VW, Union End Mexico Strike

Volkswagen and Mexican union leaders Wednesday reached a wage deal to end a 19-day strike that halted production at the only factory making the German auto maker’s popular New Beetle.

After a marathon negotiating session, the two sides struck a pre-dawn accord that gave the 12,322 union workers at Volkswagen’s Mexico plant a 10.2% wage increase.

It also included an increase in food coupon benefits equivalent to 3.5% of salary, and a 1% hike in assistance for buying school supplies for workers’ children--amounting to a 14.7% increase in workers’ overall package.

Union leader Jose Luis Rodriguez told workers at the plant in Puebla, about 60 miles east of Mexico City, that it was the best deal union negotiators could get.

“We come here perhaps not with the agreement that all of us would like,” he said to a lukewarm reception from workers. “But we come here sure that we have given it our best effort.”

The VW union initially demanded a 30% wage increase, but steadily reduced that to 16% before going into the negotiations Tuesday.

Inflation is expected to be 6% or less in Mexico this year.

VW said production was expected to resume late Wednesday.

In addition to the New Beetle, which is exported to 80 countries, the Puebla plant makes the classic Beetle, Jetta and Golf Cabrio models.

The plant, which employs 16,000 people, usually produces 8,920 cars a week, with about 80% for export, mostly to the United States. It also supplies engines to VW units in Argentina, Brazil, the Czech Republic and Spain.

VW said it had not yet calculated the effect of the strike on its financial results. Company officials said earlier the stoppage was costing about $30 million a day in lost production.

Last week, workers overwhelmingly rejected the auto maker’s offer of an 8.5% wage hike and increased benefits.

During the strike, VW said it could not meet the union’s demands because of a slowing economy in Mexico and the United States.

But VW workers said they were due a big pay increase because productivity at the Puebla plant has continued to rise, and Mexican workers at other international auto companies had won wage increases of 10% to 16% this year.