Labor disputes cause walk-out in Tesla factory

© Max Whittaker
Conflicts between a subcontracting company and a union resulted in over 300 workers walking out of the Tesla Gigafactory in Nevada. With over a billion dollars in tax breaks riding on the factory, a strike could mean trouble for the car manufacturer.

The crux of the problem seems to be with Brycon Corp, an out-of-state and non-union construction contractor that has been bringing lower paid workers to the site. Eloy Jara, a market representative for the Local Laborers 169 told This is Reno that “[Brycon pays] $12-14 per hour, so that’s the reason for the strike.

For others, the number of out-of-state contractors working on the construction site is the issue. "We are trying to call attention to the fact that they are using $1.4 billion in Nevada money to staff jobs with workers from New Mexico and Arizona," said Russ James, business development specialist with the Painters Union.

Tesla’s 10-million-square-foot Gigafactory is being built using the Nevada legislature’s gift of $1.4 billion in tax breaks, free land, and other benefits. In exchange for that, the SB 1 bill required that half of Tesla’s estimated 3,000 construction workers and 6,500 of the future employees at the factory be Nevada residents. According to workers on the site, Tesla isn’t holding up its end of the deal.

"We know they're working for Brycon, and driving around the job site we see a lot of license plates from Arizona and New Mexico," Koch said to the Reno Gazette Journal. Tesla denies the accusations from the unions, saying “more than 50 percent of the workers used by this contractor and more than 75 percent of the entire Gigafactory workforce are Nevada residents, demonstrating the project’s strong commitment to Nevada."

But Tesla has already distanced itself from the protests and blamed has blamed its subcontractors for the disputes.

The day started with about 400 construction workers in total at the gigafactory, but ended with only 60 Brycon employees working on the site. In an emailed statement, Tesla attempted to explain the protest as a spat between a union and sub-contracts, saying “Today’s activity stems from the local Carpenters Union protesting against one of the third-party construction contractors that Tesla is using,” adding, “Their issue is not with how Tesla treats its workers.”

The validity of Tesla’s claims could not be verified. In January, the Reno Gazette Journal reported that, although Tesla was ahead of schedule, they had not kept up with their employment projections. Telsa estimated that they would hire 700 permanent employees by September 30th, 2015. In reality, they had hired 82.

Regardless, union leaders hint that this could just be the beginning of protests. Local union leader Todd Koch told Fortune, “We’re not sure if the protest is going to continue at the job site tomorrow or not.” Koch, the president of the Building and Construction Trades Council of Northern Nevada, alluded to this being a bigger problem than Tesla realized. “We’re considering our options,” he explained, “But I can say, this is just the opening salvo and we’re not going to give up. Tesla hasn’t heard the last from us.

The gigafactory is the cornerstone to Tesla’s plans to lower battery costs and produce a cheaper, all-electric car. Whether or not their progress will be slowed down remains to be seen, but one worker seeks a quick resolution, saying "I'm hoping this doesn't go on again tomorrow."