By on April 27, 2017

Tesla Factory California

Tesla Motors has smooth-talked its Californian workforce out of unionizing for some time, but the labor war is now being waged on two fronts.

Since acquiring German supplier Grohmann Engineering, that company’s workforce has accused Tesla of unfair wages and dissolving established business ties to focus solely on the upcoming Model 3. Elon Musk was forced to personally reassure Grohmann, now called Tesla Advanced Automation Germany, to keep it from syncing up with autoworkers’ union IG Metall and going on strike.

Since the supplier is an essential part of the Model 3’s timely production, Tesla has changed tactics and is now throwing more money at Germany and promising extra jobs in the hope of avoiding work stoppages. It also apparently removed the company’s CEO and founder, Klaus Grohmann, after repeated clashes with Musk over the firm’s future. 

IG Metall has said Musk’s previous job guarantees and the offer of employee stock options have reduced the prospect of a strike. However, it is still demanding collective wage bargaining contracts and improved pay. According to Reuters, the head of the company’s works council, Uwe Herzig, stated Tesla had confirmed an additional 1,000 euros ($1,089) in a one-off payment after Easter, on top of the existing job guarantees, pay rises, and stock options. It also promised to create an additional 1,000 jobs at the German plant.

The negotiations were conducted without the input of Klaus Grohmann, who Herzig said mysteriously retired a month earlier. “In November we were told that everything would remain the same, and then on March 31 we were surprised to hear that he will retire,” Herzig explained during a news conference.

Grohmann has not been seen at the company since, and it was assumed he left the company on his own accord. But the truth turns out to be quite a bit more complicated. When Tesla took over in November of 2016, it initially planned to keep Grohmann on board, but disputes with Musk over how to handle existing clients resulted in his departure. Musk insisted the firm focus on Tesla-based projects at the expense of Grohmann Engineering’s legacy clients, which included BMW and Mercedes-Benz.

When Reuters asked for clarification as to what happened, Grohmann declined to comment on the grounds of an existing confidentiality agreement. However, it does not sound like he opted for an early retirement. “I definitely did not depart because I had lost interest in working,” Grohmann said, without elaborating further.

When questioned on the matter, a Tesla representative issued a carefully worded response, commending him for building an incredible company. “Part of Mr Grohmann’s decision to work with Tesla was to prepare for his retirement and leave the company in capable hands for the future,” the spokesman said. “Given the change in focus to Tesla projects, we mutually decided that it was the right time for the next generation of management to lead.”

[Image: Maurizio Pesce/Flickr (CC BY 2.0)]

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4 Comments on “Tesla Ousts Supplier’s Management and Sweetens Pay Deal to Avoid German Strike...”

  • avatar
    SCE to AUX

    “Tesla has changed tactics and is now throwing more money at Germany and promising extra jobs in the hope of avoiding work stoppages.”

    That’s how you keep unions out – good move.

    Klaus Grohmann is 79 years old; it was never going to work with him sticking around. I’m sure he didn’t see the point in fighting over the direction of his old company in new hands.

    “Musk insisted the firm focus on Tesla-based projects at the expense of Grohmann Engineering’s legacy clients, which included BMW and Mercedes-Benz.”

    Umm, that’s how takeovers work. The new owner dictates terms, and wholly-owned companies usually don’t maintain business ties with their parent’s *competitors*.

  • avatar
    Rick Astley

    I bet negotiating with Elon Musk is about as fun and productive as negotiating with your ex wife.

  • avatar

    If you’re a CEO who’s union averse, is Germany the best place to shop for labor-intensive companies to add to your portfolio?

    And if Grohmann Engineering was already a supplier to the German luxury brands, why weren’t they already unionized? Grohmann was founded in 1963, for goodness’ sake! Surely, they’ve had plenty of time to unionize if they wanted to. This smells like a cash grab by the employees. “Give us more than our old boss ever would have because you are a rich American @$$hole! If you don’t, we will suddenly discover a latent warmth in our hearts for our struggling manual labor brethren!”

    And like a bad wife, as long as he gives them what they want, they can hold the threat (of unionization) over his head. Eventually, he may decide to just close the whole thing down, fire them all, take the IP and move whatever-the-heck-they-were-doing to a country with a more compliant workforce.

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