updated 8/18/2004 3:20:55 PM ET 2004-08-18T19:20:55

Workers at Mexico’s sprawling Volkswagen plant rejected a 4.5 percent pay increase Wednesday and walked out, waving strike banners in front of the only factory that produces the New Beetle.

The strike was expected to cripple the sprawling car plant in the mountains of Puebla, 65 miles southeast of Mexico City. Workers began walking out around 11 a.m. local time.

The union is pushing for a 8.5 percent salary increase for the plant’s 9,500 workers. Talks were expected to resume later Wednesday.

Union leader Jose Luis Rodriguez said employees voted against the 4.5 percent increase, despite the fact that union negotiators had endorsed the pact.

The union “did everything it could ... to avoid this strike,” he said.

He added that union officials were working to try to keep the strike from dragging on for days. The last strike, in 2001, ended after 18 days with a 10.2 percent salary increase.

The plant is one of the biggest employers in the Mexican auto industry.

It had been the only facility still producing Volkswagen’s old Beetle, which is still a popular car in Mexico. However, Volkswagen ended production of the famed car last year amid ceremonies marking its decades of service.

While Volkswagen has seen a drop in sales and announced plans earlier this year to cut its work force, the Mexican plant has not been largely affected by cutbacks. The company even said recently it planned to increase production in Puebla.

Workers avoided a strike at the same plant a year ago when they approved a 5.25 percent salary increase.

Last year, Volkswagen’s net profit fell to euro1.1 billion ($1.4 billion) from euro2.6 billion in 2002, with sales rising just 0.2 percent to euro87.2 billion ($108 billion).

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