A car company in California now announces massive layoffs, part of restructuring plan to reduce its operating costs.
Lucid Group, the California-based electric vehicle manufacturer, has unveiled a significant restructuring plan that will result in the reduction of its workforce by approximately 400 employees.
This figure represents about 6% of the company’s total personnel, according to Street Insider.
Lucid said it intends to optimize the Company’s operating expenses in response to evolving business needs and productivity improvements through a reduction of the Company’s current employee workforce.
The Company expects to substantially complete the Plan by the end of the third quarter of 2024, subject to local law and consultation requirements.
The Company estimates that it will incur a total of approximately $21 million to $25 million in charges in connection with the Plan, which consist primarily of charges related to severance payments, employee benefits, employee transition, and stock-based compensation.
Lucid said it expects that charges of approximately $19 million to $23 million will be recognized primarily in the second quarter of 2024, with the majority of such charges anticipated to be paid by the end of the third quarter of 2024.
Substantially all of these charges are expected to result in cash expenditures.
The charges related to stock-based compensation are not expected to be material, per Street Insider.
In a statement, Peter Rawlinson, Lucid Group’s Chief Executive Officer and Chief Technology Officer, acknowledged the difficult nature of the decision.
“Letting go of our talented team members is a difficult decision that we did not take lightly.
We are grateful to everyone who has contributed to Lucid’s journey at every step,” he said.
Rawlinson further expressed the company’s appreciation for the affected employees and outlined the support measures in place.
“Accordingly, we have extended severance and health benefits to the impacted employees, and we are offering them outplacement services.
We ask for empathy and support for colleagues beginning their search for new employment.”
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Other Economy News Today
Applications for unemployment benefits now surge to new highs, a sign that the white-hot labor market is starting to cool off.
First-time applications for unemployment benefits rose last week to 231,000, the highest level since August, per CNN.
Thursday’s data also showed that the number of continuing claims, or applications from people who have filed for unemployment for at least one week, was 1.78 million.
That’s an increase of 17,000 from the prior week, according to the Bureau of Labor Statistics.
The latest numbers come less than a week after the monthly jobs report showed the US economy added just 175,000 positions in April, less than economists expected and a steep drop-off from prior months.
US employers have now added an average of 245,500 jobs per month, versus 2023’s 251,000-per-month average.
Still, hiring remains strong. Although the unemployment rate ticked up to 3.9% last month, it’s the 27th consecutive month that the jobless rate has held under 4%, matching a streak last seen in the late 1960s.
Weekly jobless claims data tends to be volatile but, while one week’s worth of data “does not a trend make,” said Chris Rupkey, chief economist at Fwdbonds.
“We can no longer be sure that calm seas lie ahead for the US economy if today’s weekly jobless claims are any indication.”
“Company layoffs are picking up, hinting at caution on the part of companies as they weigh the outlook for the second half of the year,” he wrote in a note Thursday.
The Federal Reserve has been battling inflation by raising its key lending rate in the hopes of slowing the economy.
While the labor market has so far resisted those efforts, remaining white hot for the past 18 months despite 11 rate hikes from the central bank, Fed Chair Jerome Powell said last week that demand has “cooled from its extremely high level of a couple of years ago.”
Ian Shepherdson at Pantheon Economics said in a note Thursday: “We’d need to see at least a month of elevated readings to convince us that the trend really has turned.”
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Also Read: A Giant Company Now Announces Unexpected Layoffs in Virginia
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