VW Mexico Union Seeks Shorter Work Week To Avoid Layoffs

MEXICO CITY July 4, 2003;Amy Guthrie writing for Dow Jones reported that workers at Volkswagen AG's Mexico plant asked the German automaker Friday to consider shortening their work week by one day in order to avoid roughly 2,000 layoffs. "We're talking to the company today to see if we can change their position. Right now the only thing the company is considering is layoffs," said Jose Luis Rodriguez, head of the 10,000-member Volkswagen union in Mexico.

The proposal to work four days a week has the overwhelming support of the plant's workers, close to 90% of whom voted in favor at a packed assembly meeting Thursday evening.

Rodriguez said in a phone interview that he expects Volkswagen to respond to the union's proposal by Monday afternoon.

Workers rejected a similar plan last year that would have saved over 1,000 jobs at the plant amid sagging sales.

"Now the dynamics are different," said Rodriguez.

Volkswagen announced Monday that it would cut production at its Puebla facility by 23% starting in August to adjust for lower-than-expected sales of its New Beetle and Jetta models in overseas markets.

More than 80% of the vehicles produced in the central Mexico plant are for export. Volkswagen shipped 103,379 vehicles from Mexico during the first five months of the year, or nearly 13% less than in the same period of 2002.

Production at the plant was down an even sharper 19% during the period to 122, 800 vehicles, in part due to Volkswagen's decision to extend its paid Easter holidays by one week to reduce inventories.

Volkswagen is the fourth-biggest manufacturer of vehicles in Mexico, where the company has had a plant since 1967. It's also one of the biggest employers in the sector, which accounts for about 1.4% of Mexico's workforce.

News of the production cut has already reverberated throughout the sector. Autoparts companies surveyed this week by industrial chamber Canacintra said they expect to shed about 6,000 jobs as a result of the Volkswagen trimming.

Volkswagen also recently announced that it will halt production later this year of its original Beetle, which is still assembled at the Puebla plant exclusively for the Mexican market. The elimination of that production line will affect about 350 employees. -By Amy Guthrie, Dow Jones Newswires; (5255) 5080-3453;