Authorities in San José Chiapa, Puebla, shut down the municipality’s Audi plant on Friday due to unpaid property tax and water bills.
After several hours of failed negotiations between authorities led by Morena party Mayor Arturo Graciel López Vélez and Audi representatives, the plant was officially closed late Friday night, the newspaper El Universal reported.
Local authorities say the plant, which employs some 7,000 workers, owes the municipality 90 million pesos (US $4.25 million).
Accompanied by police from San José and three other municipalities, the authorities arrived at the Audi plant at about 4:30 p.m. Friday.
After speaking to factory managers for 1 1/2 hours, the authorities concluded that Audi would not acknowledge the debt and attempted to place “closed” stickers on the plant’s exterior.
But private security guards prevented them from doing so on the grounds that Audi’s legal representative was not present, El Heraldo de México reported. The negotiations then continued until San José Chiapa authorities, backed up by police, eventually did put up the “closed” stickers.
In a statement, Audi México denied that it was behind on its bills, stating that it is a company that complies with all of its obligations in a timely manner.
“The request received from representatives of the municipal government will be reviewed and evaluated by the company. Audi México maintains close and permanent contact with the authorities and will schedule an appointment for the clarification of these issues,” the statement said.
The company subsequently said it would meet with authorities in state government offices on Monday.
The San José Chiapa plant, where Audi assembles its Q5 vehicles, opened in 2016 and usually makes more than 100,000 cars annually. However, production dropped 60% to just over 36,000 vehicles in the first half of the year due to its forced closure due to the coronavirus pandemic.
Meanwhile, the Independent Union of Volkswagen Workers, or Sitiavw, is threatening job action if the company doesn’t give employees their fair share of profits generated by the company’s Puebla operations.
Sitiavw said Friday that workers will strike on November 6 if Volkswagen doesn’t agree to distribute 293.5 million pesos ($13.9 million) in profits in accordance with its collective contract with employees.
Volkswagen said in a statement that it was challenging the claim that it owed money to its workers and that it believed its arguments had “sufficient legal support.”
It also said that it is maintaining dialogue with union representatives to clarify the issue and ensure that all the agreements it has entered into are complied with in accordance with the law.