With their fists up in the air and chanting, "Strike, strike!" the workers cut short a report by José Luis Rodríguez, the general secretary of the Independent Union of Volkswagen Workers, about the negotiations with company and government representatives. According to La Jornada, as workers began to walk out of the union hall they had to be reminded that they needed to vote on the proposal, since not doing so would allow the government and the auto bosses to declare the strike illegal. Both sides of the labor dispute had been expecting a federal board--at the request of the company--to step in against the strike.

Union officials have said that the pay raise is "negotiable" and have scaled back their original demand for a 30 percent hike, insisting that they will not go lower than 10 percent. The union has said the increases will bring wages closer to those of other auto workers in Mexico, who won wage increases of 10.5 percent to 16.5 percent this year. Last year, VW workers won a 21 percent package of wage raises and other incentives.

The company has argued that it can't afford wage increases greater than the current national rate of inflation and has called the union demand "disproportionate." In a previous offer VW responded with a 7 percent raise. "This year VW cannot afford to be generous," wrote columnist Patricia Nelson, repeating the company's statements that the slowdown in the U.S. economy in auto sales gives them less room for wage improvements. These are "riskier than usual times for the National Workers Union to drag out proceedings by maintaining double-digit demands in what has become a single-digit reality," she added later.

VW says the strike is costing the company around $30 million a day. "The company feels it is a hostage in this labor conflict," stated a VW press release, "and does not understand why it should be used as [a] test case." The company warned that the labor dispute may result in canceling future investment plans in Mexico.

The plant in Puebla employs 16,000 workers and is the only one in the world where the New Beetle model is manufactured. A study by the Workers University of Mexico pointed to the steady increase in VW sales and profits in the last two years and noted such conditions mean the auto giant can grant "a good" increase to its workers.

The auto workers strike is taking place at a moment when the administration of President Vicente Fox has come under criticism for his failure to deliver jobs and put a halt to the massive layoffs triggered by the economic decline in the United States. So far this year, 100,000 jobs have been cut in assembly plants, the vast majority of them located near the border with the United States. About 85 percent of exports from Mexico go to the United States.

International Monetary Fund general secretary Marcello Malentacchi wrote a letter August 23 to Francisco Bada, vice-president of Volkswagen in Mexico, to express the IMF's "extreme concern" at developments around the strike. Malentacchi urged the company and government to desist from "ill-considered" moves to declare the strike illegal and to negotiate in good faith. "Moreover, it is unlikely to lead to the results we all desire--a resolution of conflicts, a productive workplace, and decent incomes for workers," said the IMF official.

Francisco Hernández, a leader of the National Workers Union, said actions could be organized in support of the auto workers to press for a resolution to the dispute. The union official also threatened to organize rallies at the local offices of the federal labor board and during President Fox's state-of-the-nation address. Auto workers, their families, and supporters have already organized marches through the streets of Puebla.
 

Union leaders announced September 5 that they had reached a settlement with Volkswagen. According to the New York Times, the pact includes raises of 10.2 percent and additional benefits, including coupons good for food and children's school supplies.
 
 
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