VW Mexico Strike Continues

MEXICO CITY, Aug 19, 2004; Reuters reported that the union striking for a second day at Volkswagen AG's giant plant in Mexico on Thursday said it hoped to cut a deal with management in its pay dispute by the weekend.

Union leader Jose Luis Rodriguez told Reuters that talks with management late on Wednesday did not end the deadlock, although the two sides planned to resume negotiations on Friday.

The union aimed to reach a deal with management by the weekend to pave the way for the return of workers to the plant, the only one in the world producing the popular New Beetle.

Thousands of union workers walked out on Wednesday morning at the plant in Puebla, about 120 km (75 miles) east of Mexico City, after rejecting a 4.45 percent salary increase offered by the company.

Nearly 10,000 unionized employees work at the Volkswagen factory, 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 making the legendary vehicle last year.

Striking workers, seeking a 8.5 percent wage hike, will hold talks among themselves early Friday before union chiefs go back to the negotiating table with management, Rodriguez said.

"They (the company) have not yet improved their offer, but they have said there is a possibility to improve their offer," Rodriguez said. "The stances of both sides are negotiable, but until there is an agreement the strike continues."

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

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 spokesmen were not immediately available for comment on Thursday.

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 after General Motors Corp. and DaimlerChrysler AG.