General Motors (NYSE: GM) is taking what it calls ‘proactive steps to improve overall business performance’. This includes the reorganization of its global product development staffs, the realignment of its manufacturing capacity and a reduction of salaried workforce. According to the company, these actions are expected to increase annual adjusted automotive free cash flow by $6 billion by year-end 2020 on a run-rate basis.
“The actions we are taking today continue our transformation to be highly agile, resilient and profitable, while giving us the flexibility to invest in the future,” said GM Chairman and CEO Mary Barra. “We recognize the need to stay in front of changing market conditions and customer preferences to position our company for long-term success.”
Contributing to the cash savings of approximately $6 billion are cost reductions of $4.5 billion and a lower capital expenditure annual run rate of almost $1.5 billion. The actions include transforming product development, optimizing product portfolio, increasing capacity utilization and restructuring the workforce for driving efficiencies. Actions are being taken to reduce salaried and salaried contract staff by 15 percent, which includes 25 percent fewer executives to streamline decision making, the Company said in a statement. Barra added, “These actions will increase the long-term profit and cash generation potential of the company and improve resilience through the cycle.”
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