Tesla hikes pay at German unit Grohmann | Business| Economy and finance news from a German perspective | DW | 18.10.2017
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Tesla hikes pay at German unit Grohmann

The US e-car pioneer has agreed to an improved salary structure and job guarantee until 2022 for the workers at Tesla Grohmann Automation under efforts to avoid a strike at its crucial German subsidiary.

The new salary structure equates to a roughly 30 percent increase from current levels, the Tesla Grohmann Automation's works council announced on Wednesday. In addition to stock options worth approximately 10,000 euros and a bonus of 1,000 euros first agreed upon in April of this year, workers will also receive a reported 150 euro increase in their monthly salary.

"We have developed our own remuneration structure in very pragmatic discussion," council representative Uwe Herzig said after a staff gathering at the company which is based in Prüm, western Germany.

In an emailed statement, Tesla said the new remuneration structure, retroactively effective from Oct. 1, guarantees staff "a fair and competitive salary" and would include a pay raise for apprenticeships. It didn't however confirm the 30 percent figure.

Key to Tesla's Model 3

The engineering firm that was acquired by Tesla last November serves as a critical component to Model 3 production, as the company supplies Tesla with highly automated and efficient factories, including battery assembly lines for electric cars.

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However, months after the acquisition by Tesla, tensions began to rise after the relationship between company founder Klaus Grohmann and Tesla management soured over disagreements on how to handle Grohmann's existing customers including German auto giants BMW and Daimler. The company founder abruptly retired in March, leaving employees questioning his motives and a firm with an uncertain future under the new Tesla leadership.

Tesla quickly responded to the instability within the company by offering incentive packages to workers, amid threats that Germany's industrial union, IG Metall, would attempt to strike at a critical time when the California-based electric carmaker was scheduled to begin first production of the Model 3.

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Tesla faces higher wage costs in Germany as it wrestles with what Chief Executive Elon Musk has described as "production hell" in launching its new Model 3 sedan, which Tesla hopes will make it a mass-market producer.

The company warned earlier this month that production bottlenecks had left the company behind with its planned ramp-up for the Model 3. The US carmaker is counting on Grohmann's automation and engineering expertise to help it ramp up production to 500,000 cars per year by 2018.

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uhe/jd (Reuters, AFP)

 

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