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How Tesla Is Trying to Avoid Labor Unrest in Germany

Shoppers In Berlin As Euro Area Consumer Prices DropShoppers In Berlin As Euro Area Consumer Prices Drop
The Tesla logo is seen beyond droplets of rain water as they sit on the window of a Tesla Motors Inc. electric automobile showroom in Berlin, Germany, on Wednesday, Jan. 7, 2015. Krisztian Bocsi— Bloomberg — Getty Images

Tesla has offered more sweeteners to try to quell unrest at a key German supplier, whose founder and chief executive has not been seen at work for weeks, German labor officials said on Wednesday.

Grohmann Engineering, a maker of automated manufacturing systems which Tesla agreed to buy in November, is key to the Silicon Valley carmaker’s bid to succeed in the mass market by massively ramping up its output.

Since then, Tesla (TSLA) has given job guarantees and pay raises to the firm’s 700 employees in the small town of Pruem close to the Belgian border, under threat of strike action organized by powerful trade union IG Metall.

The head of Grohmann’s works council, Uwe Herzig, said Tesla had offered another 1,000 euro ($1,089) one-off payment after Easter, on top of job guarantees, pay rises and stock options.

He added that Klaus Grohmann, under whose leadership Tesla had been planning to run the business, suddenly retired at the end of last month.

“In November we were told that everything would remain the same, and then on March 31 we were surprised to hear that he will retire,” Herzig told a news conference, adding Klaus Grohmann had not been seen at the company since then.

A Klaus Grohmann listed in the German telephone directory as living close to Pruem was not immediately reachable by phone.

Tesla in Germany did not immediately respond to a request for comment.

Tesla has pledged to create an additional 1,000 jobs at Grohmann, which it has renamed Tesla Grohmann Automation, as it seeks to increase output to half a million vehicles next year from around 80,000 in 2016.

Grohmann has helped Tesla rivals Daimler and BMW build production facilities for electric car batteries. Herzig said Grohmann had given Tesla priority over existing customers.

The takeover and expansion plans by Tesla have prompted IG Metall to demand that Tesla Grohmann Automation adopts collective wage agreements and job guarantees above and beyond an existing pledge to guarantee Grohmann jobs for five years.

Christian Schmitz, head of IG Metall’s Trier branch, said concessions made by Tesla to guarantee jobs were encouraging but they were not the collective guarantees customary among German unionized workforces.

Furthermore, key parts of the workforce at Grohmann were being paid around 25 to 30% below an industry-wide collective agreement for the metalworker electric industry sector, IG Metall said..