Comment by chollida1 | Hacker News Reader

Comment by chollida1 | Hacker News Reader

> Grohmann disagreed with Musk's demands to focus management attention on Tesla projects to the detriment of Grohmann Engineering's legacy clients, which included Tesla's direct German-based rivals Daimler (DAIGn.DE) and BMW (BMWG.DE), two sources familiar with the matter said.

I mean, how was this not brought up and made a settled point before Tesla acquired his company? Big fan of Musk but this is on his shoulders. According to reports, Telsa is already talking to other Grohmann customers, read their competitors, on how to compensate them for breaking the contracts.

Now they are facing the same engineers they just acquired wanting to go on strike.

I'd start to worry about how Tesla is going to fund Model 3 manufacturing, buying out competitors from contracts that they don't want to fill, and how to deal with a set of key employees who may want to unionize and certainly want higher pay, but Tesla just somehow always seems to find a way.

The stock is close to its all time highs, and short interest is at the bottom of its trailing year, so I guess I'm not the only one who has just thrown up their hands and just let Elon have his way.

At what point does shorting Telsa join "starting a land war in Asia" as a rule to live by:)

From Zero Hedge....

> The German labor union IG Metall has demanded that Tesla's management formalize multi-year job guarantees and increase salaries as a way to provide assurance amid management turmoil. The alternative is a strike which could lead to further "unexpected" delays for the Model 3, and even more hyperbolic statements from Musk on his twitter account to deflect attention from increasingly growing problems in Tesla's paradise.

All of these events seem predictable and even desirable. Part of the benefit of acquiring Grohmann Engineering is depriving competitors of their services, and the costs include buying out contracts and appeasing labor. Turnover at an acquired company isn't unusual, nor is friction in the transition.

If Tesla was smart and gave these aquihired employees adequate golden handcuffs and noncompete clauses then I agree. But if they didn't and key employees just leave and use their expertise to start another company that helps out the competitors again then Tesla will have played themselves.

It could go poorly. Those are good points. It was a decent but if they retain talent and deprive competitors. Takes a long time to start a company and Tesla is likely attractive place for engineers so they will prob retain employees and IP to make it palatable if not profitable

> If Tesla was smart and gave these aquihired employees adequate golden handcuffs and noncompete clauses...

BTW noncompetes are illegal in California where Tesla is based.

California law is not relevant to employees living and working in Germany.

AFAIK in Germany con-competition agreements are possible with the maximum term of two years.

Grohmann Engineering is a German company. Can someone chime in on the legality of non-competes in Germany?

Totally legal, as long as the employee is paid at least 50% of their salary after they leave for the full duration of the non-compete period.

http://www.lexology.com/library/detail.aspx?g=2bae173f-7fe4-...

That actually sounds fair given the circumstances. Paid time to either stay out of the market and relax, or to transition to a fresh field unaffected by the non-compete.

This isn't software that a team of 6 can replace in 6 months. This is stuff like assembly lines, metallurgy treatments, the characteristics and quirks of specific machines, and requirements of suppliers. These can't just be replaced by a rogue team leaving.

It can easily be argued that those people are the real value behind this acquisition. Even if they could be replaced easily (not likely) it would still be a huge blow.

Agreed, the loss of institutional knowledge will cripple the team. However, what I am arguing is that they leavers won't be able to take the business elsewhere just with what is in their heads.

On the contrary. The rogue team leaving knows how to build and maintain the assembly lines, invented the metallurgy treatments, designed and built the machines, and created the supplier network themselves. Without the team, the automated manufacturing business is probably not worth nearly as much. The team can go elsewhere and repeat the feat.

No, no they didn't. They inherited the machine, or bought it from someone else. This isn't software engineering, where people bootstrap their compilers.

They signed exclusive contracts with suppliers.

They designed parts which took many iterations of surface finishes and annealing schedules and tolerances to get right. Each iteration requires months of turnaround time and $€£ in manufacturing costs.

Sure the team can go elsewhere. But it will take them almost as long to set it up the second time around, and almost as much money.

> Turnover at an acquired company isn't unusual, nor is friction in the transition.

Things are a bit different in Germany than in the USA when it comes to this.

Would you care to elaborate?

>>> Turnover at an acquired company isn't unusual, nor is friction in the transition.

>> Things are a bit different in Germany than in the USA when it comes to this.

> Would you care to elaborate?

Here's an attempt at an explanation:

Both turnover and friction occur during acquisition in Germany as well, obviously. And indeed friction is probably independent of nations (and their differing laws and cultures), so I'll focus on turnover.

So, turnover. The legal notice period in Germany is (ignoring exceptions) at least one month, and up to seven months by law. Often employer and employee contractually agree on even longer minimums, three months are quite usual. There's also an unspoken expectation that permanent employees are in for the long haul. By contrast, IIRC many US States allow essentially zero notice period, and the famous two weeks' notice is essentially just courtesy.

Culturally, there's also stronger (albeit eroding) attachment between employers and employees. Especially in Mittelstand companies, such as Grohmann seems to be, the owner takes the stance of a benevolent patriarch, taking his responsibility for his employees seriously, and workers tend to reciprocate, and be very protective of their boss. In fact, such a company structure and climate may well be a factor for when considering an employment offer.

Since identification with a company can thus be very strong, there would be considerable reluctance to leave, especially at such a critical time. You don't just leave your colleagues and your customers hanging. In fact, perhaps it was this sentiment which caused Klaus Grohmann to throw in the towel, when he realised he was expected to work against the best interest of his clients (and, by extension, employees).

I assume that such a departure of a patriarch will be a strong signal to the rest of the company.

very interesting. thank you very much.

This shows that Tesla is focused on getting the Model 3 produced above all over considerations. They are playing to win not playing it safe.

This is a common occurrence in business even if ugly. Similar circumstances happened to Tesla with Mobile Eye and Google, FB, Microsoft do this regularly. Potentially it did come up and he was mislead to make the sale, maybe their strategy changed or something in between.

I mean, Tesla was started as AC Propolsion and the CEO was fired, although fairly different circumstances. Either way, when you sell you sell control.

Kindly fact check; when Tesla started, they bought technology from AC Propulsion, but it was analogue and for various reasons they ended up having to reimplement everything themselves from scratch. AC Propulsion is still around AFAIK.

Yep, faulty memory. Still similar point though: Elon Musk bought in to Tesla and fired one of the founders. Obv, a Lotus Chassis and a car kit is much different than the product now but once you sell, you give up control.

AC prop still exists. You were correct

I mean, how was this not brought up and made a settled point before Tesla acquired his company?

Probably something like, "The plan is X but of course the details aren't set in stone, we're a fast-moving company so we'll revisit our roadmap every so often." And then down the road Elon wants to do something that Grohmann strongly disagrees with, and the only plausible resolution is to fire Grohmann.

This doesn't seem too surprising to me. Tesla bought this company to make Teslas. Why should Tesla spend any effort at all helping BMW and Daimler make cars? Maybe there's some rationale there but it doesn't surprise me that it is low priority.

I'm not saying they aren't reliable in this instance but I encourage you to be VERY skeptical of zero hedge..

Maybe it was brought up and discussed, but what's happening now wasn't what was agreed at the time? Who knows.

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