to produce, it requires billions of dollars in upfront investment. GM has said it will invest $35 billion between now and 2025 in the transition to electric vehicles. The goal is to have a selection of all electric cars by 2035.
Stellantis, which makes Chrysler, Dodge, Jeep and Ram vehicles, has indefinitely idled its Belvidere assembly plant starting Tuesday, where it built the Jeep Cherokee compact SUV. The closing plans were announced just before Christmas. It last had 1,200 workers on a single shift at the plant.
Production of the Cherokee, which was down 55% last year, is being moved to Mexico, according to the United Auto Workers union, although a Stellantis spokesman said no plans have yet been announced for where future production will take place.
Stellanti CEO Carlos Tavares said the closure of the plant is partly due to the need to cut costs as it sees significantly higher costs of producing electric cars in the short term.
“Why are we doing this? Because we have to find a solution for the fact that the technology that has been decided is 40% more expensive than the conventional technology. That is the situation,” he said at a recent media roundtable. “You have 40% more total production costs when we make an electric car compared to a conventional vehicle. So what do we do with that 40%? That’s a huge amount of money. You can’t pass it on to the consumer.”
Ford, which also faces the costs of converting to a range of electric cars, has made much deeper job cuts in recent months, including the closure of 3,000 salaried roles announced in August; in addition to cutting 3,800 jobs across Europe, announced earlier this year.
Both Ford (F) and GM (GM) faces contract negotiations with the UAW this fall on new labor agreements for their American hourly workers. The union went on strike at GM for six weeks in 2019 before reaching an agreement on its current contract.