Amid Management Exodus, Tesla Fires Hundreds Of Workers

One month after Tesla lost its head of business development who wished to "spend more time with his family", and just weeks after the EV company's veteran battery technology director also unexpectedly quit amid a growing senior management exodus (full list at the bottom of this article), Tesla decided to even out the ranks on the bottom as well, and fired "hundreds of workers" this week, including engineers, managers and factory workers even as the company struggles to expand its manufacturing and product line, according to the Mercury News which first reported of the mass layoffs.

Workers estimated between 400 and 700 employees have been fired, although Tesla refused to say how many employees were let go, and added that it expects employee turnover to be similar to last year’s attrition. Tesla employs about 10,000 workers at its Fremont factory; it lost $336 million in the second quarter, and burned through a record $1.16 billion in cash in Q2, or $13 million per day.

In September, Tesla announced it was cutting 63 positions at SolarCity Corp.’s Roseville, California office; the staff was dismissed after Tesla bought the company, which manufacturers and installs rooftop solar panels, for about $2 billion in 2016.  SolarCity had over 12,200 employees as of the end of 2016.

The dismissals come at a critical point for the company, which is scrambling to increase vehicle production five-fold and reach a broader market with its new Model 3 sedan. The electric vehicle maker missed targets for producing the lower-cost sedan, manufacturing only 260 last quarter despite a wait list of more than 450,000 customers. It was later revealed by the WSJ that Tesla's "dirty secret" for the unexpected production problem is that it was banging out parts of the Model 3 by hand.

According to the Mercury News, this week’s dismissals have not been reported to the state Employment Development Department, a spokeswoman said. The state generally requires companies to report layoffs of more than 50 employees in a 30-day period. Tesla countered that the performance-based departures were not considered layoffs and not subject to state notifications.

In an absurd demonstration of Musk's bizarre management style, the company said the mass terminations have "generally boosted worker morale", as high-performing employees have been rewarded. it was unclear what the 700 layoffs, pardon, exit events did to worker morale.

While the company said this week’s dismissals were the result of a company-wide annual review, claiming some workers received promotions and bonuses, and expects to hire for the “vast majority” of new vacancies, insisting the mass terminations were not layoffs, some critics have noted that these are layoffs "plain and simple" as a company does not fire 700 people at the same time in the middle of the year due to "performance" issues.

“As with any company, especially one of over 33,000 employees, performance reviews also occasionally result in employee departures,” a spokesman said. “Tesla is continuing to grow and hire new employees around the world.”

Still, validating the argument that these were indeed layoffs, in interviews former and current employees told the Mercury News little or no warning preceded the dismissals. The workers interviewed include trained engineers working on vehicle design and production, a supervisor and factory employees.

"Workers spoke on the condition of anonymity because they feared reprisals from the company. Employees said the firings have lowered morale through many departments. Several said Model X, Model S and former SolarCity operations seemed to be targeted."

Among those fired was Juan Maldonado, a production worker, who felt the tap on his shoulder on Thursday. He worked at Tesla for nearly four years, and said he heard about 60 other workers in his section of the factory were dismissed. Maldonado, 48, said he ran late for work twice in recent months, but thought he had straightened things out with his supervisor. Now, he said, “I’m going to try to find a job.”

The dismissals come after Tesla said it built just 260 Model 3 sedans during the third quarter, less than a fifth of its 1,500-unit forecast. The company has offered scant detail about the problems it’s having producing the car, although the previously noted WSJ report suggests that Tesla is having severe manufacturing bottlenecks forcing workers to build parts of the Model 3 by hand. The vehicle’s entry price starts at $35,000, roughly half the cost of Tesla’s least-expensive Model S sedan. When unveiling the Model 3, Musk joked to employees they would be going through “production hell” to meet demand for the new car.  Little did many the employees know that hell would come in the form of a pink slip.

As Bloomberg notes, a delayed ramp-up risks the ire of some of the almost half million reservation holders who started paying $1,000 deposits early last year. On Oct. 12, Tesla Chief Executive Officer Elon Musk posted a video on Instagram of what he said was a stamping press producing body panels for the Model 3.

Musk has told investors the company is focused on Model 3 production and expects to eventually build 10,000 cars a week. The manufacturing will become highly automated, but Musk told investors during the early ramp up he expected high overtime costs.

* * *

Meanwhile, Tesla has faced ongoing discontent from some factory workers, who have complained about work conditions and wages below the auto industry average. Tesla has a hearing before the National Labor Relations Board in November for charges that company supervisors and security guards harassed workers distributing union literature. Tesla denied the accusations.

Openly pro-union workers were among those fired this week. Some believe they were targeted, even as the company denied union activities played a role in the dismissals.

Quoted by the Mercury News, Michael Harley, managing editor at Kelley Blue Book and Autotrader, thought the dismissals could be an effort to improve vehicle production. “It’s no secret that Tesla’s Model 3 development and ramp-up for production has been derailed,” Harley said. “A major change in staff – whether dismissal or layoff – is an indication that there is an upper level movement to put the train back on the tracks.”

Whatever the reason behind the "non-layoffs", one thing is clear: Tesla has a management exodus problem as demonstrated by this extensive list of recent senior level departures from the company, including two of the most important, non CEO positions in just the past three months.

 

Comments

Hugh_Jorgan Stuck on Zero Sat, 10/14/2017 - 11:34 Permalink

Eh... Not so sure that is true ant least not what I've seen. 12 years in the industry and I never saw anything like that. (Not that it isn't a great idea)

I the case of Tesla, the media only ever shows us the shining face of Musk's great wall of hubris and bluster. Behind the scenes you have a rent seeking company trying desperately to grow large enough to take the next step toward becoming too-big-to-fail. Space-X is a way off in the distance and overall the company is on the brink. They bough Solar city for the tax break and to up their unholy flow of our "green" tax money for these technologies that are still not ready for prime time. All the signs are there. I give them a max of 18-24 months before major restructuring occurs.

In reply to by Stuck on Zero

Lucretius Hugh_Jorgan Sun, 10/15/2017 - 01:56 Permalink

With only 40 some years in the automotive industry, I feel that I can safely say that this asshole is yet another useless POS. Is this not the same starry eyed "dreamer" that wants other peoples money to send "US" to mars??? I'm just an honest, hard working stiff that never needed to lie, cheat or steal from folks to EARN a living ( I have a firm grasp of basic physics ). The auto industry (for those uninformed) is nothing but a bunch of liars, cheats and thieves! It absolutely sickens me that thieves flourish in an arena that is so vital to most every person's needs ( almost like a sub-governmental, oh,  wait, most of it IS gov mandated!). I've worked for some honest shops, a long time ago, but most were just userous assholes. ( I'm retired / self NONemployed, and HAPPY) Mr. Musk is simply a minor league political wanna be, sucking up tax dollars as fast as leftoids can shovel them   . Side note: Know why English cars are all hand built... cuz they can't build two parts the same! Good F'kn luck with your model XYZ! I personally recommend going long on EMP's.Peace, L.

In reply to by Hugh_Jorgan

Iskiab Xena fobe Sat, 10/14/2017 - 19:47 Permalink

So true, management from my experience have little knowledge of how things are actually run in their department. People with experience doing the work don’t usually make good managers and those who’re good managers are clueless. If someone’s good at both they’re quickly promoted. Usually the focus becomes perception and people who’re terrible but social make up Middle management.

The result is the hardest thing about upper management is figuring out what’s actually happening on the ground. You’re stuck with a bunch of ineffectual middle managers who’re will only give you good news and who really don’t understand their job.

In reply to by Xena fobe

not dead yet Xena fobe Sun, 10/15/2017 - 03:20 Permalink

It's all about blow jobs. Those that don't blow the boss get fired. Fixed it for ya. Plenty of competent people get fired because the incompetent boss is afraid the go getter under him will end up with his job.Actually butt kissing blow jobbers are but one segment of the incompetent that stays while good people get the axe. One other segment is the bosses only redeeming skill is that he hires good people that make up for the bosses incompetence. Henry Ford was one of those, not totally incompetent but not very smart or ambitious but had great ideas, whose company flourished because he hired top notch mangers. Happens on the lower rungs where the supervisor hires great workers who kept the department humming despite the boss. The same incompetent boss who decides who stays and who goes during the performance firings. Many of those incompetents get promoted high enough so that the big boys could eventually see just how incompetent they were and canned them.I know of one guy did a great job of running a shipping department and also hired great people to do the work. They hired in a college boy weasel who did a lot of the office functions and freight analysis. While most other supervisors spent most of their day wandering around the offices bullshitting, while the good people they hired did a bang up job, this guy spent it in his own department doing what he was getting paid for. He was under the radar of the front office and the weasel started taking credit for the guys work. He would even do it when the guy was standing there. One day a new big boss shows up and hears how great the department is running under joe college so they demoted the good guy and gave his job to joe college. It was only a matter of weeks when they realized their mistake but joe college stayed, they weren't man enough to admit or correct their action, and no apologies to the guy who did the great job. Joe college eventually sucked his way into a job at another location and they canned his ass within months.

In reply to by Xena fobe

Endgame Napoleon Zero_Ledge Sat, 10/14/2017 - 13:47 Permalink

If the company is actually not meeting its quota, it might be justified, but in many companies, they constantly churn the hard workers who help to keep the numbers up, keeping long term only a few [often] babvacationing, crony managers who are almost always parents and their back-watching and equally (usually even more) absentee mom-clique employees who, for the most part, do not love to work hard on behalf of the customers, but who do love all of the silly workplace dress-up parties, etc.

There are exceptions, of course. There are a few good managers of all social types, here and there, and a few good, mom-clique workers, but overall, workplaces are zoos. Financial services companies can keep numbers up just by churning hard workers, with the managers reaping the bonuses. Good salesmen are a dime a dozen. Managers do not train staff on a few key things, making their skills more rare in that way, especially when they churn so many hard workers, keeping the absentee, baby-pic-posting momma clique.

Mom-clique workers have unearned income streams from spouses or welfare, making the low wages palatable to them, and they do the most important thing: they squeal with glee in all of those workplace parties, although some complain behind the scenes. Customers are never the important thing in corporations. It is the always the workplace social events that are important to the managers. Well, the overall sales are important, as long as the salesmen are churn-able.

In reply to by Zero_Ledge

Endgame Napoleon Stuck on Zero Sat, 10/14/2017 - 13:17 Permalink

Lots of financial services companies operate like this: The people who come to work every day, stay the whole day, generate more new business sales than most others and retain more accounts are praised for awhile in an aggrandizing and exaggerated way to put pressure on the frequently absentee momma clique and then churned, with the often likewise frequently absentee manager getting a bonus for the increased sales. The manager then hires a new crop of hardworking salesmen to churn.

The back-watching mom-clique workers that take off whole mornings, whole afternoons, whole days and whole weeks for kids’ activities, but that that participate with loud enthusiasm in workplace activities that have nothing to do with paying customers — Halloween dress-up days, adult cubicle Easter egg hunts and bulletin board decorating contests with a mom/baby theme — are kept.

They won’t seek a management job, thinks the babyvacationing manager, but they do watch backs while their fellow management and non-management, crony parents take a ton of time off beyond PTO and pregnancy leave(s).

Most of them do not meet the quotas, either, because they are not at work enough to meet the quotas and, when at work, are often posting baby pics online when you pass by their cubicles, rather than making call after call to generate and retain business.

They often leave work at the busiest times of the day, when paying customers are most inconvenienced. If’s all for baby, So, it is okay. You can always get those churn-able employees to work like horses, keeping your numbers up until you can them.

In reply to by Stuck on Zero

Utopia Planitia Stuck on Zero Sat, 10/14/2017 - 13:24 Permalink

Would be interesting to know how you define "Finest High Tech Companies".  I have seen this nonsense happen time after time at the many companies I have worked at.  Your overgeneralization is rarely true.  No, I was not one of the terminated.  So I was able to observe who was chosen and what the after-effects were.  Rarely are the departed exclusively (or even mostly) deadwood.  They are people randomly selected by HR, so none of the line management has to take the hit for selecting who gets it.  Frequently the chosen takes a swath across the organization that results in chaos and loss of vital skills and information that now must be re-built the hard way.  Meaning everybody left is going to be working massive amounts of unpaid overtime in an attempt to keep things on schedule.  If it worked the way you describe that would be one thing.  In reality it rarely does.  Meaning your statement is as vacuous as Bernie saying: "Free Healthcare for Everybody!",

In reply to by Stuck on Zero

fattail Stuck on Zero Sun, 10/15/2017 - 10:27 Permalink

Are these the same fine tech companies that receive billions in Taxpayer subsidies?  Or the fine tech companies that spy and aggregate metadata on those same taxpayers for the DOJ, FBI, CIA and NSA to be used as blackmail on the politicians and elite to ensure all of those involved stay at the front of the taxpayer filled trough.  Or the same fine tech companies that claim an overseas tax haven to avoid having to contribute to the trough.

In reply to by Stuck on Zero

mkkby jcaz Sat, 10/14/2017 - 17:15 Permalink

The execs leaving is a red flag. They are the ones who know the true/inside story. I'd say it's time to short the sucker.

Any large company has 700 losers/slackers that need to go. This actually makes sense.

450k pre orders for a sight unseen car. It truly is idiocracy out there. Of course, they only deposited $1k. They can ask for it back, provided the company is solvent. For a while at least.

You'd be a fool to buy one of these cars. When the company goes under your warranty is null/void, it will be hard to get service or parts. The investors and buyers will be Musked.

In reply to by jcaz

jcaz mkkby Sat, 10/14/2017 - 20:32 Permalink

Tesla also plays fast and loose with those numbers-  it's "450,000 orders" but they don't bother to net the cancelled/refunded orders against that number- in fact, Tesla won't reveal exactly how many orders have been cancelled.....Right now pre-order holders are trying to auction them off, despite orders from Musk not to- they know he's not going to cancel their order.    If you try to buy a 3 today,  you'll wait until 2020 to get a car, which will be three years old and out of date-  it's a losing formula for Tesla.Legitimate pre-orders might be 5-10K, who knows-  but once people realize that they're buying a $50K car instead of a $35K car-   they'll bolt for a.... Bolt,  or a dozen other choices that will be much more current.

In reply to by mkkby

jcaz SokPOTUS Sun, 10/15/2017 - 13:29 Permalink

Yep.   The REAL purpose of the pre-order program has been to pump the price of the stock- algos think those 450K orders are legit, they've punched the "buy" button on the stock every time  there has been an update.   If Tesla was legitimate,  they would have made the program a $5K or $10K non-refundable deposit- real money.  Surely,  Tesla had 10-20K believers to do so.   $1000 just makes this a tulip to trade,  and Musk's threat to cancel any flipped pre-order is bogus- he'll sell this pig to anyone with a pulse. NO WAY there are 450K legit orders outstanding on the 3.

In reply to by SokPOTUS