When General Motors (GM) announced its buyout plans in early March to a large sector of the company’s almost 60,000 white-collar workers across the United States, of which approximately 35,000 are in Michigan, many were surprised by the news. And salaried employees wanting to take advantage of the company’s Voluntary Separation Program (VSP) had to sign up by March 24 and exit the company by June 30.
In a letter to employees explaining the company’s plans to prepare for a deeper commitment to manufacturing electric vehicles (EVs), Mary Barra, GM’s Chair and CEO, said, “By permanently bringing down structured costs, we can improve vehicle profitability and remain nimble in an increasingly competitive market. Now more than ever, we need to have a mindset of taking cost out in everything we do. It needs to be built into our culture just like we’ve done with safety.”
Barra also wrote, “to accelerate attrition and taking this step now will help avoid the potential for involuntary actions.”
Interestingly, GM posted record sales last year. However, in January 2023, GM stakeholders learned despite record profits, the giant automaker would cut $2 billion in structural costs over the next 24 months as the company prepares to evolve and position itself to make and sell only electric passenger vehicles by 2035.
The news of the buyout came months after GM, one of Michigan’s largest and most storied companies, told media outlets the automaker would invest $7 billion in the state’s manufacturing facilities to become the nation’s epicenter for developing and manufacturing electric vehicles. The investment would create 5,000-plus jobs.
In Detroit, details of the investment were met with excitement because the Factory Zero Plant was tapped to be a major producer of the 2024 Silverado EV and GMC Sierra EV pickups. The projections for the east side facility are to grow the capacity to produce more electric vehicles in the ensuing years, creating hundreds of jobs, many filled by Detroiters.
GM’s recent buyout packages followed those of Ford and Stellantis, but some industry experts wonder if such buyouts of white-collar workers will lead to layoffs of other salaried workers, despite GM’s top brass saying layoffs were not in the plans to cut costs.
Some hourly auto workers wonder the same, as automakers gear up to become fully immersed in the world of making electric vehicles over the coming years.
While layoffs may be a last resort for the Big 3 automakers to reach their respective cost-saving goals, other X factors could influence short and long-term plans, such as a global banking crisis, shaky stock market, the COVID-19 pandemic, and a recession of any measure.
And what if there are miscalculations by the Big 3 as related to the transition from manufacturing combustible vehicles to electric vehicles? Could miscalculations, dramatic economic downturns or a deep recession, cause layoffs or auto plant closures in Detroit and the region, including Factory Zero Detroit-Hamtramck Assembly Center or Stellantis Detroit Assembly Complex?
Studies have shown that auto plants that have gone idle or closed meant lost wages and salaries by workers, employees of supply chain companies, and people working in nearby consumer service establishments, including restaurants, grocery stores, and other small and large shops. One study of GM’s former Lordstown Plant in Ohio concluded decades ago that for every four GM jobs lost at the plant, two more supply chain-related positions and one more consumer service industry job was lost.
While those numbers may extrapolate differently in Detroit, nevertheless, hardships would befall the city and neighboring communities due to scenarios of massive and prolonged layoffs, outright cuts, and the idling and closures of auto manufacturing facilities. Furthermore, African Americans, the overwhelming population of Detroit, would feel the brunt of such automotive downfalls since Black people, as documented, experience the “highest levels of inequity and disparity” in any aspect of society, including employment and business opportunities.
However, Dr. Daniil Manaenkov, an economic forecast specialist at the University of Michigan, told the Michigan Chronicle that he doesn’t see a dramatic downturn in the local economy anytime over the next four years.
Manaenkov referenced the Detroit Economic Outlook Report prepared by U of M and released on Feb. 6, 2023, “projecting employment at businesses in Detroit – including automotive related – and employment among Detroit residents to climb every year from 2023 to 2027.” The report states, “Detroit’s resilience in recovering from the pandemic to date translates into continued growth even amid a challenging national economy.”
In its two-year quest to cut structural costs to the tune of $2 billion, would GM relocate its World Headquarters, especially since thousands of employees and contractors work remotely, leaving the corporate office almost empty on any given weekday?
“Our headquarters will always be in Detroit, in the Ren Cen,” Barra told the Associated Press in a 2022 interview. “Right now, the plan is for it to be at the Renaissance Center. That’s our home.”
While “for right now” is not as definitive as “always,” Barra admits “she can’t predict what will happen in five, 10 or 15 years.”
“If GM moves its headquarters out of Detroit, it would be a significantly unpopular move,” said Manaenkov. “There are lots of high-paying, white-collared jobs there. And while they may not live in Detroit, they pay taxes there. I’m sure the City of Detroit’s administration realizes that GM moving out would be a big deal, and the city would have to offer some big concessions to keep GM’s world headquarters in Detroit.”
While any talk of GM moving its World Headquarters out of the city is pure conjecture, many who have watched Detroit soar from the 2013 bankruptcy believe that the Motor City’s resilience is indestructible. Last year, Time Magazine named Detroit one of the “World’s Greatest Places of 2022,” citing the success of investments and development across the city.
“As a Detroiter, this means the world to me,” Lt. Gov. Garlin Gilchrist II said in a statement. “Gov. Whitmer and I are proud of the strong partnership we have forged with Detroiters. We are committed to continuing our work to put Detroit not only on the list of greatest places, but at the very top.”
And as GM evolves deeper into the EV era, the giant automaker has no plans to leave Detroiters behind.
“Detroit will continue to be at the center of GM’s work as we pursue an all-electric future and aim to bring everyone along, investing in the residents, the economy, and the future of this city,” said Barra.