VW Gives in to Mexican Union

…or what a well organized strike can do. German manufacturer Volkswagen announced yesterday that the company’s management reached an agreement late on Saturday to give workers at its Mexican facility, in the central state of Puebla, a 3 percent raise, while the union agreed to resume work, union official Victor Jaime Cervantes said.

"Labor costs at Volkswagen in Puebla continue to rise while the rest of the auto industry in Mexico did not give raises this year. This obliges the company to reinforce measures to improve production," Volkswagen said in a statement quoted by Autonews.

According to USB analysts, the strike costs Volkswagen some 1,000 to 1,200 vehicles a day because of the work stoppage at the factory. Volkswagen produces here Jettas and New Beetles for both the domestic and export markets. The plant is already working with a reduced output of some 25 percent ever since last month, due to economic conditions..

The strike began on August 19, after negotiations over the 3 percent wage increase failed. Workers at the plant did not engage in violent actions, like we have seen in SsangYonk’s case, but limited themselves at hanging banners painted in red and black at every entrances to the factory.

Initially, Volkswagen said it is willing to give workers a 1 percent raise and a bonus of 5,500 peso ($425), adding that the strike would not affect their inventories dramatically. After the initial stalemate, talks resumed at the plant between the two parties on Friday, with the management hoping to convince the strikers to restart production.