Some 16,000 workers strike Nov. 12 after Volkswagen do Brasil fires 3,000 workers at its Sao Bernardo do Campo, Sao Paulo state, plant, representing 11% of its 26,800 total workforce in Brazil. “We offered ways out, and all the options were rejected,” says Herbert Demel, president of VW in Brazil. “No one could expect that we would receive these rejections without doing anything.”

The workers were cut after unions rejected a management proposal to reduce their wages and salaries by 15%. The offer was made as an alternative to possible layoffs of 4,000 workers. The 22,500-member metalworkers union at two plants had threatened to strike if layoffs proceeded.

VW has been at a stalemate with its unions since October as it attempts to make its five Brazilian plants more competitive amid an economic downturn. Brazil's total vehicle sales in October were down 15% compared to year-ago numbers.

VW produced 160,000 units in May, and just 100,000 in September. “We can't maintain all the employees with a drop this size,” Mr. Demel says, noting Volkswagen still had 60,000 unsold cars in October.