Strike Shuts VW's Mexico Beetle Plant

PUEBLA, Mexico August 18, 2004; Chris Aspin writing for Reuters reported that German auto giant Volkswagen AG's plant in Mexico, the only one in the world producing the popular New Beetle, was shut down by striking workers on Wednesday in a pay dispute.

Thousands of union workers walked out on Wednesday morning after earlier rejecting a 4.45 percent salary increase offered by the company.

Nearly 10,000 unionized employees work at the Volkswagen plant in Mexico's central city of Puebla, which produces several models, including the New Beetle that is sold in around 80 countries.

The plant was also the last manufacturing site of the classic "Love Bug" Beetle before Volkswagen stopped building the legendary vehicle last year.

As the strike began, chanting workers unfurled a huge red, white and black union banner and hung it on the gate at the main entrance to the factory. Four women dressed in red and black set up a picket line to prevent people from entering.

"What they are giving us is not fair," said Juan Castro, a 45-year-old mechanic who has worked here for 23 years and says he earns 220 pesos (about $20) a day.

The last strike at the plant was in 2001 and lasted for 18 days before the two sides finally reached an agreement.

Union leader Jose Luis Rodriguez said negotiations on the latest pay deal would resume on Wednesday afternoon. He said the union's demand of an 8.5 percent wage increase was "still negotiable" and he hoped for a quick resolution.

"This is not a strike that suits either side," he told reporters. "We intend to resolve this as soon as possible."

Volkswagen offered a 4.45 percent wage rise and other benefits that would improve workers' overall package by 5.4 percent. It was rejected by about 60 percent of union members at an early morning meeting.

The plant plans to produce about 235,000 vehicles this year. Its output has slipped in recent years because of a decline in export demand, especially from the United States, and it now produces vehicles just four days a week.

Company spokesman Thomas Karig said the Puebla plant currently produces about 1,300 vehicles per working day, although he declined to estimate the financial impact of the strike.

In the first half of the year, Volkswagen exported about 85,000 vehicles from its Mexican plant, making it the third biggest auto exporter in the country