Tesla Caves to German Workers’ Salary Demands

Big raises in Germany may heighten tensions in California plant.

by on Oct.19, 2017

Tensions are reportedly high at Tesla's Fremont, California, plant after the company reportedly fired hundreds of underperforming workers.

Facing what it admits are production bottlenecks as it moves to roll out its critical Model 3 from its big factory it Fremont, California, Tesla has agreed to give workers at its German engineering unit a substantial pay increase.

German daily newspaper Die Welt reported the wage pact that included a new pay structure that will raise workers’ salaries by about 30% from current levels, the division’s works council said.

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“We will now get to a competitive wage level,” a spokesman for the company’s works council, which is required by German law, said this week after a staff gathering at Tesla Grohmann Automation GmbH.

Tesla founder Elon Musk is counting on Grohmann’s automation and engineering expertise to help it ramp up production to 500,000 cars per year by 2018 through the design of ultra-efficient factories.

(Tesla trying to tie up loose ends with Grohmann customers. For the story, Click Here.)

Before being bought by Tesla last year for 150 million euros, Grohmann helped clients build highly automated and efficient factories, including battery assembly lines for electric cars.

Tesla CEO Elon Musk flew to Germany in April to avert a strike by disgruntled Grohmann employees.

“The workforce was informed today that we will introduce a pay structure” at Grohmann, which has about 650 workers, the council said, without elaborating. Tesla workers are represented by the influential German union IG Metall.

In an emailed statement, Tesla said the new remuneration structure, retroactively effective from Oct. 1, guarantees staff “a fair and competitive salary” and will include a pay raise for apprenticeships.

(Click Here for more about Elon Musk’s rocky relationship with Grohmann’s founder.)

However, it did not confirm the 30% figure but it appears Tesla met the demands for a wage increase of between 25% and 30% first laid out by the German workers last spring when they threatened to strike as Tesla stepped up preparations for production of the Model 3.

In April, after the German workers issued their initial strike threat, Tesla pledged a five-year job guarantee for all Grohmann employees up to at least 2022. Each workers will also receive a 10,000-euro grant of Tesla stock and an additional bonus of 1,000 euros with their April pay and a monthly salary increase of 150 euros, according to Die Welt.

The disclosure of the settlement with the German workers could raise tensions at the Fremont plant where workers have complained of low pay. In addition, Tesla has recently dismissed between 400 and 700 employees, including a good number from the Fremont plant, for not meeting the company’s performance standards.

(Tesla CEO Musk flies to Germany to help avert strike. Click Here for the story.)

Meanwhile, Tesla warned in a filing with the Securities and Exchange Commission that bottlenecks of an unspecified nature have left the company behind with its planned ramp-up for the Model 3.

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