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Tesla Bracing for Possible Union Strike in Germany

Stoppage could impact Model 3 production schedule.

by on Apr.18, 2017

Tesla will pause production at its plant in Fremont, California, to prep for the Model 3, but could a union strike in Germany halt production even longer?

For months on end, analysts and investors have been wringing their hands over Tesla’s ability to deliver its mass-market Model 3 sedan on schedule and it large numbers. The company raised additional money and spent time assuring all was well.

And now it may not be due to a factor many hadn’t even contemplated: a union strike. In the U.S., Tesla’s hourly employees are non-union, although it is a top target of the UAW; however, the EV maker bought a German automation company last fall, Grohmann Automation Engineering, and its hourly workers are union and they may be the monkey wrench.

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German employees are represented by IG Metall, and the representatives of the powerful union are unhappy with the wages Tesla is paying the employees at its new subsidiary, Tesla Grohmann Automation in Prüm near Germany’s western border with Belgium.

Tesla disagrees with the notion that its German employees are underpaid. The maker points out it gave workers a 10,000-euro grant of Tesla stock, worth about $10,700 that vests quarterly over four years. They also received a 1,000-euro cash bonus.

(UAW gearing up for organizing battle with Tesla. Find out more, Click Here.)

“We continue to work directly with Tesla Grohmann employees and are prepared in the event there is an action initiated by the union,” Tesla said in a statement.

Tesla promised to launch Model 3 production in July, with retail sales following later in 2017.

The EV maker said it does not anticipate any impact on the timeline for production of the Model 3, but if Grohmann is shut down for a while, it could be a big problem for the Palo Alto, California-based maker.

The subsidiary is charged with “building the machines that build the machines,” Tesla CEO Elon Musk said at the time of the acquisition. Speed and quality are two areas were Tesla struggles and Grohmann specializes in designing and building the equipment needed for high-speed and high-quality manufacturing.

While Tesla officials noted the company had increased its production rate at its Fremont, California-based plant by 400% between 2012 and 2016, it still needs help moving from 40,000 cars annually to the 500,000 it claims it will build by the end of 2018.

(Tesla idling California plant briefly to prep for Model 3 production. Click Here for the story.)

The aforementioned UAW will likely be keeping a close eye on how Tesla deals with the issue. IG Metall and the UAW have a loose allegiance due to Volkswagen’s union issues at its plant in Chattanooga, Tennessee.

An employee at the Tesla’s manufacturing facility in Fremont, which is a former unionized General Motors plant, stepped forward recently to express concerns about working at Tesla and identify himself as a union supporter.

“I think our management team would agree that our plant doesn’t function as well as it could, but until now they’ve underestimated the value of listening to employees,” Moran, who identifies himself as a worker for four years at the plant, wrote in an online forum in February.

“We need better organization in the plant, and I, along with many of my coworkers, believe we can achieve that by coming together and forming a union.”

(Tesla misses mark on deliveries. Click Here for details.)

Musk was quick to criticize Moran and suggest he was a UAW employee, which the union quickly denied.

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One Response to “Tesla Bracing for Possible Union Strike in Germany”

  1. Riff Raffy says:

    Tesla recruiting engineers in Mexico for California plant

    http://www.reuters.com/article/us-tesla-mexico-idUSKBN17U2X5