Tesla to Cut Employees’ Pay as Much as 30% to Curb Costs | Hacker News Reader

Tesla to Cut Employees’ Pay as Much as 30% to Curb Costs

bloomberg.com

Nissan and Honda just laid off/furloughed over 10k each.

https://asia.nikkei.com/Spotlight/Coronavirus/Nissan-and-Hon...?

I live about three miles from one of the affected assembly plants. It's pretty tough.

FTA:

"The affected employees will not be paid by Nissan after being laid off, though it appears that the company will rehire them once the plants restart production. The workers will draw unemployment benefits until then.

Nissan also plans to lay off most of its 6,000 employees at its U.K. plant and about 3,000 workers at a factory in Barcelona, Spain.

Honda, which built 1.2 million cars in the U.S. in 2019, suspended production at its factories there on March 23. The automaker will guarantee full wages until Sunday. The company will instruct the workers to apply for unemployment benefits from their local governments starting Monday."

My company recently furloughed some people, and at least in our case, they got to keep health insurance. Normally that would be cold comfort, but... right now it's pretty important.

Yes i believe both Nissan and Honda are maintaining health insurance. Totally agree. Can't imagine 30 days in an ICU on a ventilator would be inexpensive here in the states.

30% cut for VP+, 20% for director, 10% others

At least it's progressive?

Seems kind of questionable to lead the headline with 30% cut for employee pay when it's a 30% cut for the top level executives.

* > Employees who haven’t been assigned to critical tasks and who can’t work from home will be furloughed without pay, though they will keep health-care benefits.*

Sounds like a 100% cut for most folks, less whatever inadequacy our unemployment insurance system pays out.

It now pays up to $1050 per week up to 26 weeks, plus the stimulus check of up to $1200. I wouldn't call that inadequate, especially considering that you don't have to work or even look for work.

For low paid workers, the federal unemployment stimulus can actually make their unemployment checks larger than their normal take home pay.

Only on HN is $54k/year considered "low paid".

The US median income is $31k. $1050/week is an enormous pay raise for well over half of the working population.

Those are two separate paragraphs. Low paid workers don't get $1050 per week, it scales based on income. But the minimum is $600.

Does unemployment insurance even pay out if you've been furloughed without pay, but still technically have a job?

In the US generally speaking yes.

Yes, it can sometimes even pay out if you are furloughed with pay.

Total BS headline. It seems like they did they best they could.

Title selection has never been a super honest deal. It's meant to get you to read the article, nothing more. In the US at least it's a well-oiled machine from the late 1800s. I guess other countries have probably been doing it longer?

How would you rewrite it? At some companies, "VP" isn't that senior of a position, and there are hundreds of them.

100s of vps usually means dozens of presidents. Probably 100s of directors and 100s x 2 managers.

There's very few industries where that's true, and it certainly isn't at Tesla.

I counted 20 VPs at Tesla[1] before getting lazy and giving up. There are lots in their sales and local manufacturing groups. There may be 50 or more.

Either way, you still didn't propose a better headline. Is it possible there isn't a significantly better way to condense the info into a headline?

1. https://www.google.com/search?q=tesla+vice+president+site%3A...

Same headline, replace "as much as 30%" with "10% or more"

It's more accurate, but less click baity. But of course that's why they chose it, so here we are.

Years ago during the dotcom burst the executives where I worked took a paycut along with everyone else.

We later found out that the paycut for executives was repaid later via other pay and benefits "because they had a contract"... but obviously not for everyone else.

It was common in a lot of companies to cut (or defer) executive salaries but grant them additional stock options or warrants.

My brother works at GM, they did a 20% paycut to everyone, I want to say the leadership took larger ones like 30% but I can't completely remember.

It’s actually a pay deferral. They’ll get the money just at a later date

https://www.freep.com/story/money/cars/general-motors/2020/0...

I think Pay deferral is a much better solution. It is hard to ever get a pay rise after a pay cut. That is why Salary raise on the whole dont catch up as fast as economy after 2008.

Doesn't Tesla already underpay relative to other tech companies?

They contract most of the factory workers out so they can claim it's not Tesla.

There are some absolutely awful stories that come out of Tesla's factories. Like horrible injury rates, extremely high drug usage, workplace doctors incentivized to not report anything, and workers suffering permanent life-destroying injuries due to Tesla's negligence.

Some day I hope these stories come to light in the mainstream and technology "journalism", but I am not hopeful that Musk will ever be held accountable.

OK, but what is the base rate for injuries?

Car factories can be dangerous place, so you would expect a certain amount of injuries over time, doctors with shady backgrounds, etc.

Keep in mind that everything Tesla do is scrutinized and publicized, along with every stories of malfeasance, real or imagined, along with Tesla fanboy and Tesla haters amplifying the noise.

Which of course, make it incredibly difficult to be objective.

> OK, but what is the base rate for injuries?

That is the whole point of the allegations: that Tesla does not report accurate numbers so any comparison is meaningless. If the doctor supervising the clinic refuses to sign any paperwork that contains reportable injuries, then the bureaucrat's report will show that "there were no physician-verified reportable injuries" therefore "we must be the safest factory in the world". One of the more prominent whistle blowers actually worked at other car factories and reported that the injury rate at Tesla was staggering - orders of magnitude higher than at any other factory she worked at. She also said that because the physician would refuse to document or sign any documentation with reportable injuries, the paperwork did not match reality.

Look, there have been enough whistleblowers that I would be highly suspicious even if I were Musk's biggest fan. Every once in a while we get an article[1] and then Tesla destroys the whistleblower's life and the journalists just stops reporting. Elon's fans then go nuts on Twitter saying that it's the Tesla Bears or whatever new Illumanti Cabal is out to stop Musk.

There will certainly be more and maybe someday people will care, but I wouldn't hold my breath. Tesla buyers just don't care about poor people and Elon Musk literally wanted to keep his factories operating during a global pandemic, so expecting empathy from him is futile.

---

[1] https://www.theverge.com/2018/11/6/18064326/tesla-factory-wo...

Or: https://www.forbes.com/sites/alanohnsman/2019/03/01/tesla-sa...

Or: https://www.theguardian.com/technology/2018/jun/13/tesla-wor...

Or: https://www.theguardian.com/technology/2017/may/18/tesla-wor...

Really the sky is the limit.

There's no particular reason for car factories to be dangerous. It's just sloppy management.

I am not asking about whether it should happen, but what is typical for an automotive factory.

Hi, I worked for the UAW campaign to organize Tesla a while back, and I did some of the data analysis for this report. https://uaw.org/report-worksafe-internal-tesla-data-shows-in...

I wish I could answer questions about it but at this point it's been years and I've forgotten basically all the details. I will say though that there were suspicious gaps in Tesla's incident reports of months going by without the slightest incident, from the very beginning of I think April 2015 to the end of the calendar year.

You may dismiss it as biased, since it obviously is, but the methodology of the portions I worked on or saw was honest.

Yeah, that's pretty much in line with what every report has said, and that's even keeping in mind American car factories have higher injury rates than their foreign competitors in general.

Tesla's injury rates were 30% higher than the average car company, and close to double in the case of serious injuries: https://www.revealnews.org/article/tesla-says-its-factory-is...

And that's not including the evidence that Tesla has left many injuries off the books.

Depends what happens over the next 10 years. He could make more friends or he could make more enemies. Does he find success or crash and burn maybe go Mcafee at some point.

Well Tesla isn't a tech company. They should really only be compared to other auto manufacturers and maybe some dealers.

Tesla is really strange company. They don’t pay like tech and don’t have same business flexibility. But at the same time they’re valued like tech and take same shortcuts (or “optimizations”) in the processes like tech.

Shortcut? It seemed that Tesla is doing incredible engineering and that they learned their lessons.

What lessons have they learned?

Some lessons learned here from an unverified source

For example, make sure you have enough error handling so that a malformed JSON file doesn't bootloop all of your cars

https://mobile.twitter.com/atomicthumbs/status/1032939617404...

I think you've got it completely backwards. There are quite a few broken Tesla short sellers who lost billions trying to assign an automotive valuation to Tesla.

Just curious, how do you define what a tech company is?

It's a really strange label. I think most people define it as "Whatever those crazy guys in Silicon Valley are doing/funding," because I can't imagine a world where there exists automotive manufacturing that isn't considered technology.

In addition, I think the definition of the term "Technology" is quite broad.

According to the Oxford dictionary,

Technology:

  The application of scientific knowledge for practical   purposes, especially in industry.

In the formal terms, tech industry is all industry that relies on scientific knowledge to gain leverage. What large industry today doesn't involve using science in some form or the other? Perhaps the industry of religion. It is hard to find one and there is a gradual curve between least scientifically based industry to the most.

Exactly. It feels like the term was invented by people who think that Information Technology is the only technology worth mentioning, and that's a bit perverse.

Tech companies often spend most of their money on R&D. Manufacturing typically instead has high capital expenditure.

While I agree that one would expect a tech company to spend a lot on R&D, I'm not sure how accurately this definition corresponds with what people mean when they say those words.

Alphabet only had about 20% of its expenditures going to R&D in 2019, so does that mean it's not a tech company?

Meanwhile, Tesla have had close to 50% of their expenditures going towards R&D year after year. Ford had less than 5% of expenditures go to R&D in 2019.

By this measure, Tesla is definitely a tech company, but Alphabet might not be. I might... actually want to agree with that, but again, I don't think people who use the phrase would.

Actually Google was earlier a tech company, but it was reclassified into communications sector in 2018.

https://www.google.com/amp/s/mobile.reuters.com/article/amp/...

Facebook is also classified as Communications, and Amazon is Consumer. In fact, of all the FAANG companies, the only tech company is Apple. Microsoft and IBM, too, if you include them.

Why would IBM and Microsoft be in FAANG?

When people say tech company they mean tech margins. There is no indication that Tesla will ever be able to achieve that.

To be fair R&D at 50% of revenue is massive. They are basically a university.

Actually, I looked at the wrong numbers. Their R&D is a lot more in line with other automotive manufacturers at 6.6% of total expenditures (for 2018). The majority of their expenditures go into Cost of Revenues (building and delivering the cars), with Operating Expenses being a distant second.

A company whose product is technology rather than something like advertising, media or hotel booking.

I feel the distinction these days is pretty blurry. Tesla writes a lot of software and hires a lot of engineers. I personally know of several people who left FAANG jobs to join Tesla.

Facebook, Alphabet, Netflix, and Amazon are not tech companies. Communications, Communications, Communications, and Consumer, respectively. Apple is a tech company.

Funny how whenever there is good or exciting news, it's 'Elon Musk' that's quoted.

But bad news like this comes from 'Tesla'.

Musk is getting closer and closer to his $1B in options. Tesla is at ~$100B market cap as of 4/7. They need this to hold until late July. Musk is doing whatever he can to keep the markets happy; not sure it’s going to be enough

> In the U.S., the salary cut is 30% for vice presidents and above, 20% for directors and above, and 10% for others

That looks like a nice, reasonable gradient. I wonder what it looks like when divided by relative wages.

The factory will restart one month into the quarter, but the pay cuts will persist for two months after that. Classy.

https://archive.md/0Kemu

Meanwhile, Elon’s private yet burns $5K an hour and has flown an average of 2,200 miles per day, every day, for the last three months.

> In the U.S., the salary cut is 30% for vice presidents and above, 20% for directors and above, and 10% for others, according to an internal memo seen by Bloomberg. Workers outside the U.S. will see similar reductions. Employees who haven’t been assigned to critical tasks and who can’t work from home will be furloughed without pay, though they will keep health-care benefits.

Come on, this is even in the paywall blurb. Common employees are at a 10% cut.

If they can get idle factories without mass layoffs, good for them and for their workforce.

> Employees who haven’t been assigned to critical tasks and who can’t work from home will be furloughed without pay, though they will keep health-care benefits.

That sounds more like 100% than 10% to me.

But those employees will be eligible for CA unemployment insurance, which will pay them a large fraction of their normal pay for 26 weeks, plus the new $600 weekly federal checks (which in the case of part time or low paid employees can actually make their unemployment checks larger than their regular after tax pay).

CA unemployment insurance is capped at $450, right?

But with the federal stimulus it's $1050. Plus the payments are exempt from several taxes that are normally deducted from wages. And you don't have to look for work. And of course separately there's the extra $1200 federal stimulus check.

Correct, capped at $450.

Wow

I take it they're planning to cut the prices on their products to match, this being "shared sacrifice" and all? Rhetorical question, I know.

On a more serious note, why not cut the hours by the same percentage, maintaining hourly pay equivalent? Seems like this would fit the definition of "shared sacrifice" a bit better. You give up some, company gives up some.

My wife is an independent contractor. Her client asked her to go part-time, same hourly pay. It's great. The client gets to pay less, she gets a much deserved break.

Shared sacrifice would be you volunteering to pay more.

Sound like it'd defeat the purpose (i.e. stay alive financially when the main factory is shut down) to do what you say.

I think this is just an excuse to cut salaries. I’m not sure their revenue is down.

If you go on their website and try to order a new model 3, it still says it’s a 9 week wait.

And last I heard their factories never stopped running because they got themselves declared essential.

So at least from the outside, it seems like their revenue hasn’t changed.

> And last I heard their factories never stopped running because they got themselves declared essential.

RTFA:

Tesla agreed to idle U.S. production last month amid authorities’ orders, choking off the supply of cars to customers. The electric-vehicle maker expects to resume normal production at its U.S. facilities on May 4, according to the memo.

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