Union 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 lay-offs, Volkswagen Mexico said on Friday, according to Reuters.

The company reportedly said its 9,800 unionised workers accepted the plan after negotiations between union leaders and the plant’s management.

Reuters noted that VW in June said it planned to cut 2,000 assembly line workers due to slowing demand in export markets, the destination of more than 80% 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.

Reuters, citing a VW statement, said that,according to the agreed plan, workers with lower seniority will take additional temporary pay cuts.

Total production of vehicles this year at the Puebla plant, which just stopped building the old air-cooled Beetle, 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, Reuters said.

The news agency noted that labour relations at the Puebla plant are seen as a barometer of union negotiations in Mexico and there were strikes at the plant in 2000 and 2001. However, Reuters added, a walkout was avoided last year when workers agreed to a salary increase of 5.5% and an increase in benefits of 1.5%.