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GM terminates hundreds of contract workers as it tries to shave $2 billion from...

 1 year ago
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GM terminates hundreds of contract workers as it tries to shave $2 billion from its budget

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Jamie L. LaReau, Detroit Free Press
Tue, May 2, 2023, 1:01 AM GMT+9·3 min read

DETROIT − General Motors terminated "several hundred" contract employees who worked at its Global Technical Center in Warren, Michigan, and other locations this weekend in its bid to shave $2 billion from its budget by the end of next year.

The cuts come nearly a month after 5,000 salaried employees agreed to a voluntary separation package that GM said would help it achieve close to 50% of its cost-cutting target this year alone and prevent further involuntary cuts.

GM spokeswoman Maria Raynal confirmed to the Detroit Free Press, part of the USA TODAY Network, on Monday that the automaker terminated “several hundred” contract workers Saturday, effective immediately. Most were full-time, she said. Raynal could not specify the other locations where people were terminated because contract employees are spread out across the organization.

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GM salaried employees have until noon March 24 to decide if they want to accept a buyout offer of up to 12 months pay for long-term employees. File photo: The Renaissance Center, the headquarters for General Motors, in downtown Detroit on Tuesday, June 6, 2017.
GM salaried employees have until noon March 24 to decide if they want to accept a buyout offer of up to 12 months pay for long-term employees. File photo: The Renaissance Center, the headquarters for General Motors, in downtown Detroit on Tuesday, June 6, 2017.

“They’re in the global product development area in all different areas. It can be multiple different positions,” Raynal said. “It’s part of normal operations and it contributes to that saving, but we’re not sharing a specific number.”

The expectation is the cuts will be permanent.

What does it mean to terminate contract workers?

Business expert Erik Gordon of the University of Michigan's Ross School of Business said terminating contract employees is something many corporations do to save money.

"Contract workers are in an in-between land where they are not employees of the company, don't get company benefits, and can't count on long-term work," said Gordon. "When contractors are let go, companies don't think of it in terms of forcing them. They think of it as just not renewing work that always was temporary.  It's a strained but common interpretation of 'forced cuts' or 'job loss. '"

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