With Tesla gearing up to kick start the production of its upcoming Model 3 sedan, a labor dispute seems to be brewing at the electric automaker’s robotics division in Germany. This could disrupt the company’s supply chain and production for the affordable Model 3 sedan, which is expected to start shipping in July later this year, reports Wall Street Journal.
Several reports suggest that employees working at Grohmann Engineering, the German engineering company acquired by Tesla last year, are calling for a strike due to lower wages. The company, now known as Tesla Grohmann Advanced Automation, specializes in highly advanced and automated methods of manufacturing. It will enable the automaker to automate its production processes, thus, helping it improve its annual churn rate from 84,000 in 2016 to over 500,000 by 2018. The plan is double the same to 1Mn by 2020.
At the said facilities in Prüm near Germany’s western border, German industrial workers are being pressured by the local labor union IG Metall to organize a strike against the company. This union also exerts a powerful control over other workers at automobile giants like Volkswagen and General Motors. The union mentions that some employees are dissatisfied with the compensations under Tesla, hence, they will call a protest to push the automaker to negotiate the terms of their employment.
The employees who’ve been wooed by the union claim that Tesla has been paying them 30 percent below union wages, ever since it acquired the company in late 2016. There is currently no action by the union members, i.e no strike, but a decision is expected to be reached very soon. The automaker has refuted any claims about the industrial workers being underpaid under their watch. Speaking on the same in a statement, a Tesla spokesperson said:
We continue to work directly with Tesla Grohmann employees and are prepared in the event there is an action initiated by the union. We don’t anticipate any impact on the Model 3 timeline.
While wage negotiations may be a regular exercise for such industries, the significance of this strike is rather crucial because it is the automaker’s mass-market electric vehicle which hangs by a thin thread. Tesla has previously faced several production-related issues and is not new to them – the Model X was plagued with three years of delays.
It has since been improving on its production practices, Grohmann being one of the pawns in that overall strategy. It is also building a massive Gigafactory in the middle of the Nevada desert, with plans for three odd more such factories across the globe. All this so it can deliver the $35,000 Model 3 to the masses in July later this year.
As for a current status report, Tesla, during its earnings call mentioned that it is on track with regards to production and has already started readying its Fremont facilities. It has raised close to $1.2 billion to make at least this production on time, some analysts share its positive skepticism. The automaker is not planning to raise any fresh funds this year. It will start by producing 5,000 vehicles per week in the fourth quarter and steadily increase the same to 10,000 vehicles per week at some point in 2018.