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Sunday, 19 August, 2001, 16:29 GMT 17:29 UK
VW may produce in the US
VW Beetle
More than 12,000 workers at the Mexico VW Beetle factory are on strike
Volkswagen, the German car maker whose Mexican factory is in the grip of a strike, is considering building a new factory in North America, according to chairman Ferdinand Piech.


We didn't want a strike. We want a solution as soon as possible

Jose Luis Rodriguez Salazar
secretary-general
Independent Union of Volkswagen Workers
"If the dollar weakens in the long term, we would need another factory in the NAFTA area," Mr Piech said in the interview due to be published in the Financial Times Deutschland's Monday edition.

NAFTA is the North American Free Trade Area which comprises the United States, Mexico and Canada.

VW would also consider using spare capacity in South America to make cars for the US market, rather than continue making them in Europe, Mr Piech said.

Last week, the euro rose above $0.90 for the first time in many months and some analysts say the currency is set to appreciate against the US dollar.

Strike

Mr Piech's comments were published soon after more than 12,000 workers at the big Volkswagen plant in the Mexican city of Puebla went on strike over a pay dispute.


We are negotiating the salaries, but 21% is impossible

Franciso Bada Sanz
Volkswagen
Production at the Mexican plant, the only one in the world which produces the new Volkswagen Beetle, came to a standstill on Saturday.

More than 80% of the vehicles made there are exported to the US, Europe and Asia.

In addition to the Beetle, the factory turns out Jettas and Golf convertibles.

Pay demand

The workers had initially demanded a pay rise of 30%, but reduced this to 21%.

The company rejected the demand, saying it was impossible to meet, especially with the sharp slow-down of the Mexican economy.

A senior VW executive said the company was willing to increase wages, but not at the rate demanded.

"We are negotiating the salaries, but 21% is impossible," said administrative board vice president Franciso Bada Sanz.

However, the main workers' union said that the company had not offered any increase.

"We didn't want a strike. We want a solution as soon as possible," said Jose Luis Rodriguez Salazar, secretary-general of the Independent Union of Volkswagen Workers.

Talks between the company and the trade union collapsed last Thursday.

Rejection

On Friday, the workers voted to reject a Mexican Labour Department proposal for a 5.5% rise.

Mr Piech
Chairman Ferdinand Piech
The talks resumed over the weekend, but by late Sunday no resolution appeared to have been made.

The strike is the second in two years at the factory, which employs about 16,000 people.

Last year, a five-day strike ended when the Mexican government ordered the workers back to work.

Soon after, they were granted a 13% rise.

Profits

VW is a hugely profitable car maker.

Last year, the company recorded net profits of more than 4bn euros ($3.7bn).

This year, the profits are expected to be greater, Mr Piech reiterated, despite falling sales in its home market Germany.

Exports to Asia and already introduced cost cutting measures will boost profits, the company said last month.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Theo Leggett
"Workers at the plant in Mexico have downed tools in a dispute over pay"
See also:

19 Aug 01 | Business
Strike hits Mexican Volkswagen plant
20 Feb 01 | Business
VW reports record profits
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