General Motors recently laid off 1,000 employees in its software and services division as it tries to keep up with the industry’s push toward electric vehicles and digital services.
New Layoffs at GM
General Motors announced a new wave of lay-offs, the majority of which will come from the software and services division. The company has not announced how many employees would be let go, but CNBC reported that GM laid off more than 1,000 salaried employees.
Inside the Software and Services Division
The software and services decision focuses on new areas, like subscriptions and car features, as well as other areas, like the company’s OnStar brand.
Focus on Critical Divisions
GM’s decision reflects its decision to prioritize the move toward better Electric Vehicle (EV) technology. The company is not aiming to cut costs, but to focus its operations on certain investments.
Major Restructuring
The automotive industry has been experiencing major recent shifts, as the government pushes the industry to move toward a more sustainable model. This has caused companies like GM to focus their business priorities.
Recent Leadership Changes
This recent round of layoffs piggybacks off of the recent leadership changes in the division. Mike Abbott, former Apple executive, recently left the company after less than a year.
Two New Leaders Step In
Abbott was succeeded by Baris Cetinok, who is in charge of building design and program development on the product management side and Dave Richardson, who’s responsible for software engineering on the team.
Transition to EVs
GM’s transition to EV has motivated this restructuring. The company wants to focus on developing and rolling out new EV technology to help GM remain a leader in the industry.
Importance of Digital Services
More specifically, GM is focusing its workforce efforts on digital services, which are becoming more important in the automotive industry. This would allow the company to stay competitive in the long-run.
Industry Challenges
Big high-tech production changes are creating challenges for companies as they transition from traditional manufacturing styles. Many companies now have to reevaluate their departmental priorities.
Becoming a Leader
The electric vehicle market is not only being hit with higher demand, but also governmental pushes. If GM wants to be a leader in this market, the company has to make a shift in its operational decisions.
“Make Bold Choices”
A GM spokesperson spoke to CNBC on the layoffs, saying, “As we build GM’s future, we must simplify for speed and excellence, make bold choices, and prioritize the investments that will have the greatest impact.”
Focus on Efficiency
These layoffs are part of the workforce that GM believes no longer aligns with its strategic goals. This shift will likely affect not only current employees, but also decisions about future hirings.
Michigan Gets Hit
The majority of layoffs occurred near Detroit, Michigan, where GM has a tech campus. Nearly 600 of the 1,000 job losses have happened at this location and employees were notified on Monday, August 19th.
Impact on Local Economy
These layoffs have raised concerns about how the local workforce could be impacted, with many now unemployed. It’s likely that the local economy could also face some consequences because of the transition.
Communal Concerns
Many people living in this Michigan community are worried that local businesses and families will be impacted by this sudden unemployment. The availability of jobs in the industry will likely change and also affect the nearby community.
Transitional Support
GM has offered support to affected employees. This comes in the form of severance packages and services for transitioning to another career.
Impact on Other Parties
Suppliers and investors may also be concerned about these recent changes. The industry has had many recent shifts, which could be concerning for suppliers of traditional operations and investors concerned about challenges in the industry.
Shift in Skills
This shift is important for job-seekers and current employees hoping to work in the automotive industry. Hopeful employees may need to focus more on software development and digital services in order to join the field.
Future of GM’s Operations
GM’s evolution is expected to focus more on emerging technologies and recruiting employees with expertise in this field. This is a necessary transition if the company wants to remain a leader.
Long-Term Strategy
The company’s decision to cut 1.3% of its workforce could be necessary to focus on changes in the industry. In order to be a leader, GM will need to meet consumer demands and cut unnecessary spending going forward.
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