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Tesla layoffs are good for business

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elon muskTesla CEO Elon Musk.Joe Skipper / Reuters
  • Tesla announced that it would lay off 3,000 workers — 7% of its workforce.
  • Tesla’s headcount is bloated relative to its production — it’s about time the company started cutting.
  • CEO Elon Musk, with profits in his sights, is finally running Tesla like a real car company.

Tesla announced Friday, via a company email, that it would lay off 3,000 workers, about 7% of its headcount. Tesla also shed 9,000 workers last year.

It’s about time.

For years, auto-industry veterans have commented on how Tesla’s staffing levels are excessive, relative to its production and sales numbers. A company that will likely sell something in the ballpark of 250,000 vehicles in 2018 and that runs a single factory in California can’t support 45,000 total employees.

On assembly line workers alone at its Fremont factory, Tesla has about twice as many people building half as many vehicles as the same plant cranked out in the 1980s, when it was known as NUMMI and was a joint venture between General Motors and Toyota. The level of efficiency is notably bad and couldn’t last, especially given Tesla’s profitability objectives going forward.

Read more: Elon Musk says he’s firing more than 3,000 Tesla staff because of pressure on profits and Model 3 production challenges

From the wording of Musk’s email, it sounds like Tesla is concentrating on shedding contractor bloat, which is an obvious tactic in the car business if you’re trying to drastically ramp up a less-expensive vehicle than you’ve been selling. There’s no $35,000 Model 3 yet, and the car that Tesla has been making is going for around $50,000 — not bad, except that the company’s average transaction price on its Model S and Model X luxury vehicles is twice that.

The oldest trick in the CEO playbook

tesla factoryTesla’s factory.Tesla

Tesla shares slid of Friday, but that was because Musk telegraphed weaker profits on Model 3 than some investors had expected. Those investors were solidly in the fantasy camp, however. Smaller sedans make less money than big luxury sedans and SUVs, end of story. Tesla will report fourth-quarter and full-year 2018 financial results next month and is expected to post in the black for a second consecutive quarter — but the profit probably won’t be a high as it was in the third quarter of 2018.

Usually, a head-count chop delights Wall Street. It’s the oldest trick in the CEO book. And in the auto industry, it’s typically greeted with an initial round of concern — GM caught some flak when it announced last year that it would idle five factories. But once the numbers are crunched, the industrial logic of doing the same or more work with less human resources is hard to argue with in a business that burns cash at a terrifying rate.

I’ve been saying for a few years now that the real reckoning for Tesla investors would come when investors figured out that it’s a car company, not a tech company that just happens to operate a car plant of over five million square feet that’s full of million-dollar robots and workers wielding power tools.

In this framework, Tesla has been a model of inefficiency — the worst run carmaker in the industry, from a production standpoint. 

That was OK when Tesla was rising to its current manufacturing plateau. In fact, the efficiency was rewarded. It was also necessary. Tesla would have gained nothing by holding back on its Model 3 ramp, so the drunken sailor spending was warranted.

This attitude toward capital isn’t going to fly anymore. Musk knows it. And he’s finally starting to run Tesla like a real car company.

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More groups join in support of women in STEM program at Carleton

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OTTAWA — Major companies and government partners are lending their support to Carleton University’s newly established Women in Engineering and Information Technology Program.

The list of supporters includes Mississauga-based construction company EllisDon.

The latest to announce their support for the program also include BlackBerry QNX, CIRA (Canadian Internet Registration Authority), Ericsson, Nokia, Solace, Trend Micro, the Canadian Nuclear Safety Commission, CGI, Gastops, Leonardo DRS, Lockheed Martin Canada, Amdocs and Ross.

The program is officially set to launch this September.

It is being led by Carleton’s Faculty of Engineering and Design with the goal of establishing meaningful partnerships in support of women in STEM.  

The program will host events for women students to build relationships with industry and government partners, create mentorship opportunities, as well as establish a special fund to support allies at Carleton in meeting equity, diversity and inclusion goals.

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VR tech to revolutionize commercial driver training

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Serious Labs seems to have found a way from tragedy to triumph? The Edmonton-based firm designs and manufactures virtual reality simulators to standardize training programs for operators of heavy equipment such as aerial lifts, cranes, forklifts, and commercial trucks. These simulators enable operators to acquire and practice operational skills for the job safety and efficiency in a risk-free virtual environment so they can work more safely and efficiently.

The 2018 Humboldt bus catastrophe sent shock waves across the industry. The tragedy highlighted the need for standardized commercial driver training and testing. It also contributed to the acceleration of the federal government implementing a Mandatory Entry-Level Training (MELT) program for Class 1 & 2 drivers currently being adopted across Canada. MELT is a much more rigorous standard that promotes safety and in-depth practice for new drivers.

Enter Serious Labs. By proposing to harness the power of virtual reality (VR), Serious Labs has earned considerable funding to develop a VR commercial truck driving simulator.

The Government of Alberta has awarded $1 million, and Emissions Reduction Alberta (ERA) is contributing an additional $2 million for the simulator development. Commercial deployment is estimated to begin in 2024, with the simulator to be made available across Canada and the United States, and with the Alberta Motor Transport Association (AMTA) helping to provide simulator tests to certify that driver trainees have attained the appropriate standard. West Tech Report recently took the opportunity to chat with Serious Labs CEO, Jim Colvin, about the environmental and labour benefits of VR Driver Training, as well as the unique way that Colvin went from angel investor to CEO of the company.

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Next-Gen Tech Company Pops on New Cover Detection Test

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While the world comes out of the initial stages of the pandemic, COVID-19 will be continue to be a threat for some time to come. Companies, such as Zen Graphene, are working on ways to detect the virus and its variants and are on the forefronts of technology.

Nanotechnology firm ZEN Graphene Solutions Ltd. (TSX-Venture:ZEN) (OTCPK:ZENYF), is working to develop technology to help detect the COVID-19 virus and its variants. The firm signed an exclusive agreement with McMaster University to be the global commercializing partner for a newly developed aptamer-based, SARS-CoV-2 rapid detection technology.

This patent-pending technology uses clinical samples from patients and was funded by the Canadian Institutes of Health Research. The test is considered extremely accurate, scalable, saliva-based, affordable, and provides results in under 10 minutes.

Shares were trading up over 5% to $3.07 in early afternoon trade.

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