Volkswagen Mexico reaches new contract deal with union

MEXICO CITY (Reuters) – Volkswagen’s Mexico unit has reached a deal with the Independent Union of Automotive Industry Workers (SITIAVW) over a new collective contract after more than three weeks of negotiations, the German automaker said on Tuesday.

Manuel Aburto, the union’s spokesman, said the pay increase under the new deal amounted to 5.46%, including a salary hike of 3.62% and a rise in benefits of 1.84%.

The new deal will go into effect at 11 a.m. local time on Tuesday, Volkswagen Mexico said in a statement.

Unionized workers at Volkswagen’s plant in the central state of Puebla, one of the largest auto plants in Mexico, had sought a 12% wage increase and threatened to strike over the demands by Aug. 18.

(Reporting by Sharay Angulo, Writing by Daina Beth Solomon, Editing by Dave Graham, Nick Zieminski and Paul Simao)