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Worker Strike in Germany; Will it affect production??

Worker Strike in Germany; Will it affect production??

I remain hopeful and optimistic that it will not be affected, but you never know. I hope the issues can get resolved as soon as possible.

http://insideevs.com/possible-strike-threatens-tesla-model-3-production/

xautoworld | April 17, 2017

I hope so, Tesla need to satisfy the workforce of any of their serious concerns !

SamO | April 17, 2017

Workers are asking for an additional $50,000,000 per year.

It might be better for the workers to take equity and risk. They have the chance to be magnificently wealthy rather than just making getting a raise and never get ahead.

M3München | April 17, 2017

German unions fight for their members of course, but they generally do not shoot themselves in the face, either. For better or worse, unions here are accustomed to working _with_ management to achieve goals common to labor as well as Capital.

Tesla offered a 150€ per month raise + stock to all employees of the subsidiary, and the employees want 400€ and no stock. I imagine what they end up with will be somewhere in between. Hopefully it's that simple, anyway.

Today is a public holiday in Germany, so don't expect any news until tomorrow at the earliest.

SamO | April 17, 2017

@M3Muenchen,

+1

Mike83 | April 17, 2017

Wenn ich es wäre, würde ich ein Lager und ein kleineres Gehalt aufnehmen.

M3München | April 17, 2017

@Mike83 we could do the German equivalent of the Monty Python "Romans go home" scene, but I will refrain except to say I could go for a Lagerbier right about now.

I assume what you're saying is you'd take the stock and smaller raise. I would, too. But I'm not a German engineer whose company just got bought up by a US/SA tycoon who swooped in and turned everything upside down.

Stability is highly valued, and when it gets taken away people get upset. Or they might just be greedy. :) In any event, I'm eager for this to get resolved quickly.

Mike83 | April 17, 2017

I know some people from Munich who love California and would like a visit here. I think VW soured krauted some people and Tesla might even look like a savior. I might ask them.

Garyeop | April 17, 2017

Tesla did not bid out a project to the lowest bidder. They went and bought an engineering company to keep experience, and employees, in house for a long time. That is the kind of decision you make if you want to stay in business the next 100 years. The strike will work out. It is not like It is pro sports.

M3München | April 18, 2017

Shots fired. Musk wrote a letter to employees. Highlights include:

"I don't believe IG Metall shares in our mission [to accelerate the conversion to renewable energy]."

And

"We expect no consequences on the schedule for Model 3."

And he gave assurances that everyone's job at Tesla Grohmann was safe.

Run this through Google translate.

http://app.handelsblatt.com/unternehmen/industrie/nach-streikdrohung-in-...

http://app.handelsblatt .com/unternehmen/industrie/nach-streikdrohung-in-deutschland-tesla-chef-musk-kritisiert-ig-metall-und-gibt-jobgarantie/19686168.html?mwl=ok

Red Sage ca us | April 18, 2017

Hmmm... ~*sigh*~ Whenever something of this sort happens, I wonder, "Are these demands that the union had any hope of seeing fulfilled by the prior ownership? Are they reasonable requests, or opportunistic threats?" and, "Can they be replaced?" I was under the impression that union members in Germany were already very well paid. If these guys weren't being paid properly, why hadn't they already gone on strike?

Red Sage ca us | April 18, 2017

Luckily, it seems that @Pushmi-Pullyu has been working toward answering those questions I put forth above! Yay! OK, so...

1) If this was a non-union workplace, the employees had next-to-no hope of getting anything at all out of the prior ownership.
2) They are reasonable requests based upon the work done, though perhaps not based upon the cost of living in the area where the company is sited. The workers may well have been taken advantage of prior to the arrival of Tesla and are seeking relief now, because of the change in management. What better opportunity could there possibly be?
3) To replace the workforce, Tesla might as well just pull up stakes and buy another company outright, or go start yet another division from scratch.

I must say that it is rather strange that one of the complaints was that contracts the firm held with other companies were canceled, so that staff could concentrate on building and designing for Tesla only. Really? Dude, if the work you were doing was for Volkswagen, Daimler-Mercedes-Benz, or BMW, and you simply don't want to work for a 'foreign' company just say so, resign, and put in an application to work for those other guys directly. Don't try to burn down the house, barn, stable, and bridge behind you on your way out the door. Damn.

M3München | April 18, 2017

Not sure who Pushmi-Pullyu is, but I see you and him or her (and Elon Musk for that matter) are applying USian mentality to a very German situation.

1) German shops are not all-or-nothing. Some employees are members of Union A, others are members of Union B; it's possible that some are not union members.
2) Opportunism is a human trait, and Germans are indeed mostly human.
3) I don't envision Tesla needing to replace the workforce; this will be smoothed over (crosses fingers).

German employees feel a deep connection to the well-being and the future of the company. Loyalty is high when the owner/CEO is well-liked, and that appears to have been the case before Tesla bought Grohmann. All that loyalty went out the window when Musk announced the contracts would be canceled or not renewed. BTW: news sources do not appear agree on whether contracts are being actively canceled or simply allowed to run out without renewal.

Red Sage ca us | April 19, 2017

M3Muenchen: Indeed, I look at the world through a very distinct U.S. focused lens, of that much I am sure. I don't particularly like unions, as they are primarily represented in the U.S. (UAW, Teamsters, AFL-CIO...) I very much like what I have learned about how unions work in Germany, and I am in awe of their dedication to the concept. The purposefully adversarial nature of unions in the U.S. is highly destructive, in my opinion. I have Relatives that are in Unions, and it astounds me that they on one hand praise unionized facilities, while on the other complain about them all the time. Once indoctrinated to the concept of adversarial relationships with management, they refuse to indulge in any action that might prove to be cooperative at all.

As for the contracts... Whether Canceled or not pursued for Renewal, I believe Tesla will make sure there is plenty of work to go around. Some here have suggested at various times that perhaps Tesla should buy out one of the other traditional automobile manufacturers.

I think this present issue illustrates a microcosm of the problem that buying another OEM would cause for Tesla. They would be forced to deal with an existing corporate identity that would have to be purged somehow before work could begin. They would have to deal with the legacy ICE technology for older products and current ones, divesting of those responsibilities as soon as possible while also dealing with service, maintenance, and warranty issues for them.

In the U.S., they would have to close all the existing dealerships across the nation, angering potentially hundreds of companies and their employees, while also leaving previous Customers high and dry. There is no real 'up side' to the situation. You would just dig a really big hole to start, jump in, keep digging, then realize that someone above is filling in the same hole while they dug.

Of course the workforce felt as if their entire world was ending. If they had sacrificed years of their lives working for someone who ultimately abandoned them to some guy they don't know at all... They would naturally feel as if they deserved immediate compensation for their relative pain and suffering at their loss. They probably haven't followed Tesla very closely this past decade, and know very little about Elon Musk. Let's face it, there is a whole bunch of really bad crap that is spread about him and his companies all the time. After encountering the worst of the FUD, from the loudest of Naysayers, they may well have stopped there and presumed that Tesla was destined to go out of business 'any day now', just as FUDsters have claimed for a very long time now.

So, yeah... Get the biggest raise you can now, and then ride it out until the company can go under. It's... a strategy. A very opportunistic one, but fully understandable.

Frank99 | April 19, 2017

I understand how Grohmann employees might feel.
Firing all their existing customers, and working for a single one, completely upends the concept of stability in the company. Having good working relations with a lot of customers, and having a continuous stream of projects from those companies, creates a stable company. If BMW has a bad year and doesn't engage in the projects you hoped, you pick up projects from VW or Audi or MB and everybody stays employed.
Working for a Silicon Valley startup, for whom "stability" is an unknown word, you have to recognize that your continued employment is always on the edge. A bad decision, a program delay, combined with a downturn in the US economy that dries up capital, and Tesla could be in receivership and the Grohmann employees may find themselves jobless. Yes, there's the possibility of a huge upside - but perhaps the possibility of a big downside is of more importance to them.

Red Sage ca us | April 19, 2017

Rebels Without a Cause...

If everything were so 'stable', how is it that Tesla was able to buy the place out, lock, stock, and barrel? Someone in ownership must have seen a bigger upside in abandoning ship. Because things may not have been so good, no matter how happy the employees were while being underpaid by 30% or so. For how many years were the workers effectively donating $50,000,000 per annum to the owner? Why are they unable to go even a couple of years working for Tesla before deciding they must go on strike? This seems much more like a protest than an actual labor dispute. There may have been a downside to continuing to operate as the firm had done before. There are no guarantees, for anyone, before or after the Tesla acquisition.

Madatgascar | April 19, 2017

@Red Sage is right. What union goes for a 267% pay raise? This is pure price gouging on the verge of the Model 3 rollout.

This is not just any strike. I count this as strike 3. Strike 1 was the Hoerbiger falcon wing door fiasco that held up the Model X. Strike 2, the German government's decision to offer EV incentives for every car that costs less than an entry level Model S, and to encourage a competing charging network.

Sooner or later Tesla will learn that German companies, unions, government, and car buying public will collude to protect their auto industry at any cost, ethics be damned. Don't let there be a German link in any critical path schedule.

KP in NPT | April 19, 2017

Man those stock options - I'd take that deal in a heartbeat.

I missed they wanted a 267% pay raise. I thought it was 400 euros a month they were asking for?

M3München | April 19, 2017

From the article:

Derzeit liege das Lohnniveau um etwa 25 bis 30 Prozent unter dem Tarifgehalt, sagte Betriebsratschef Uwe Herzig jüngst der „Welt am Sonntag“. Tesla bietet 150 Euro im Monat mehr. Musk erklärte in seinem Brief zudem, jeder Grohmann-Mitarbeiter solle Tesla-Aktien im Wert von 10.000 US-Dollar erhalten, die vierteljährlich über die nächsten vier Jahre ausgeschüttet würden, sowie einen sofortigen Bonus über 1000 Euro in bar.

at the time of aquisition, average wages were around 25 to 30 percent below standard wages, said the head of the workers council, Uwe Herzig recently to the "Welt am Sonntag" [a periodical]. Tesla is offering 150€ per month more. Musk explained in his letter, every Grohmann employee will recieve Tesla stock valued at 10,000US$, which will be distributed quarterly over the next four years as well as an immediate bonus of over 1000€ in cash.

so they are not demanding a 267% raise. They are demanding 267% more than Tesla is offering if you don't include the stocks and bonus.

SamO | April 19, 2017

At $300 option price to the employee, that's about 33 shares. If Tesla becomes a $1T value, then the shares will be worth ~$6,000 each.

~$200,000

http://www.cnbc.com/2017/02/15/ron-baron-expects-mindboggling-returns-fr...

Madatgascar | April 19, 2017

@M3M - thanks, that makes more sense. The report I saw must have lost something in translation. I should have looked at the units and realized it did not make sense. I saw this news early, before I had my coffee, and shot off a rant that was not appropriate.

M3München | April 20, 2017
Red Sage ca us | April 20, 2017

Meh. I don't like unions. Let's see...

400€ ÷ 150€ = 2.666~

So, about 267% 'OF' the offer of salary increase proposed by Tesla.

Only ~167% 'MORE THAN' the offer put forth, in cash per month.

They want their dough now, and don't want to wait for shares to vest. Makes me wonder, though... Does the workforce really see Tesla (TSLA) as having no appreciable value? Have they no patience for the newcomer? Do they not realize that with the Tesla MISSION, they will be providing hardware for use in multiple Gigafactories around the world, perhaps for decades to come, yielding extreme levels of job security? Do they honestly believe Tesla has no chance to achieve such goals, will be going under 'any day now' thus requiring a bigger paycheck than any of them have ever seen until what they percieve as an inevitable consequence takes place? And, longterm, should those shares end up being worth $500, $800, $1,200, $1,700, or $2,500 each within the next five years...? Will they be kicking themselves for not accepting the deal? Because I really see that attitude as a willful determination of self-fulfilling prophecy.

What if Apple had purchased an old Nokia factory with the intent to manufacture iPhones. Does the existing workforce have the right to protest being forced to make products with so few buttons?

Tesla would do well to retract the offer of stock, give no bonus, and offer them an additional 300€ per month in compromise. That would be a good enough negotiating position, I think. 100% more than the monthly offer of salary increase should be acceptable. Especially if that keeps a union out of the joint.

Did I mention I don't like unions?

Obi Wan | April 22, 2017

I'd like Elon to offer a fair price based upon salaries in similar companies in Germany. He has purchased the technology; if they don't like it, build a factory in the USA or Canada, and use domestic engineers.... or take USA people over there, to work in the German factory, till he can reproduce one in North America.

Red Sage ca us | April 22, 2017

TSLA recently went up by nearly 10x as much as GM went down in a single day. In Silicon Valley, it is considered 'more than fair' to offer stock in the company (that will vest later, 3, 4, or 5 years) in lieu of a salary increase. Tesla could give them the 400€ more per month and no stock as demanded by the union... But they may well end up in worse financial shape that way than they would be taking the offer of 150€ per month, plus 1,000€ bonus, plus $10,000 in TSLA shares over the course of the next four-to-five years.

Five years ago, TSLA was at about $33 per share. Today it is just shy of $306 per share. So, it has gone up by 9.27~ times since people became employed there five years ago. If that were to happen again over the next five years (not at all guaranteed, of course) then that $10,000 would become $92,727 in five years. But the shares vest in four years, and four years ago, the stock was more like $48 per share. So, since then it has gone up by 6.375 times. Once again, if history repeats, the $10,000 in stock would become $63,750 in value. Or, 59,432.25€.

Meanwhile, 400€ less 150€ is a 250€ difference. Over 48 months, that would be 12,000€. So basically, the union IG Metall is betting that $10,000 worth of TSLA will not go up enough in the next 48 months to add up to 12,000€ or more in value for their members. Interesting.

Because currently $10,000 worth of TSLA is worth 9,322.71€. It would have to reach 12,871.80€. That would be about a 38.06% increase from today's price. Thus, $422 per share or so. In other words, IG Metall thinks that TSLA will not go up by an amount equivalent to about 45% of what it has seen in the past four years.

As your Friendly Neighborhood Tesla Certified Apologist Fanboy, I'm rather optimistic that TSLA will be well over $422 long before 48 months have passed. But hey, I could be wrong.

___ GM DOWN 0.35 (-1.03%)
___ TSLA UP 3.09 (+1.02%)

M3München | April 23, 2017

Many Germans got scorched on Deutsche Telekom stocks when they underwent privatization, and because of that the prevailing attitude towards any stocks is here less than positive.

Red Sage ca us | April 23, 2017

M3Muenchen: TSLA has gone up by 21.3565245% in the past year alone. In order to privatize the stock via hostile takeover, someone would probably have to offer between $450 and $500 per share. That is again, beyond the $422 threshold that exceeds the union demands, even without the offered 1000€ bonus. And, let's face it, simply making the offer would probably push TSLA to $750 or more, due to the dedication of true believers.

Deutsche Telekom (DTE) has gone from 15.75€ to 15.93€ in the past year. That is an improvement of 1.14285714% and is up from 8.53€ in April 2012. That is an 86.75263775% improvement in five years. Though yes, it is still barely 79.01785714% of the IPO at 20.16€ in 2002. So, is it fear of the stock market, or fear of tech stocks in particular that is a problem for Germans?

M3München | April 24, 2017

Buying stocks in general is risky and that simply doesn't sit well with many here. As an example: I have the German equivalent to a 401k, but instead of going onto a website to choose which stocks or mutual funds I want, the choices are set in stone, and the only choices are bonds with a very low return, however that return is guaranteed.

I'm not saying Tesla Grohmann employees are making the right decision regarding their situation. I'm saying how they respond is governed by a completely different set of rules that most Americans would use, and furthermore knowing those rules is key to understanding what is going to happen here and why.

From Wikipedia.de + Google Translate:

The former state-owned company Deutsche Telekom has so far completed three public offerings. On 18 November 1996, T-shares were launched for the first time. The Telekom staged an unprecedented advertising campaign with Manfred Krug as a figurehead. The T-share was particularly popular with private investors as a so-called Volksaktie (Peoples' Stock). The advertising campaign had a resounding success. Even people who had never previously had anything to do with shares, ordered the T-share. It was the beginning of a political upheaval in Germany, which lasted for several years.

At the start of the stock exchange on 18 November 1996, 713 million shares were placed in the course of a capital increase. At an issue price of 28.50 DM (EUR 14.57), Telekom took some DM 20 billion (around EUR 10 billion). The second public offering and thus a further capital increase took place on June 28, 1999. 281 million shares were issued at a price of EUR 39.50 and EUR 10.8 billion was taken. [1]

On 19 June 2000, the Federal Government sold 200 million T-shares at the price of EUR 66.50 through the state-owned Kreditanstalt für Wiederaufbau (KfW). [1] For this third stock offering, about 13 billion EUR went to the state fund. The stock market upturn was at its peak. The Telekom share was listed above EUR 100, its all-time high [2].

The risky company acquisitions of then CEO Ron Sommer, especially in the USA, strongly increased the share. The most frequent allegations to the telecom boss are the wrong corporate strategies, an overpriced purchase of the UMTS licenses, a huge debt and a too high price for the acquisition of the US mobile phone provider VoiceStream. Ron Sommer retired on July 16, 2002, the T share trading at its temporary low of 8.42 euros on 30 September 2002. [3] The share price was EUR 9.631 for the year from September 2010 to 2011, with falling tendency. [4] Meanwhile, the share is traded in a corridor between EUR 13.25 and EUR 17.50 (as at November 2016). It is therefore still below the issuance prices of the second and third stock exchanges.

M3München | April 26, 2017

Good News. IG Metall has taken it down a notch.

http://www.volksfreund.de/nachrichten/region/wirtschaft/Wirtschaft-Tesla...

I ran the article through google translate and fixed it up where necessary.

Tesla Grohmann in Prüm: Metalists are reaching for agreement

(Prüm) Trade unionists see strike only as a last resort.

Prüm (fpl) No strike at Tesla Grohmann Automation in Prüm - for the time being, this was only the last resort, said Christian Z. Schmitz, IG Metall Trier's first representative, yesterday at a press conference on the latest developments in the company that the Californian electro- Car maker had taken over in autumn (the TV reported).

The metal workers demand from Tesla the entry into collective agreement and a contractually documented workplace guarantee. Although Tesla boss Elon Musk has now assured the inspectors not to dismiss anyone in the next five years - but "experience shows that contracts are better than any verbal commitments," said Trade Union Secretary Patrick Georg yesterday.

Musk had also promised shares to his 680 Prüm employees (value per package: 10,000 dollars) and an immediate bonus of more than 1000 euros. However, Tesla still needs around 300 additional employees to support the planned production in the Eifel [the region]. But they are hard to find - which is also the case, the metallists say that Americans do not want to pay by collective bargain. Musk had also criticized the union: it is not the right partner in Tesla's "mission to speed up the transition to sustainable energy".

Meanwhile, the IG Metall does not point to a further escalation: Tesla has already improved the original offer, which was 150 euros per month more. And despite the efforts of the company to "turn the atmosphere in the company against us," one would be interested in an agreement. Christian Z. Schmitz: "It's only a small step."

Red Sage ca us | April 26, 2017

So... Like the 'independent franchised dealerships' in the U.S., they just want a contract. Any contract. Ugh.

M3München | April 26, 2017

I have been trying very hard to avoid making sweeping generalizations about my hosts, but Germans really love contracts.

Red Sage ca us | April 26, 2017

M3Muenchen: Thank you for your kind, measured, even tone when responding to zealots such as myself. It is most refreshing, and quite informative. I know this place can be a 'tough room' sometimes, and I rarely make it any easier. +42!