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Tesla to cut salaries, furlough workers as COVID-19 shutdowns expected to last until May 4

Tesla will suspend production at its U.S. factories until at least May 4 due to the COVID-19 pandemic, prompting the company to cut pay for salaried employees between 10% and 30% and furlough workers, according to an internal email sent Tuesday night and viewed by TechCrunch.

Pay cuts for salaried employees — which ranges from 30% for vice presidents, 20% for director-level executives and 10% for the remaining workforce — is expected to be in place until the end of the second quarter, according to the email. The salary cuts and furloughs will begin April 13. Employees who cannot work from home and have not been assigned critical onsite positions will be furloughed until May 4, according to the email.

“While we are continuing to keep only minimum critical operations running, we expect to resume normal production at our U.S. facilities on May 4, barring any significant changes,” the email from Tesla’s human resources department head Valerie Workman. “Until that time, it is important we take action to ensure we remain on track to achieve our long-term plans.”

“This is a shared sacrifice across the company that will allow us to progress during these challenging times,” the email read.

Furloughed employees will remain employees of Tesla without pay. They will their healthcare benefit. The email directs furloughed employees to apply for unemployment benefits.

Tesla said in the email to employees that it will also put any merit-based actions such as equity grants on hold.

Tesla operates a number of factories and facilities throughout the U.S., namely its main assembly plant in Fremont, Calif., its Nevada gigafactory that produces battery packs and electric motors for the Model 3 and its factory in Buffalo, New York, which makes solar products.

Tesla announced March 19 plans to suspend production at its Fremont and Buffalo factories. At the time, the company didn’t say when it expected to restart production. The production suspension at its Fremont factory was set to begin March 23, a week after a shelter in place order went into effect in Alameda County due to the COVID-19 pandemic.

Some basic operations that support Tesla’s charging infrastructure and what it describes as its “vehicle and energy services operations” has continued at the Fremont factory, which under normal circumstances employs more than 10,000 people. About 2,500 workers are still working at the plant.

Tesla said in March that it had enough liquidity to weather the shutdown caused by the COVID-19 pandemic. Its cash position at the end of the fourth quarter was $6.3 billion before its recent $2.3 billion capital raise.

“We believe this level of liquidity is sufficient to successfully navigate an extended period of uncertainty,” Tesla said.

The company had available credit lines worth about  $3 billion, including working capital lines for all regions as well as financing for the expansion of its Shanghai factory at the end of the fourth quarter of 2019.

Tesla CEO Elon Musk: New York gigafactory will reopen for ventilator production

Tesla CEO Elon Musk said Wednesday that the company’s factory in Buffalo, New York will open “as soon as humanly possible” to produce ventilators that are in short supply due to the spread of the COVID-19 pandemic.

His comments, which were made Wednesday via Twitter, follows previous statements by the CEO outlining plans to either donate ventilators or work to increase production of the critical piece of medical equipment needed for patients who are hospitalized with COVID-19, a respiratory disease caused by coronavirus. COVID-19 attacks the lungs and can cause acute respiratory distress syndrome and pneumonia. And since there is no clinically proven treatment yet, ventilators are relied upon to help people breathe and fight the disease. There are about 160,000 ventilators in the United States and another 12,700 in the National Strategic Supply, the NYT reported.

Giga New York will reopen for ventilator production as soon as humanly possible. We will do anything in our power to help the citizens of New York.

— Elon Musk (@elonmusk) March 25, 2020

Last week, Tesla said in a statement it would suspend production at its Fremont, Calif. factory, where it assembles its electric vehicles, and its Buffalo, N.Y gigafactory, except for “those parts and supplies necessary for service, infrastructure and critical supply chains.”

It isn’t clear based on Musk’s statements when the Buffalo plant would reopen or how long it would take to convert a portion of its factory, which is used to produce solar panels. Musk didn’t say if this was part of a possible collaboration with Medtronic .

Medtronic CEO Omar Ishrak told CNBC on Wednesday that it is increasing capacity of its critical care ventilators and partnering with others such as Tesla. He said Medtronic is open sourcing one its lower end ventilators in less acute situations for others to, to make as quickly as they can. These lower end ventilators, which are easier to produce because there are fewer components, can be used as an intermediary step in critical care.

Tesla is one of several automakers, including GM, Ford and FCA that has pledged support to either donate supplies or offer resources to make more ventilators. Earlier this week, Ford said it is working with GE Healthcare to expand production capacity of a ventilator.

GM is working with Ventec Life Systems to help increase production of respiratory care products such as ventilators. Ventec will use GM’s logistics, purchasing and manufacturing expertise to build more ventilators. The companies did not provide further details such as when production might be able to ramp up or how many ventilators would be produced.

Cities that didn’t win HQ2 shouldn’t be counted out

Scott Andes
Contributor

Scott Andes is the program director for the National League of Cities City Innovation Ecosystem program.

The more than year-long dance between cities and Amazon for its second headquarters is finally over, with New York City and Washington, DC, capturing the big prize. With one of the largest economic development windfalls in a generation on the line, 238 cities used every tactic in the book to court the company – including offering to rename a city “Amazon” and appointing Jeff Bezos “mayor for life.”

Now that the process, and hysteria, are over, and cities have stopped asking “how can we get Amazon,” we’d like to ask a different question: How can cities build stronger start-up ecosystems for the Amazon yet to be built?

In September 2017, Amazon announced that it would seek a second headquarters. But rather than being the typical site selection process, this would become a highly publicized Hunger Games-esque scenario.

An RFP was proffered on what the company sought, and it included everything any good urbanist would want, with walkability, transportation and cultural characteristics on the docket. But of course, incentives were also high on the list.

Amazon could have been a transformational catalyst for a plethora of cities throughout the US, but instead, it chose two superstar cities: the number one and five metro areas by GDP which, combined, amounts to a nearly $2 trillion GDP. These two metro areas also have some of the highest real estate prices in the country, a swath of high paying jobs and of course power — financial and political — close at hand.

Perhaps the take-away for cities isn’t that we should all be so focused on hooking that big fish from afar, but instead that we should be growing it in our own waters. Amazon itself is a great example of this. It’s worth remembering that over the course of a quarter century, Amazon went from a garage in Seattle’s suburbs to consuming 16 percent — or 81 million square feet — of the city’s downtown. On the other end of the spectrum, the largest global technology company in 1994 (the year of Amazon’s birth) was Netscape, which no longer exists.

The upshot is that cities that rely only on attracting massive technology companies are usually too late.

At the National League of Cities, we think there are ways to expand the pie that don’t reinforce existing spatial inequalities. This is exactly the idea behind the launch of our city innovation ecosystems commitments process. With support from the Schmidt Futures Foundation, fifty cities, ranging from rural townships, college towns, and major metros, have joined with over 200 local partners and leveraged over $100 million in regional and national resources to support young businesses, leverage technology and expand STEM education and workforce training for all.

The investments these cities are making today may in fact be the precursor to some of the largest tech companies of the future.

With that idea in mind, here are eight cities that didn’t win HQ2 bids but are ensuring their cities will be prepared to create the next tranche of high-growth startups. 

Austin

Austin just built a medical school adjacent to a tier one research university, the University of Texas. It’s the first such project to be completed in America in over fifty years. To ensure the addition translates into economic opportunity for the city, Austin’s public, private and civic leaders have come together to create Capital City Innovation to launch the city’s first Innovation District at the new medical school. This will help expand the city’s already world class startup ecosystem into the health and wellness markets.

Baltimore

Baltimore is home to over $2 billion in academic research, ranking it third in the nation behind Boston and Philadelphia. In order to ensure everyone participates in the expanding research-based startup ecosystem, the city is transforming community recreation centers into maker and technology training centers to connect disadvantaged youth and families to new skills and careers in technology. The Rec-to-Tech Initiative will begin with community design sessions at four recreation centers, in partnership with the Digital Harbor Foundation, to create a feasibility study and implementation plan to review for further expansion.

Buffalo

The 120-acre Buffalo Niagara Medical Center (BNMC) is home to eight academic institutions and hospitals and over 150 private technology and health companies. To ensure Buffalo’s startups reflect the diversity of its population, the Innovation Center at BNMC has just announced a new program to provide free space and mentorship to 10 high potential minority- and/or women-owned start-ups.

Denver

Like Seattle, real estate development in Denver is growing at a feverish rate. And while the growth is bringing new opportunity, the city is expanding faster than the workforce can keep pace. To ensure a sustainable growth trajectory, Denver has recruited the Next Generation City Builders to train students and retrain existing workers to fill high-demand jobs in architecture, design, construction and transportation. 

Providence

With a population of 180,000, Providence is home to eight higher education institutions – including Brown University and the Rhode Island School of Design – making it a hub for both technical and creative talent. The city of Providence, in collaboration with its higher education institutions and two hospital systems, has created a new public-private-university partnership, the Urban Innovation Partnership, to collectively contribute and support the city’s growing innovation economy. 

Pittsburgh

Pittsburgh may have once been known as a steel town, but today it is a global mecca for robotics research, with over 4.5 times the national average robotics R&D within its borders. Like Baltimore, Pittsburgh is creating a more inclusive innovation economy through a Rec-to-Tech program that will re-invest in the city’s 10 recreational centers, connecting students and parents to the skills needed to participate in the economy of the future. 

Tampa

Tampa is already home to 30,000 technical and scientific consultant and computer design jobs — and that number is growing. To meet future demand and ensure the region has an inclusive growth strategy, the city of Tampa, with 13 university, civic and private sector partners, has announced “Future Innovators of Tampa Bay.” The new six-year initiative seeks to provide the opportunity for every one of the Tampa Bay Region’s 600,000 K-12 students to be trained in digital creativity, invention and entrepreneurship.

These eight cities help demonstrate the innovation we are seeing on the ground now, all throughout the country. The seeds of success have been planted with people, partnerships and public leadership at the fore. Perhaps they didn’t land HQ2 this time, but when we fast forward to 2038 — and the search for Argo AISparkCognition or Welltok’s new headquarters is well underway — the groundwork will have been laid for cities with strong ecosystems already in place to compete on an even playing field.