Tesla is “building the plane as we’re flying it” they were told

BUFFALO, N.Y. (WIVB) – A group of former Tesla workers in Buffalo are breaking their silence about problems they witnessed at the plant, including what they termed as “a lack of urgency” shown by management to improve operations.

In exclusive interviews with News 4 Investigates, former workers described a gloomy picture of the Tesla’s Gigafactory II plant in Buffalo, formally known as Solar City.

They said taxpayer-funded equipment constantly broke down that resulted in production goals never being met and a work atmosphere in which some employees spent more time on personal cell phones than their jobs.

When one of the former workers raised these concerns with management, he said he was told that Tesla is trying to “build the plane as we’re trying to fly it,” and that hiccups are part of being a start-up.

“It’s a wake-up call,” said Dale Witherell, who was among the 50 employees that Tesla laid off in Buffalo, part of a larger 7 percent reduction of its global workforce.

“I don’t know how Gigafactory II has been going on this long without any checks and balances or any government officials or politicians actually monitoring or watching and holding them to some standards.”

Tesla’s fourth quarter financial results back up some of the problems raised by the employees, as the solar side of Tesla continues to struggle and play second fiddle to the company’s electric cars.

CEO Elon Musk, again, delayed the production ramp up of the energy-producing Solar Roof made at the Buffalo factory. Tesla officials have said the delay has more to do with testing the Solar Roof for safety and durability that is comparable to conventional shingle roofs.

At the same time, Tesla recently unveiled to workers a new product it plans to manufacture in Buffalo, to which company officials declined to comment about.

The layoffs and the slow pace of the solar business come at a critical time for Tesla.

The plant at Riverbend in Buffalo was built and equipped with $750 million in taxpayer funds – the centerpiece of Gov. Andrew Cuomo’s Buffalo Billion initiative. As part of the deal, Tesla must employ 1,460 workers at the facility by April 2020 or face $41.2 million in state penalties.

Tesla and state officials have said the plant employs 800 workers – an even split between Tesla and Panasonic, which shares the facility.

But former workers dispute Tesla’s employment numbers.

A Tesla spokeswoman characterized some of the statements made by the former employees as untrue and said the company has always been upfront about the Solar Roof and its operations

“As we’ve said, Solar Roof is a product that needs to last decades, and therefore has a long development cycle, and we’ve been thoughtful and deliberate as we gradually ramped production,” the spokeswoman said.

“We understand that job cuts like those we announced two weeks ago are never easy, and we are grateful to everyone who departed for their contributions to Tesla’s mission.”

Sluggish solar

Tesla reported a 21 percent decrease in installed solar systems for the fourth quarter.

Company officials said in the quarterly update letter that transitioning the sales force to sell both cars and solar systems has been a challenge. For the second time, the ramp up of the Solar Roof got delayed.

“We plan to ramp up the production of Solar Roof with significantly improved manufacturing capabilities during 2019, based on the design iterations and testing underway,” Tesla stated in its quarterly update letter.

“In the meantime, we are continuing to install Solar Roofs at a slow pace to gather further learnings from our design changes, as well as about the viability of our installation processes by implementing them in areas around the U.S. that are experiencing inclement weather.”

The workers interviewed by News 4 said they saw the slow pace.

Both Witherell and Dennis Scott, another worker laid off in January, said the lack of discipline was unfamiliar to them based off of other workplaces.

For example, both said that employees would watch movies on their cell phones while on the clock.

“We’re paid for 12 hours to work, not watch movies,” Scott said.

Witherell added: “During my employment there, nothing improved during the entire employment as far as production.”

“Some weeks we produced enough solar modules for zero homes and probably the best I saw was maybe four homes in a week, so that is alarmingly scary to obviously be a part of a company who doesn’t have any sense of urgency to tackle these issues and get them working correctly,” Witherell said.

Scott said his experiences there have him questioning the massive state investment that Gov. Cuomo made on behalf of taxpayers.

“That $750 million could have been spread out a lot better to a lot of other companies to stay here in Buffalo than sinking it into one big company,” Scott said.

Tesla said these are the opinions of only a few of the hundreds of workers employed there and do not reflect what really happens inside the plant. Downtimes are planned for upgrades and maintenance, Tesla said, and sometimes new equipment needs to be installed that can slow down the assembly line.

The company said cell phone use is restricted to business purposes only and violators are held accountable by supervisors.

‘Dog and pony show’

In November, Tesla gave the media its first glimpse inside the Buffalo factory.

Employees described it as a “dog and pony” show that was planned by Tesla for over a month. They said Tesla had walls built to hide unused equipment and blocked off large areas.

The tour was an extremely controlled event, with the company picking employees to speak with reporters and not letting cameras inside. Footage recorded by Tesla was provided to television outlets like News 4.

“It was all fabricated for show,” Witherell said.

“There was no actual production that day so some of the teams in their specific area were instructed to make sure they looked busy and they actually were working on the same module over and over again.”

Around the time of the tour, Tesla and state officials announced that 800 people work at the plant; 400 by Tesla and 400 by Panasonic, which manufactures solar cells there.

Some workers disputed that Tesla employs 400 people.

“If you took all of our shifts, there are about 50 people, maybe 60 people at best per shift, there are four shifts,” Scott said.

“You do the math. Are you going to tell me there are 200 people up in the front office?”

News 4 Investigates requested through the Freedom of Information law the job numbers at Tesla’s Buffalo plant

After three months passed without any documents, News 4 appealed to the state. Only then did the state provide two sheets of paper that showed employment numbers by quarter for both Tesla and Panasonic, including workers employed elsewhere in the state by Tesla. The documents did not state how the state insures the job data is accurate.

But the data only showed job numbers for each quarter through the end of 2017, when Tesla employed 188 workers and Panasonic employed 279 workers at the facility.

When News 4 asked why the job numbers did not reflect what Tesla and the state had been reporting in late 2018, a state official said they did not have the data.

“Tesla is required to provide employee numbers annually (broken down by quarter).  The 2018 numbers will not be reported until early 2019,” said Patricia Bucklin, vice president of Administration for Fuller Management Corporation, by email.

Tesla refused to provide News 4 with the 2018 job data – information that is important because Tesla can face financial penalties for failing to meet job goals.

New product or the end nearing?

Tesla did post profits in the final two quarters of the year, which is the first time the 15-year-old company posted consecutive quarterly profits. Tesla also increased its cash on hand to $3.7 billion, which it needs to cover $920 million in debt due this March.

But Tesla still lost $1 billion for all of 2018, and its fourth-quarter profit was lower than what analysts had expected.

As a result, in January, the company laid off 7 percent of its global workforce, including at least 50 in Buffalo, to reduce costs at a time when it wants to boost production of both its Model 3 cars and its Solar Roof technology built in Buffalo. (Tesla never released the exact number of employees laid off in Buffalo.)

Sales of Tesla’s electric cars continue to drive its revenue, but Tesla has struggled to produce them fast enough to meet the demand. In addition, Musk has promised to produce an electric car for the masses at a $35,000 price point, but Tesla has failed to do so.

While Tesla releases a lot of details about its electric cars, the opposite can be said about the inner-workings of the Buffalo plant.

Musk did not mention the Buffalo solar plant during his Jan. 30 earnings call. Instead, he said the goals are to increase car sales by 50 percent and he teased the possibility of launching new models this year.

There was no mention of the potential of manufacturing a new product in Buffalo, but former Tesla employees said that managers in Buffalo recently showed off a new product. One described it as energy storage battery systems for utilities and commercial businesses.

“We came in for the start of one of our shifts about a month ago – it was some time in December – and the plant manager was there and unveiled a curtain over a large container,” Witherell said.

“He said the goal was in June to be having a line at Gigafactory II producing [the new product]. I believe they are trying to do whatever they can because of the failing solar modules.”

Tesla declined to comment on the new product.

Even with a potential new product line, the former Tesla workers doubt the company’s solar business will ever thrive. They said it was evident that the production of the electric cars trumps everything else.

“The state of the Gigafactory II is in, I believe, a spot where it can no longer recover from,” Witherell said.

“It’s a terrible loss for obviously the taxpayers of New York state and obviously the City of Buffalo.”