Tesla is threatened by a strike at ‘Advanced Automation’ group ahead of Model 3 production

As we reported earlier this month, Tesla is dropping all other clients of its ‘Tesla Advanced Automation Germany’ newly created from its acquisition of the German engineering group Grohmann Engineering. The move is aimed at having all hands on deck for the start of Model 3 production since the group’s expertise is setting up production lines, but it also led to some tensions with local workers.

Now we learn that the tensions escalated to threats of a strike at a critical moment less than 3 months away from the planned start of Model 3 production.

The head of the workers’ council said that while they are excited about the prospect of working for Tesla, they also liked the security of having a broad range of clients.

They are seeking a renegotiation of their labor agreement to get reassurance that Tesla is committed to local jobs in Prüm and they want to increase their compensation.

Tesla responded via Welt am Sonntag (German):

“We want to grow significantly in Prüm and understand that we have to pay competitive wages in order to achieve that. Everyone at Tesla Grohmann Automation is fair and competitive above the branch level”.

The employees are represented by IG Metall and a representative of the union, Patrick Georg, said in response:

“We received an unsatisfactory response from the company. We’re going to check next week whether strikes are possible,”

After over a ~100 employees joined the union following Tesla’s acquisition of the company, roughly half of the ~680 employees of the new Tesla Advanced Automation Germany group are now part of the union. Therefore, a strike would have a significant impact on the operations of the group, which we understand to be critical to the Model 3 program.

In terms of salary, it seems that the union employees are seeking an increase of 400 euros per month, while Tesla is offering 150 euros and stock options in the company – something Tesla is offering to all employees as part of its compensation policies.

It has been a very favorable compensation plan for employees so far due to Tesla’s stellar performance on the stock market, but there’s no guarantee of continued success in that regard and German employees seem less comfortable with it.

While German labor unions and American labor unions don’t operate in the same way, Tesla is currently dealing with them on two fronts since there’s also an ongoing effort to unionize its Fremont factory, where the company employs over 6,000 workers.

It will be something to monitor closely in the coming months. We will keep you updated.