MEXICO CITY (Reuters) - Volkswagen AG and the union at its Mexican unit agreed a wage deal on Tuesday just hours before a third strike in as many years was set to start at the only plant making the German automaker's popular New Beetle model.þþUnion negotiators said after marathon talks that they had agreed to accept a 5.5 percent wage increase and a 1.5 percent increase in benefits -- substantially below the 10.2 percent raise originally sought.þþ``It's an increase within the parameters of the automobile industry,'' union leader Jose Luis Rodriguez told reporters in the early hours of Tuesday.þþ``The most important thing is that a conflict was avoided,'' he said after emerging from the negotiations held at the offices of the Labor Ministry in Mexico City. The Volkswagen de Mexico union, representing about 10,500 workers at the company's plant in Puebla, about 60 miles east of the capital, were set to strike at 11 a.m. (noon EDT) on Tuesday if a contract agreement had not been reached.þþ``We've reached an accord after five weeks of negotiations that is positive for jobs,'' said Francisco Bada, VW de Mexico executive vice president.þþVW executives had grown increasingly frustrated with the annual labor strife at the Puebla plant, particularly at a time of slack demand in many of its markets.þþLast year's strike by the VW Mexico union lasted 19 days and ended after the company agreed to raise wages by 10.2 percent and benefits by 4.5 percent.þþIn 2000, VW workers won a raise of 18 percent plus a 3.0 percent increase in benefits.þþBut output has dropped steadily to an estimated 360,000 units expected this year, from 380,000 units in 2001 and 425,000 units in 2000.þþThe plant each day produces 440 New Beetles, which are exported to 80 countries, 880 Jettas and 85 classic Beetles.þþSome 200 union workers are scheduled to be laid off in December and another 600 in 2003.þþ``Market conditions indicate that we ought to continue with the personnel reductions,'' Bada said.þþUnion leader Rodriguez said production lines at the Puebla plan were now running at about 70 percent capacity.þþ``This obviously complicated negotiations,'' he said. þþ
Source: NY Times
