Who is burning the money at Tesla?23. June 2022
Who is burning the money at Tesla?
Elon Musk is pretty pissed off right now about almost everything that isn’t going right at his car factories. All plans for the near future could end up in the garbage can.
The background: the Tesla boss had informed his inner circle about layoff plans at the beginning of June. He was quoted as saying that he had a “super bad feeling” about the economic development. A little later, he became more specific: A recession in the near future was possible, he was told. Then he added, “It’s not certain, but it seems more likely.” The U.S. electric car pioneer wanted to maintain the record level of sales at the start of the year of around 310,000 vehicles in the second quarter. I wonder if that’s still realistic.
A little later, Tesla announced that the electric carmaker would cut 3 to 3.5 percent of its jobs in the coming months. About one in ten white-collar jobs will be eliminated, while the number of factory workers will grow in the long term. At the beginning of the year, Tesla had just under 100,000 employees.
Next item: In Austin Texas, Tesla is being pilloried on suspicion of mass layoffs without complying with the notice period. Two former employees said they were summarily fired in June at the Gigafactory in Sparks, according to the lawsuit.
According to the suit, Tesla put more than 500 employees on the street that month. U.S. labor law requires a 60-day notice period for such a mass layoff, it said. “Tesla merely notified the employees that their terminations would take effect immediately,” the lawsuit says. The fired employees are seeking a class action lawsuit.
Something like that doesn’t make you happy, it makes you morose. In this mood, Musk recently delivered his verdict on the new electric car factories in Grünheide near Berlin and Austin in the U.S. state of Texas : these are “gigantic money-burning furnaces.” In the same breath, he described the auto industry’s supply chain problems as an “absolute nightmare.” The Tesla CEO warned, “We’re not out of it yet.”
Now, he said, it’s a matter of keeping operations running so that employees can continue to be paid and the company doesn’t fall into insolvency.
Job creation in Brandenburg
What the downsizing plans mean for the German Tesla plant in Grünheide, Brandenburg, initially remained open. The IG Metall union took advantage of this to point to increasing resentment among the workforce in Grünheide because of excessively low and unequal wages. This, it said, was also the reason why no progress was being made in recruiting new employees.
“Tesla wants to have around 12,000 employees on board by the end of the year. In order to achieve this goal, management will soon have to step up a notch when it comes to pay,” explained the head of IG Metall’s Berlin-Brandenburg-Saxony district, Birgit Dietze. According to the union’s findings, pay is up to 20 percent lower than collectively agreed wages at competing automakers in the region. That probably got through to the carmaker’s top management and they decided to act. Currently, Tesla management is offering more pay for new hires than it did for previous hires. Whether this is enough will soon be seen.