Volkswagen's global crisis has forced it to stop its production in Mexico. The German shipowner has reported that, faced with a “challenging context” for the industry in the world and, specifically, in North America, its factory in the State of Puebla—the firm's most important in the country—will close one of its production shifts indefinitely. The company noted that the adjustment will only apply to Tiguan and Jetta models. “As a company, we assume this difficult but necessary measure, in compliance with what the law establishes,” Volkswagen concluded in a brief statement published last Friday. The firm did not specify a number of layoffs, but sources close to the shipowner's union are considering the elimination of between 800 and more than a thousand jobs. Although more information was requested from the shipowner, at the time of going to press no response had been obtained.
The Volkswagen plant in Puebla, one of the engines of the Mexican automotive industry with a production of 919 vehicles per day, is in the spotlight. In parallel with the announcement of the elimination of a shift, the union at the plant in Puebla assured that the company has incurred unilateral dismissals. “For the union, stability in the employment of its members and the protection of productive activity are priority issues,” he stated. The union body added that since last May they presented alternatives to the board to address the production problems, but none of the proposals were taken into account by the company. The stoppage of operations at Volkswagen Puebla occurs just a few days after a global increase of 10.04% in the labor prerogatives of the employees of this factory was announced.
The alerts within the manufacturer began to sound last week, when the CEO of Volkswagen, Oliver Blume, stated in a meeting with nearly 10,000 workers in Wolfsburg, Germany, that the company will use a drastic plan to reduce costs and simplify its structures. Blume acknowledged growing pressure on the automotive industry due to the difficulties of the global environment and the accelerated advance of Chinese competitors. “From the current perspective, approximately half of the need for adjustment corresponds to Germany and the other half to the rest of the world,” said the manager, although he did not mention a specific number of jobs to be eliminated.
The echoes of this crisis have already reached the heart of Volkswagen in Mexico, to its plant in Puebla. For the union and private initiative organizations, the announcement of the suppression of a production shift can mean the beginning of a greater storm. The union leaders assured that in the coming days they will announce a battery of technical initiatives to address this situation, while demanding that the manufacturer and the federal and local governments join together to find a solution that does not affect a production center with more than 70 years of history, when in 1954 the engines of the Volkswagen Sedan, better known as “vocho,” were started. In addition to its plant in Puebla, the firm has an engine factory in Silao, Guanajuato.
Volkswagen's plan to adjust to the challenging global environment is not unrelated to the reconfiguration that the sector has experienced since last year due to the United States' tariff war against foreign automobiles. Mexican automobile exports that do not prove American content must pay a maximum tariff of 25% to access the United States. With this tariff as a backdrop and Washington's refusal to renew the North American trade agreement, the USMCA, for the next 16 years, the automotive sector based in Mexico will have to adjust its plans. Companies like Toyota have already announced the transfer of part of their production to factories in the United States.
The expert in labor issues, Manuel Fuentes, explains that the closure of a department or a shift does not require a labor consultation for its completion. On the other hand, he points out that this measure is added to that of other companies in the sector that in Mexico have decided to close jobs due to the new tariff environment. "The loss of jobs affects not only workers, but also indirect jobs. It is a very serious issue and, finally, this phenomenon has been reflected throughout the country, especially due to the issue of tariffs," he concludes.
