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August 21 2001
Over 12,000 of VW's 16,000 workers at the Puebla plant have downed their tools.
Strike action which began on August 18 at Volkswagen's assembly plant in the central Mexican city of Puebla is continuing as management still refuses to make any reasonable offer of a wage increase to its 16,000 employees. The general secretary of the Volkswagen trade union, José Luis Rodriguez Salazar, says the union, which organises three-quarters of the workers at the plant, is demanding a pay hike of 21 per cent. The company has made no offer and government labour authorities have proposed a 5.5 per cent increase. VW workers currently earn a daily average of 272 pesos (US$29).
The chairman of the Volkswagen Group Global Works' Council, Klaus Volkert,
as well as its general secretary, Hans-Jürgen Uhl, have talked to company
executives at VW's head office in Wolfsburg, Germany, demanding that management
at VW's Mexican subsidiary make a new offer upon which an acceptable compromise
can be found. Both Volkert and Uhl say it is urgent and necessary to resolve
the conflict and end the strike quickly.
It is said that VW officials in Mexico are attempting to get judicial and government labour authorities to declare the strike illegal and thus force the workers back on the job.
The Puebla plant is the worldwide center for manufacture of the new VW Beetle model and also turns out Jettas and Golf convertibles. It has a daily production of 1,500 vehicles, 2,000 engines and 1,000 axle assemblies. (Fitim, August 21, 2001) KL
The Mexican unit of German auto giant Volkswagen AG was set to begin another
day of talks with union workers on Tuesday, the fourth day of a strike that
has paralysed output at the world's only New Beetle factory.
After Monday's talks failed to produce an agreement, Volkswagen officials and union leaders were scheduled to meet at the Labor Ministry offices in the Mexican capital before midday on Tuesday (1700 GMT).
Volkswagen on Monday offered the 12,500 striking workers, who walked out on
Saturday demanding a 21 percent pay increase, a wage hike of 7 percent. The
company said the offer represented 1.5 percentage points above this year's expected
But the company made the offer on the condition that the workers accept it quickly or it would be rescinded.
"It is very likely that we will withdraw our proposal of 7.0 percent" on Tuesday,
VW executive Francisco Bada Sanz said on Monday.
The workers, meanwhile, lowered their salary demands to 19 percent, leaving
the two sides still far apart from reaching an agreement. Union leaders had
initially demanded a 30 percent salary increase and said they would not consider
any offer below 10 percent.
Volkswagen said the union's demands simply cannot be met, especially amid the sharp slowdown in Mexico's economy.
Separately, Volkswagen asked the government to declare the strike be declared
illegal. The government has between 48 and 72 hours to rule on the request,
according to news agency Notimex.
The automaker's plant in Puebla, a city about 65 km (40 miles) southeast of
Mexico City, is the only Volkswagen facility in the world to produce the popular
New Beetle. It also makes the classic Beetle, the Jetta and the Golf Cabrio.
With about 16,000 workers, the plant had record output of 425,703 vehicles last year. About 80 percent of the vehicles were exported. (Reuters, 21 Aug 2001 )
The Mexican unit of German auto giant Volkswagen AG offered union workers a
salary increase of 7 percent in a bid to end a three-day-old strike on Monday,
but the walkout seemed set to go into its fourth day. Francisco Bada Sanz, a
Volkswagen executive, said the offer - an effort to end a dispute that has suspended
production at the only plant producing the New Beetle worldwide - was about
1.5 percentage points above this year's expected rate of inflation.
Union workers, who walked off the job on Saturday demanding a 21 percent pay
increase, lowered their demands to 19 percent on Monday, but Bada said their
new position made negotiations "impossible".
"When the company makes a formal proposal of 7 percent ... and they counter
with a demand of two percentage points below what they had been working with,
we feel that the union has no intention of reaching a deal," Bada told reporters
outside Mexico's labor ministry, where talks are being held.
Union leaders initially demanded a 30 percent salary increase and said they
would not consider any offer below 10 percent.
Volkswagen says the union's demands simply can not be met, especially amid
the sharp slowdown in Mexico's economy.
Mexico's gross domestic product posted zero growth in the second quarter, thanks
to a marked deceleration in its biggest export market, the United States.
Union spokesman Miguel Angel Galan said any wage proposal from the company
would be put to a union assembly for consideration.
That has proved a sticking point, as the company previously called for direct
negotiations with union representatives and refused to make a salary proposal.
Separately from the wage offer, Volkswagen asked that the strike be declared
illegal at a meeting with government arbitrators, according to news agency Notimex.
The government's arbitration has between 48 hours and 72 hours to decide if
the strike does not comply with the law, the agency said.
The plant in Puebla, a city about 65 km southeast of Mexico City, is the only
Volkswagen facility worldwide to produce the New Beetle. It also makes Volkswagen's
classic Beetle, the Jetta (Bora) and the Golf Cabrio.
With about 16,000 workers, the plant had record output of 425,703 vehicles
last year, of which about 80 percent were exported.
Workers said they were willing to negotiate to end the strike, which they claimed
was costing Volkswagen $30 million a day in potential revenues from the cars
that would have been produced.
Galan said the independent National Workers Union (UNT) had agreed to support
the Puebla plant strike, possibly with marches and other demonstrations yet
to be determined.
Last year, Volkswagen increased unionised workers' salaries in Mexico by 18 percent, double the 2000 inflation rate of 8.96 percent. (Reuters, 20 Aug 2001 )
Monday brought no sign of an immediate end to strike action at Volkswagen's
Talks between management and trade unions brought no sign of a rapprochement. Mexico's Labor Ministry urged the two sides to return to the negotiating table with new offers.
The plant of VW de Mexico in Puebla produces the New Beetle for the global market. The plant's 12,400 employees started the strike at the weekend in support of demands for higher wages. Trade unions last called for a wage increase of 21% 15 percentage points above the inflation level.
VW's management described the demand as "astronomical" and as a consequence
refused to put forward its own offer.
The head of the trade union representing VW workers, José Luis Rodriguez,
said that the demand was negotiable but that the union would not strike a deal
below a 10% increase.
The Puebla plant 125km east of Mexico City is earmarked to also produce the Jetta model for the whole American continent. It also produces small numbers of the Golf Cabrio and of the old Beetle. In 2000, the plant produced a total of 425,000 cars. Because of a decline in U.S. demand, short-time work was introduced this year.
Meanwhile, Volkswagen AG chairman Ferdinand Piech announced on Monday in an interview that his group may set up an additional production plant in the North American Free Trade Agreement (NAFTA) region (U.S., Canada, Mexico). He said the additional plant would be needed if the U.S. dollar continued to lose in value against the euro.
In the first seven months of this year, the VW group sold 3.1 million cars worldwide, a rise of 2.7% from the year-ago period. (HANDELSBLATT, 20. August 2001 )
Shares in Europe's biggest carmaker Volkswagen AG fell sharply on Monday on
renewed worries about the effects of a weaker U.S. market and of a strengthening
euro against the dollar. At 1005 GMT, VW shares were down 4.14 percent at 47.25
euros at a 4-1/2 month low. The stock was the fourth-biggest loser on the benchmark
DAX index, which was down 1.8 percent.
It was the biggest loser on the Dow Jones Auto Stoxx Index.
A report in Monday's edition of Financial Times Deutschland quoted VW Chief Executive Officer Ferdinand Piech as saying the company would consider building another plant in North America if the dollar continued to weaken against the euro.
"The market doesn't welcome the prospect of a big investment in the U.S. but more importantly, it indicates VW's vulnerability to a weaker dollar," said one trader.
European auto stocks slumped on Friday after Ford said it would cut jobs and slashed its 2001 profit outlook, prompting further jitters about the outlook for European auto exports.
An additional reason for VW's weakness was a strike at VW in Mexico, said traders. (Reuters, 21 Aug 2001 )
The National Union of Metalworkers of South Africa (NUMSA) said on Tuesday
it was meeting striking auto workers to consider a new wage offer and would
announce a decision on Wednesday.
The Commission of Conciliation Mediation and Arbitration (CCMA) on Monday recommended
workers and employers accept a compromise 8.5-percent wage increase to end the
three-week long strike which has cost the country and industry billions of rand.
In addition to the 8.5 percent, back-dated to July 2001, the striking 21,000 workers affiliated to NUMSA will also receive a rise of 0.5 percent effective from January next year.
NUMSA initially demanded a 12-percent annual salary increase and a two-year wage agreement, but later backed down to 10 percent, while employers stuck to their offer of 7.5 percent.
"Workers will have to decide whether to accept this offer. We are appealing to all workers to attend general meetings today," NUMSA spokesman Dumisa Ntuli said. "Our members will evaluate and consider the recommendations very seriously and the union will announce its decision on Wednesday at 1200 GMT."
Companies estimate that the strike in one of the key export industries has
cost the country about 350 million rand ($42.44 million) in foreign currency
earnings and the industry over 2.0 billion rand in lost turnover.
Workers have lost around 50 million rand in wages. The strike has affected
about 90 percent of production at the South African operations of BMW, Delta
(GM), Ford, DaimlerChrysler, Nissan and Toyota.
Industrial officials said there had not been major disruptions at Volkswagen.
The government estimates that auto industry exports have increased more than
38 percent annually since 1992.(Reuters, 21 Aug 2001 )
South Africa's arbitration body has recommended that striking auto workers
and company representatives accept a compromise 8.5 percent wage increase to
end a prolonged work stoppage, union officals said on Monday.
The National Union of Metalworkers of South Africa (NUMSA) said the Commission
for Conciliation Mediation and Arbitration (CCMA) had proposed another 0.5 percent
annual wage increase effective from January next year.
The 8.5 percent increase, if accepted by both parties, would become effective from July 1, 2001.
About 21,000 workers affiliated to NUMSA downed tools on August 6, demanding
a 12 percent annual pay increase in a two-year wage agreement. NUMSA later backed
down to 10 percent, while employers stuck at 7.5 percent.
"We are considering the offer and will announce our decision tomorrow (Tuesday) afternoon," NUMSA spokesman Dumisa Ntuli told Reuters.
But the Automobile Manufacturers Association (AMEO) representing seven companies
said it was unaware of the CCMA offer. "We have not heard from the CCMA. We
know that they called a meeting with NUMSA today and we are on standby for a
meeting with them," AMEO spokesman Dave Kirby told Reuters.
AMEO estimates that the strike in the key export industry has cost the country
about 350 million rand ($US42.44 million) in foreign currency earnings and companies
two billion rand in lost turnover. Workers have lost around 50 million rand
The strike has brought about 90 percent of production at six assembly plants
to a halt, with DaimlerChrysler last week warning it might be forced to move
production of its right hand drive C-Class Mercedes Benz back to Germany if
no resolution was found soon.
Other firms affected by the strike are the South African operations of BMW
, Delta (GM), Ford, Nissan and Toyota. Production at Volkswagen has not been
The auto industry is one of South Africa's major foreign currency earners. According to government statistics, auto industry exports have increased more than 38 percent annually since 1992.
A raft of strikes in other sectors during the past few weeks has ended with
pay settlements well above the three to six percent inflation target range set
by the government for 2002.(Reuters, 20 Aug 2001 )
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