MEXICO CITY : August 18, 2008 - Volkswagen AG headed off a strike at its plant in Puebla, southeastern Mexico, over the weekend by agreeing to a 5.4 percent increase in wages and other benefits for its unionized workers.


The Independent Union of Volkswagen Workers had threatened to recommend its members to stop work at 11a.m. local time on Monday, if they failed to reach agreement with the company.

In addition to the 5.4 percent increase, the workers accepted an increase of 1,227 pesos ($120 U.S.) per year in grocery vouchers and an extra day in the calculation of their Christmas bonus.

The union's initial demand was a 13 percent increase in wages and benefits, a company spokesman at the Volkswagen plant in Puebla told Automotive News.

Located 75 miles southeast of Mexico City, the plant is the only one Volkswagen has in North America, although it plans to build another in Chattanooga, Tenn. The Chattanooga plant is scheduled to start production in 2011.

Strikers stopped production at the plant for five days in 2006 to press their demands. However, last year a strike was avoided after the union accepted a 4.35 percent wage and benefits hike plus another 111 pesos (about $10 at the time) per month in grocery vouchers.

Volkswagen assembled 264,884 passenger cars at the Puebla complex from January through July, 22 percent more than in the same period in 2007.

The company exported 222,029 units, or 83 percent of the total.

According to Volkswagen, the plant produced 117,635 Jettas, known as Boras in Mexico, 65,168 SportWagens, 47,866 former generation Jettas and 34,215 New Beetles.

The Puebla complex has a capacity of 450,000 vehicles a year. It employs 11,000 hourly workers out of a total work force of 16,000.

[Source : Automotive News .. sub req.]