Tesla confident it will meet job targets but questions linger

Local News

By Dan Telvock

In November when Tesla invited the media to the Buffalo solar plant for the first time, the company announced that 800 employees worked at the facility.

Tesla officials said the employee tally was an even split: 400 people worked at Tesla and 400 worked for its partner, Panasonic, which manufactures solar modules and cells inside the same plant.

In February, two former employees, who were laid off, appeared on News 4 and questioned the employment numbers released by Tesla.

The company disputed their account.

At the end of 2018, we shared with media that Gigafactory 2 had about 800 employees onsite, approximately half Panasonic and half Tesla well above the state requirement of 500 total jobs onsite. The numbers reported to the state for 2019 will be about 800 total onsite.”

But News 4 Investigates has obtained an employee list for Tesla’s South Buffalo factory for the month of December that raises questions of whether the company actually employed that many workers. At that time, the list shows that Tesla employed fewer than 300 on the factory floor. The source who provided the employee list, who is familiar with the plant and its operations, asked for anonymity for fear of reprisal.

Tesla disputes the number, and said the list obtained by News 4 is not a complete picture of employment, but refused to provide any supporting documentation.  

But others are curious about how many people actually work in the plant.

“I have always had a lot of questions about the numbers of employees,” said Linnea Brett, an organizer assisting Tesla employees with a union campaign.

“My assessment has always been that I can’t imagine how there are that many folks in the facility and I’m a little bit surprised that New York State hasn’t actually verified those numbers.”

State officials said they will take steps to ensure that Tesla is accurately reporting its employment numbers and capital spending. The job reporting documents from Tesla will be due in a few weeks, Empire State Development said.

In addition, News 4 Investigates has learned that the state’s chief fiscal watchdog has launched an audit of Empire State Development’s high-tech programs and will include the Tesla at Riverbend project in the review.

That’s good news to John Kaehny, of the good government group Reinvent Albany.

“This deal has gone completely bust and it just turned into an unaccountable, basically fiasco for taxpayers,” Kaehny said.

In addition, there are still questions about why the state in 2015 made several amendments to the agreement with the solar panel manufacture to reduce the job targets for this year by more than 40 percent and provide an exit strategy for the solar panel company if changes to local, state or federal regulations or policies adversely affect the business.

The job numbers are important because state taxpayers invested $750 million to build and equip the solar panel manufacturing facility as part of Gov. Andrew Cuomo’s Buffalo Billion initiative. One of the only mechanisms in the agreement that the state can hold Tesla accountable for is the number of jobs.  If Tesla misses job targets, the state can clawback $41.2 million each year.

“It will be a miracle if New York taxpayers get their money back from the $750 million they spent building the Riverbend Tesla factory,” Kaehny said.

Quiet amendments by state

If all had gone as planned, the massive solar panel factory in South Buffalo would have 900 high-tech employees by now – a huge win for a city that craves better-paying jobs. The name on the taxpayer-funded building would have been “Silevo,” and the Triex solar panels coming out of the facility were supposed to be more efficient and cheaper than any on the market.  

“This is bigger than anything we could have imagined,” Gov. Cuomo said at a press conference in 2014.

But a lot has changed since the pen hit the paper on the original 2014 agreement between the state and Silevo, then a start-up solar module company.

For starters, in 2014, Silevo was acquired by SolarCity, led by chairman Elon Musk and his cousin and CEO Lyndon Rive. They were going to bring to market Silevo’s Triex solar technology that the state considered to be “of critical importance to the United States economic competiveness and energy independence.”

The agreement with the state required Silevo to have 900 high-tech jobs at the Buffalo plant by this year. That requirement rises to 1,460 high-tech jobs by April 2020, with Tesla having to spend $5 billion in the area over the next 10 years.

But by 2015, a nonprofit arm of the state, Fort Schuyler Development Corporation and the Research Foundation for the State University of New York, quietly began making concessions for the company without any public input or disclosure. 

Critics believe SolarCity had already begun to realize that Silevo’s Triex technology was failing, so concerns surfaced about whether it could meet the 2019 job commitments.

In October 2015, state officials agreed to reduce the job target from 900 to 500. In addition, the state agreed to add an exit strategy for the solar panel manufacture if changes to local, state or federal regulations or policies adversely affected the business.

“It’s a hedge,” said Kaehny.

“It’s a way out for Tesla in the event that federal subsidies for solar manufacturing goes away and it lets them off the hook to the State of New York and to state taxpayers.”

Two months later, another amendment was made to the agreement.

This time the state agreed to remove “high tech” from the job description, thus potentially saving the company money by not having to pay higher salaries to employees, critics said. News 4 reported in December that the average salary at the Buffalo plant is $16.20 an hour.

“That’s disappointing,” Senator Robert Ortt, R-Niagara, said about the hourly pay at Tesla.

“That was not what we were told.”

Empire State Development, the state’s economic development agency, said it was neither a party to nor involved in negotiating any of the amendments to the agreement. Those decisions were left to a nonprofit arm of the state led by Alain Kaloyeros, who is serving a 3 1/2 year prison term for steering hundreds of millions of dollars worth of contracts to developers, including LP Ciminello of Buffalo, who donated to the governor’s campaign. 

“The beneficiary company has undergone significant changes to its corporate structure, business model and industry environment since the beginning of the project,” an ESD spokeswoman said.

“These changes, as well as other events such as the imposition of international tariffs and Tesla’s decision to partner with Panasonic at the site, have all impacted the nature of the project’s products, production layout, distribution strategy and employment profile, which still continue to evolve.”

ESD also said that “the overall job commitment of 1,460 jobs … was not reduced.”

By 2016, Tesla, led by Musk, acquired his cousin’s company, SolarCity, for $2.6 billion. That deal angered some shareholders, who filed a class action lawsuit against Musk and the company’s board alleging that they breached their fiduciary responsibilities.

By December 2016, Tesla partnered with Panasonic, and Silevo’s Triex technology seemed to have finally hit its dead end.

Since then, Tesla has continued to struggle financially.

It reported losing $702 million for the first quarter of this year, as sales of its electric cars slumped and the ramp up of the solar roof made in Buffalo got delayed again.

In addition, Tesla reported more bleak news for its solar installations. which fell by 38 percent from a year ago. A senior analyst with Wood Mackenzie’s Power & Renewables believes the downturn will drop Tesla to third place in the residential solar installer market.

Earlier this week Tesla announced in a New York Times article that it was slashing the cost of its solar panels, while having customers purchase the products direct from their website. Tesla on Thursday also announced that it plans to raise $2 billion in capital by selling common stock shares and convertible notes, even though Musk noted during his earnings call last week that he did not think raising more capital should be a substitute for making Tesla operate more effectively.

Nonetheless, Musk kept a bright outlook of the Buffalo factory and the solar roof technology during the April 24 earnings call for the first quarter. He said Tesla is on its third version of the design of the solar roof and continues to test its durability.

“The rate at which you can iterate on Solar Roof is necessarily slowed down according to the rate which you can do accelerated aging on the roof and we want installation process to be simple and easy,” Musk said.

“I was actually just at the Tesla Buffalo factory a few weeks ago. I was pretty impressed with the team and we’re looking forward to scaling that up significantly through the balance of this year and next.”

Job targets

Tesla very well may be meeting its job target this year of 500 employees, but neither the company nor the state has ever provided any supporting documentation to show that it is.

The only official job data News 4 could obtain from the state was through the end of 2017, when Tesla employed 188 workers and Panasonic employed 279 workers at the facility.

The employee list obtained by News 4 shows the names of workers at the plant as of December 2018 – before Tesla laid off about 50 employees – and the number of workers on each of its four shifts.

Even less is known about the number of workers on the Panasonic side. The state does not have an agreement with Panasonic and Tesla reports that company’s job totals. Panasonic officials did not return emails seeking comment.

Musk’s bright outlook of the Buffalo plant during last week’s earning call fails to recognize the huge challenge Tesla will have in the coming year to meet the state’s job target of 1,460 employees and the sluggish progress of its widely-anticipated solar roof.

“How do we verify the numbers?” said Ortt.

“So, when you see these numbers, I would just like to know where those numbers are being derived from.”

Ortt, and state taxpayers, may soon find out.

The audit by the state comptroller’s office will take a hard look at the Riverbend project.

In addition, Empire State Development (ESD) said that it will do its due diligence to check the job data that Tesla provides in the coming weeks.

For example, ESD has a memorandum of understanding with the state Department of Labor under which ESD can request actual employment data from the unemployment insurance program, which is confidential information. ESD can then internally use the confidential data to cross-check the reported job totals.

ESD also said that “through ongoing visits and active work with Tesla and Panasonic, the state will continue to monitor Tesla to verify their efforts to meet their employment goals.” 

Cuomo, and his lieutenant governor Kathy Hochul, said this month that the state will collect the $41.2 million penalty if the job targets are not met.

Some critics have already thrown in the towel.

“The public really at this point shouldn’t expect much because this deal is belly up,” Kaehny said.

“We’re the losers here, and the people in Buffalo are the losers here because this is money that could have been spent on surefire solutions.”

Tesla’s complete statement to WIVB:

“In January, when WIVB first raised the question of headcount to Tesla, we were transparent and shared our headcount for the period in question (December 2018), at which point there were approximately 400 employees onsite, in addition to Panasonic employees. We had far more jobs in December than they are alleging, and we expect to meet our statewide hiring requirements when we report our job numbers in the coming weeks. Despite repeatedly presenting them with the facts about our headcount at Buffalo, WIVB is knowingly reporting information to the public they have admitted to Tesla is incomplete. It is clear that WIVB is not interested reporting the facts to viewers and is instead apparently intent on publishing something that is patently false.”

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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