Automobile Industry Mexico

This country's automobile industry, already booming thanks to free-trade pacts with the U.S. and Canada, can expect another big boost from the historic trade agreement signed last week with the European Union. It will mean even more Mexican-built cars streaming into the U.S., on top of the hundreds of thousands of Volkswagen Beetles, Dodge Rams, Plymouth Neons, Chevy Cavaliers and other models already shipped north of the border each year.

Toyota Motor Corp. is leaning toward building a major automobile factory in Baja California, a facility that could start a wave of heavy industry and investment in the border state, Mexican officials said Wednesday. Ernesto Ruffo Appel, commissioner for border affairs for President Vicente Fox and a former Baja governor, said Toyota officials told him the Japanese company will announce details of its new facility within days.

After 19 days on strike against Volkswagen, unionized workers have won a victory that goes beyond the paycheck. The Volkswagen workers--the largest automotive union in Mexico--got a 14.7% increase in wages and benefits, more than double the rate of inflation. The settlement reflected labor's increasing muscle, which could grow with reforms that President Vicente Fox hopes to present to Congress in the next several months.

After 19 days on strike against Volkswagen, unionized workers have won a victory that goes beyond the paycheck. The Volkswagen workers--the largest automotive union in Mexico--got a 14.7% increase in wages and benefits, more than double the rate of inflation. The settlement reflected labor's increasing muscle, which could grow with reforms that President Vicente Fox hopes to present to Congress in the next several months.

Just four years ago, the Kenworth truck assembly plant here was flying high, churning out about 5,000 heavy rigs a year, enough to corner 40% of Mexico's big-truck market and keep 1,300 employees busy in what is Baja California's only major automotive plant. Last year, the Kenmex plant, owned by Paccar Inc. of Bellevue, Wash.

Honda Motor Co. said it will begin exporting its Mexican-made Accords to the United States in October, thus joining other major auto companies in selling their Mexican-built models in the U.S. market. Honda currently produces the Accord in Mexico for the domestic market and imports the Civic to Mexico from its U.S. plants in Ohio. Next year Honda will also begin making Accord engines in Mexico. It currently imports the engine from the United States.

* The Mexican unit of Germany's Volkswagen unit said it will continue producing the classic sedan known as the "Bug" for an "indefinite time," responding to a Mexican newspaper story alleging that the model, whose basic design dates to the 1930s, would be discontinued. Mexico is the only remaining country that produces the car, which is the cheapest on the market there.

* Workers at Volkswagen's plant in Mexico lowered their wage demands in a bid to end a strike that has paralyzed production of the company's New Beetle, Jetta and Golf models. The union, which represents about 12,700 workers, is now asking for a wage boost of 20% to 25%, down from the 35% originally demanded. Mexico's Labor Ministry is helping broker the ongoing contract talks. The workers went on strike Friday morning after turning down the company's offer of a 9.2% wage increase.

Auto sales and production are still booming in Mexico, November figures showed. But executives in the rapidly expanding industry say a U.S. economic slowdown could begin to hurt production next year, because most units are exported across the border to U.S. showrooms. Total new car and truck production in November rose to 165,119 vehicles, up 32% from November 1999, the highest total for that month since the 1994 peso devaluation and ensuing economic crisis.

In the most dramatic sign yet of the threat Mexico's financial crisis poses to employment, Nissan Motor confirmed plans to lay off 1,000 workers--nearly 10% of its work force--because the country's economic problems are likely to crimp demand for cars. Nissan has proposed the job cuts to the labor union at its factory in Cuernavaca, south of here, which makes cars primarily for the Mexican market, a company spokesman in Tokyo said early this morning.

Volkswagen and Mexican union leaders Wednesday reached a wage deal to end a 19-day strike that halted production at the only factory making the German auto maker's popular New Beetle. After a marathon negotiating session, the two sides struck a pre-dawn accord that gave the 12,322 union workers at Volkswagen's Mexico plant a 10.2% wage increase. It also included an increase in food coupon benefits equivalent to 3.

Deals to hire employees without all the treasured perks given German workers normally would cause an outcry from unions, but a plan by Volkswagen to do just that is getting uniform support--as a means to encourage flexibility and fight unemployment. VW, Europe's largest auto maker, agreed Tuesday to hire 3,500 workers to produce a new minivan in its home base of Wolfsburg.

Workers at Volkswagen's only plant in Mexico failed to reach agreement with the German auto maker on a new contract Sunday, pushing a strike into its second day and suspending production of the New Beetle model. About 12,500 unionized workers demanding a 21% pay increase walked out at the Puebla plant Saturday. Workers expect an offer from the company today. The plant in Puebla is the only Volkswagen facility worldwide to produce the New Beetle.

Mexico's President Vicente Fox met recently in Detroit with United Auto Workers President Stephen P. Yokich and International Brotherhood of Teamsters President James P. Hoffa to discuss how to raise wage levels for Mexican workers. The talks were serious, not a mere public relations gesture. Fox and the U.S. unions share a common need to see Mexican wages and living standards rise. Mexico can't afford to rely on low-cost labor as a competitive advantage, and the U.S. unions, as well as the U.S.

* The Mexican unit of Germany's Volkswagen unit said it will continue producing the classic sedan known as the "Bug" for an "indefinite time," responding to a Mexican newspaper story alleging that the model, whose basic design dates to the 1930s, would be discontinued. Mexico is the only remaining country that produces the car, which is the cheapest on the market there.

Mexican tractor-trailers won't have to undergo a U.S. safety check for up to 18 months after they have full access to American roads under proposed federal rules. Critics pounced on that aspect of the plan, saying the trucks should be thoroughly inspected before being allowed to operate in the U.S. to ensure American motorists aren't alongside unsafe vehicles.

Mexican Imports of Cars and Trucks Surging: Imports rose 1,092% in the first five months of the year compared to the equivalent period a year ago, according to figures from the Mexican Automobile Industry Assn. Imports totaled 26,608 vehicles, up from 2,232 a year ago, the association said. Automobiles accounted for the bulk of vehicle imports in the period, rising almost 2,500%, to 21,204 units from 832 units, the group said. Truck imports rose 286% to 5,404 units.

Auto sales and production are still booming in Mexico, November figures showed. But executives in the rapidly expanding industry say a U.S. economic slowdown could begin to hurt production next year, because most units are exported across the border to U.S. showrooms. Total new car and truck production in November rose to 165,119 vehicles, up 32% from November 1999, the highest total for that month since the 1994 peso devaluation and ensuing economic crisis.

Workers at Volkswagen of Mexico won a pay raise substantially higher than the rate of inflation, in a settlement that's likely to encourage other Mexican unions fighting to recover the buying power workers have lost over more than a decade of austerity policies. The workers won a 21% overall increase, consisting of a 13% wage hike, a 5% increase in productivity incentives, 2% in loans and 1% in aid for school supplies for workers' children, a union spokesman said.