Tesla dispute costs SpaceX state grant

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WASHINGTON — A dispute over the reopening of a Tesla automobile factory has resulted in a California labor board rejecting a grant application by another of Elon Musk’s companies, SpaceX.

The Employment Training Panel, a California program to fund employee training, considered a $655,500 application by SpaceX to train 900 existing employees and 300 new employees. The panel’s staff, in a description about the proposal, recommended the panel approve it at its May 15 meeting.

However, panel members, which include representatives from industry and organized labor, raised questions about the suitability of providing state funding to SpaceX. They also mentioned threats by Musk to move Tesla, the electric automobile company he is also chief executive of, out of state.

Musk made the threat May 9 amid a dispute with officials in Alameda County, California, where Tesla has a major factory in the city of Fremont. Tesla moved to restart production at the factory without the approval of county officials, who had imposed a stay-at-home order in March because of the coronavirus pandemic.

“Frankly, this is the final straw. Tesla will now move its HQ and future programs to Texas/Nevada immediately,” Musk tweeted. “If we even retain Fremont manufacturing activity at all, it will be dependent on how Tesla is treated in the future.”

While Musk made no mention of SpaceX in his comments, members of the panel said his threats to move Tesla out of California made it difficult for them to support a grant to SpaceX given that both are led by Musk. Five of the panel’s eight members voted to reject the proposal.

Before the vote, members of labor organizations in the state asked the panel to reject the SpaceX application. “Musk has been the recipient of billions of public dollars over the past decade for several of his companies, and he has used those dollars to run businesses that tamp down on the collective bargaining rights of employees and disregard the safety of workers,” they wrote in a May 14 letter. That letter did not mention specific issues with SpaceX, but did mention Tesla’s plans to reopen its Fremont plant without county approval.

Labor organizations applauded the panel’s decision to reject the SpaceX application. “You absolutely love to see it. California will NOT be subsidizing Elon Musk’s SpaceX,” the California Labor Federation tweeted after the panel’s decision.

The panel’s decision is unlikely to have a material impact on SpaceX’s plans. The company said it would contribute $1.1 million to the total cost of the training for which it sought the $655,500 in state funding. The company received $177,000 in funds from the panel in 2018 for training activities.

Part of the proposal involved retraining 600 technicians, 200 engineers and 100 managers and supervisors, while it also sought to train 200 new technicians and 100 new engineers. Those employees would work on both SpaceX’s Starlink constellation and its Starship reusable launch system.

The proposal did not detail what work those employees, all located in California, would perform. Much of the work on Starlink satellites is done at a SpaceX facility in the Seattle suburb of Redmond, Washington, while Starship assembly and testing is underway at a facility in Boca Chica, Texas, near Brownsville. SpaceX did reach an agreement with Los Angeles officials in February that revived plans to turn vacant property at the Port of Los Angeles into a launch vehicle manufacturing facility.

Although Tesla has been enmeshed in controversy about whether and how it could reopen its factory in Fremont, SpaceX has kept its Hawthorne factory open given the federal government’s classification of aerospace manufacturing as a critical industry. SpaceX executives said they have taken various measures for worker safety amid the pandemic.

“We are nothing if our employees are not in great health and able to work,” Gwynne Shotwell, president and chief operating officer of SpaceX, said during a May 1 NASA briefing about the upcoming Demo-2 commercial crew mission. More than half the company’s engineering staff is teleworking, while those working on site are using personal protective equipment and social distancing. “The facility is almost always very clean,” she said. “It’s even cleaner these days.”

While SpaceX has made no threats to leave California, at least one elected official in another state is making a pitch for the company to move. In a May 15 letter to Musk, Houston Mayor Sylvester Turner argued his city would be an ideal home for both SpaceX and Tesla.

“As the only U.S. market that can immediately meet the production needs of Tesla and SpaceX, Houston provides a single solution for your operations,” Turner wrote.