While Elon Musk is firing his US workers, he’s giving the Germans a huge pay rise

How about this much?
How about this much?
Image: AP Photo/Rich Pedroncelli
We may earn a commission from links on this page.

Soon after Tesla fired hundreds of workers at its plant in Fremont, California, it managed to settle a problem with its German staff that could have been far, far worse.

Elon Musk got a rude wake-up call when Tesla bought German firm Grohmann, which builds machines for car plants, earlier this year. Musk needed the expertise of Grohmann, now called Tesla Grohmann, to help him ramp up production of the Model 3. Instead, he found himself embroiled in a fight with its workers and their union, Germany’s mighty IG Metall.

Things got off to a bad start when the boss of Grohmann resigned shortly after the takeover, and workers threatened to strike. They complained that once Tesla was their sole client—they used to supply a variety of automakers—they would face job insecurity. On top of that, they said they were getting paid 30% less than union rates.

In April, Tesla initially offered each employee a one-off €1,000 ($1,090) bonus, an extra €150 a month, and €10,000 of Tesla shares distributed over four years, as well as a job guarantee until 2022.  IG Metall wasn’t satisfied and wanted to move a step further—to collective bargaining, where the union would negotiate wages on the company’s behalf.

Musk has now agreed directly with the Tesla Grohmann workers’ council to a new wage structure of “fair and competitive” salaries, avoiding IG Metall’s demand that he adopt the standard tariff levels for the metal and electronic industry.

Tesla will reportedly ramp up wages by about 30%. “We have developed our own remuneration structure in very pragmatic discussions,” Uwe Herzig, the head of the workers’ council at Tesla Grohmann Automation, told Die Welt (link in German).

Musk’s negotiations directly with the workers council have helped him bring the standoff with the IG Metall union to a close. It couldn’t have come at a better time for them after the firings at  Fremont. Indeed, it seems Musk can treat workers at home much worse than he can in Germany.

Correction (Oct. 24): This article has been amended to reflect that Tesla’s German workers received their offer of €10,000 of Tesla stock, a bonus, a five-year job guarantee, and monthly salary increase of €150 in April, not last week with the wage-increase agreement. Also, Tesla disputes that its fired workers in California were “layoffs” under the terms of the 1988 WARN Act.