MEXICO CITY (Reuters) -- Unionized workers at Volkswagen's Mexico plant, hit by a drop in export demand, have agreed to cut their work week to four days from five to avoid 2,000 layoffs, Volkswagen Mexico said on Friday.
The company said its 9,800 unionized workers accepted the plan after negotiations between union leaders and the plant's management.
The company said in June it planned to cut 2,000 assembly line workers due to slowing demand in export markets, the destination of more than 80 percent of the vehicles produced at its plant in the central Mexican city of Puebla.
Union leaders said that rather than lose jobs, they would prefer to reduce their members' hours and salaries until demand picks up again.
According to the agreed plan, workers with lower seniority will take additional temporary pay cuts, the company said in a statement.
In the first half of 2003, Volkswagen Mexico, a unit of German automaker Volkswagen AG, produced 152,000 vehicles at its Puebla plant. Volkswagen's last-ever classic Beetle rolled off the assembly line there last month.
Total production of vehicles this year is forecast at 285,900, down from an original target of 320,000, as the economy struggles to rebound in the United States, Mexico's main trading partner.
Labor relations at the Puebla plant are seen as a barometer of union negotiations in Mexico.
There were strikes at the plant in 2000 and 2001 but a walkout was avoided last year when workers agreed to a salary increase of 5.5 percent and an increase in benefits of 1.5 percent.