Mexico's VW workers end strike, get 3% raise

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orkers at Volkswagen AG's plant in Mexico — the only one in the world turning out the company's new Beetle — ended a five-day strike today after negotiating a 3% salary increase, the company said.

Workers will get a 2% raise starting this month and an additional 1% in December. The 9,400 workers at the plant in the central city of Puebla will also get a one-time payment of 2,000 pesos ($155), the German carmaker said in a statement.

The company, which employs a total of 14,700 people in Mexico, said that the salary increases "will continue to add to labor costs when the rest of the auto-making industry in Mexico didn't grant any salary raises this year."

"This will force the company to improve its productivity level," it added.

Union leader Victor Cervantes said full production would resume Monday.

Unionized workers, who earn an average of 370 pesos ($29) a day, went on strike Tuesday to demand an 8.25% salary raise.

The strike paralyzed production of 1,500 cars a day.

Mexico's recession has hit the auto industry — the country's biggest manufacturing sector — especially hard.

Car production in the world's No. 10 automaker fell 25% in July compared to the same month last year. Exports fell 26%, while domestic sales of new cars were down 34%.

Volkswagen's car production in Mexico fell nearly 37% between January and July this year compared to the same period in 2008, according to the Mexican Auto Industry Association.

However, the German carmaker said last month it would begin manufacturing a new compact sedan at its Puebla plant in 2010.

The Mexico plant was the last in the world to produce the iconic old Volkswagen "Beetle" Sedan, shutting that assembly line in 2003.

Volkswagen's Mexico workers last went on strike was in 2006.

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