No Pact at Volkswagen Plant in Mexico

Workers at Volkswagen’s only plant in Mexico failed to reach agreement with the German auto maker on a new contract Sunday, pushing a strike into its second day and suspending production of the New Beetle model.

About 12,500 unionized workers demanding a 21% pay increase walked out at the Puebla plant Saturday. Workers expect an offer from the company today.

The plant in Puebla is the only Volkswagen facility worldwide to produce the New Beetle. It also produces Volkswagen’s classic Beetle, the Jetta and the Golf Cabrio.

“It was proposed that [today] at [noon Mexico Central Time], we will resume negotiations, and there will be a serious offer from the company,” Jose Luis Rodriguez, who heads the union, said after emerging from negotiations Sunday.

“Obviously, if they provide us with a serious offer, we shall have to treat it in kind,” Rodriguez said.

The plant, which had record output of 425,703 vehicles last year, employs about 16,000 workers. About 80% of the cars Volkswagen produces in Puebla, a city about 40 miles southeast of Mexico City, are exported.

Workers at the plant initially demanded a 30% pay increase but reduced the figure to 21%.

Volkswagen rejected the wage demands, saying they were impossible to meet, especially with the sharp slowdown in the Mexican economy.

Workers said they were willing to negotiate to end the strike, which they claimed was costing Volkswagen $30 million a day in potential revenue from the cars that would have been produced.