Strike ends at VW Mexico after pay deal

PUEBLA, Mexico, Aug 21, 2004; Oliver Ellrodt writing for Reuters reported that Union leaders and management at Volkswagen AG's Mexico plant agreed a new pay deal on Saturday and ended a strike which shut down the German auto maker's sole North American factory for three days.

Union leader Jose Luis Rodriguez told reporters the company improved its salary offer and also boosted benefits to union workers at Volkswagen's plant in Puebla, about 120 km (75 miles) east of Mexico City.

"Concretely, they have given us a 4.5 percent increase direct to salaries and another 1.6 percent hike in benefits," Rodriguez said after the two sides clinched an accord at the labor ministry in Mexico City.

Union members abandoned picket lines and pulled down red, black and white banners -- in place to denote a strike -- hanging on fences at the entrances to the Puebla plant, the only place in the world where the popular New Beetle is made.

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

Production was set to restart at the factory from Monday, Rodriguez said, as the weekend is used for maintenance.

EXPORTED TO 80 COUNTRIES

The strike only affected output on two days, part of Wednesday and all Thursday.

Car production lines, including that for the New Beetle which is exported to 80 countries, are only currently cranked up Monday to Thursday.

Almost 10,000 workers walked out of the plant in the cider-making city of Puebla on Wednesday after rejecting a 4.45 percent salary increase offered by the company.

The union's initial demands were for a hike of 8.5 percent plus more benefits, although both sides always said they wanted a quick end to the shut down.

Rank-and-file union members handed their leaders power to clinch a binding deal with management in talks at the labor ministry. Mexico's government often brokers pay disputes to avert or end strikes.

Spokesmen for Volkswagen Mexico, which makes about 1,300 vehicles per working day, were not available for comment.

Workers last year agreed to a four-day production week to avoid job cuts.

The last strike at the plant was in 2001 and lasted for 18 days before the two sides finally reached a deal that gave workers a 10 percent pay rise.

The Puebla 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.

Volkswagen is currently the third biggest auto exporter in the country after General Motors Corp. and DaimlerChrysler AG.