Elon Musk has again thrust himself and electric automaker Tesla Motors under the looking glass by blatantly defying local California health authorities directives concerning conditions for restarting production operations at its U.S. manufacturing facility.

In its reporting, The Wall Street Journal depicted this move as: “quickly becoming one of the highest-profile showdowns between business and government about reopening after weeks of sheltering in place.”Tesla Motors

Mr. Musk took to Twitter yesterday to declare that: “Tesla is restarting production today against Alameda County rules. I will be on the line with everyone else. If anyone is arrested, I ask that it only be me.

Musk had previously defiantly described the restrictions aimed at slowing the spread of virus as “fascist”, urging governments to ease restrictions.

Our readers might recall that in the days leading up to the March 23 suspension of operations, Musk was equally vocal in challenging the authority of local and state agencies to mandate manufacturing suspensions. Tesla was subsequently the last U.S. automaker to suspend manufacturing operations.

In the days leading up to this week’s confrontation, Musk similarly took to social media threatening to move either the company’s corporate headquarters or all production out of California. That threat might have been a bit hollow since the automaker already announced intent to establish a second incremental U.S. based manufacturing facility, likely to be located in a Midwest location.

This past weekend, a reported lawsuit was filed in federal court against the County that has blocked the plant reopening, arguing that Alameda County health officials had overstepped power from a prior subsequent order from the Governor, calling for manufacturers to begin resumption of phased operations.

Company officials indicated that a 38-page plan was previously submitted to local health authorities outlining prescribed steps and were modeled from learnings derived in the company’s newly opened Shanghai production facility that had to suspend operations based on a government mandate.

This morning’s headlines indicate that the company’s Fremont California workforce are indeed back on the job and now, both U.S. Treasury Secretary Steven Mnuchin and President Trump have weighed in to public support Musk’s defiance.

California State and local Alameda County officials continue to seek out a less confrontational approach in assuring that workers and work procedures are adequately addressed “beyond Minimum Basic Operations” which was previously communicated to the company.

 

Supply Chain Matters Perspective

One has to speculate why such matters could not be resolved in behind closed doors among Musk and public safety officials.

Such high visibility extremist views publicly shared by the company’s founder and CEO are not new and have made for many prior headlines across general media as well as Supply Chain Matters.

During the rather challenging Model 3 production ramp-up crisis over the past two years, Musk’s singular statements regarding aggressive production goals did not add to his creditability, both internally and externally.

Tesla was finally able to meet its Model 3 monthly production volumes after the Shanghai manufacturing facility quickly ramped-up offshore production in just about a year’s time. Any regulatory hurdles seemed to be quickly resolved.

Neither was Musk’s taking to Twitter in August 2018 to announce that Tesla would be privatized. The U.S. Securities and Exchange Commission (SEC) subsequently announced a mutually agreed settlement to a pending securities fraud charge brought by the regulator against Musk and Tesla. The settlements resulted  in comprehensive corporate governance and other reforms at Tesla—including Musk’s removal as Chairman of the Tesla board—and the payment by Musk and Tesla of financial penalties.

This week, other U.S. and global based automakers are each in the process for resuming production operations among U.S. manufacturing facilities. One can presume that that development may have added to Musk’s frustrations. However, it would seem that each of these automakers have worked with local and state agencies on coordinated plans of measured production volumes and ensuring that there are  safer facilities, worker social distancing and hygiene safeguards in place.

A further reality is that auto and truck focused supply chains are not immune to ongoing disruptions amid this continuing global pandemic.

From our lens, no other automotive senior executive, and for that matter, high profile industry executive has taken such a public action of confrontation against government regulators in the backdrop of this ongoing pandemic. I

If Tesla’s California factory were to encounter, a subsequent virus outbreak among the company’s on-site workforce, Musk’s actions risk a worker and consumer backlash similar to that of Amazon’s negative visibility concerning caring for worker and public health safety. That applies to the company’s Nevada based Gigafactory as well. The company’s production workforce has made many prior sacrifices in helping the automaker to achieve Model 3 monthly production goals in spite of clear challenges. They would likely now seek assurances that this auto maker has their safety and health needs top of mind in resuming a controlled phase-in of production.

If Musk’s motivations are selling and delivering more cars, a corporate and supply chain social responsibility risk comes into question, not to mention Tesla being perceived as tone-deaf to the severe economic consequences being felt by consumers.

These are not normal times, and we all should seek level-headiness from our government and corporate leaders. That includes sensitivities to public health and worker safety during this extraordinary time. Manufacturing workers will do their part in producing and delivering quality products. They should expect that corporate leaders will do their part as-well.

 

Bob Ferrari

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