Tesla Raises Wages 30% in Germany, Plans China Factory and German AI Research

Elon Musk’s imbecilic war with labor just took another stupid turn. Less than two weeks after firing hundreds of employees in Freemont, California, Tesla Motors (NASDAQ: TSLA) gave German workers a 30% raise.

Both actions were apparently taken for the same reason to avert unionization and labor unrest. The raise is an effort to defuse labor tensions at Musk’s German subsidiary Tesla Grohmann; a manufacturer of machines that build car parts, Quartz reported.

Workers at Grohmann were preparing to strike an action that would have to a fight Tesla with a powerful German union IG Metal that Tesla would probably lose. Workers struck because Musk tried to pay them 30% less than union wages. That action even pissed off Grohmann’s chief executive who resigned.

Musk vs. Unions Guess who wins

Musk got an education on how German labor relations and industry work. You cannot just fire workers that talk about unions in Germany as you can in the U.S. Instead you actually have to talk to the union, something that must grate on an egomaniac like Elon.

One reason why Musk fired hundreds of Tesla workers earlier this month was to keep the power United Auto Workers (UAW) union out of his factory in Freemont. Musk is afraid he’ll have to work with the UAW in labor-friendly California. If Musk is smart he’ll let the UAW into Freemont and make some sort of deal with it.

If he wants to do business in Germany Musk will have to work with the worker’s council at Grohmann. The worker’s council is a group of workers that help manage the business and advise management. Such councils are mandated by the laws of the Federal Republic.

Germany is vital to Tesla’s plans because many of the world’s robots and auto parts are made there. Tesla is planning to open an artificial-intelligence (AI) research facility in the Federal Republic so it needs labor peace in Germany, The Financial Times reported Monday.

Tesla to build Factory in China

Musk will not have to worry about unions and labor trouble at his new factory which is planned for Shanghai’s free-trade zone. The Chinese government is relaxing some rules on foreign companies to bring Tesla to town, The Verge reported.

Since it is in the People’s Republic of China, Musk will have a Communist-controlled official “union” that will do whatever he tells it in the factory. Any worker that objects to the arrangement can expect a visit from the secret police and a trip to a re-education camp (gulag).

Building in Shanghai is a smart move for Tesla because it will be able to easily import parts and machines from Germany and the United States. It will also be able to easily export cars to other nations and avoid a 25% tariff on imported vehicles in China.

The Chinese government is heavily committed to electric vehicles. The Communist Party wants to eliminate all fossil-fueled cars in an attempt to reduce pollution. That means China is a huge potential market for Tesla.

FILE PHOTO — A Tesla car showroom is seen in west London, Britain, March 21, 2017. REUTERS/Toby Melville/File Photo

Musk wants to Rebuild Puerto Rico

Musk is trying to repair his reputation which took huge hits because of his bromance with Donald J. Trump and union busting. One way he is doing this is trying to help Puerto Rico.

Musk tweeted plans to rebuild Puerto Rico’s power grid; which was destroyed by hurricanes last month, on 5 October with technology form his SolarCity subsidiary. Puerto Rico’s desperate governor Ricardo Rossello immediately tweeted back “let’s talk,” The Verge reported. The hope is Tesla’s solar panels and lithium-ion batteries will replace the island’s aging infrastructure.

Sorry, Puerto Rico Musk cannot Help You

Tesla certainly has the technology to rebuild Puerto Rico’s grid but it lacks the resources to do so. Tesla had to absorb the money-losing SolarCity to save it from bankruptcy last year and is still losing money. Tesla Motors reported a loss of -$766.13 million and a negative free cash flow of -$1.358 billion on June 30, 2017.

Puerto Rico’s government, which is bankrupt also lacks the money. That means Musk and Rossello will have to turn to the Republican-dominated U.S. Congress for money.

Since there is no political advantage for Republicans in helping Puerto Rico rebuilding the island, it is doubtful they will do anything. Particularly since Musk dumped their president like a hot potato after receiving a criticism for talking to him.

Will China Save Puerto Rico?

Do not expect Tesla Puerto Rico to go very far unless Musk can find a deep-seated backer. The biggest possibility there is China Tencent Holdings; which already owns 5% of Tesla. That would make a lot of Americans mad, and possibly spur Congress to help.

A smart move for China right now would be to offer to pay to rebuild Puerto Rico. That would embarrass the United States profoundly and establish the People’s Republic’s position as a responsible world leader.

Another potential savior is Amazon (NASDAQ: AMZN) Puerto Rico has put in its application for Amazon’s proposed second headquarters and 50,000 high-paying jobs, Bloomberg Technology reported. That might not help Tesla because Amazon CEO Jeff Bezos reportedly despises Musk.

Therefore Puerto Rico might be left to its misery unless Democrats win control of the House of Representatives (which writes the federal budget) in 2018, or China comes to the rescue. Elon Musk will be of little help to the island’s beleaguered people.

 

 

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