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TORONTO (Reuters) - The Canadian Auto Workers union has set a Wednesday deadline to reach a deal with General Motors Corp on buyouts and early retirement packages for about 1,200 unionized workers who will lose their jobs when GM closes a Windsor, Ontario, transmission plant in 2010.
"We could end up setting aside bargaining here on Wednesday and coming back in September with a strike deadline if we don't come together on these issues," CAW President Buzz Hargrove told reporters in Toronto.
Bargaining could be put on hold at 5 pm EDT.
The CAW has said it has a strike fund of C$70 million, which would be enough to cover a six-month walkout at GM Canada, where 15,000 CAW members are currently employed.
The union has been in early contract talks with GM since Thursday and was told during the negotiations that the Windsor plant, which employs about 1,200 unionized workers and another 150 managers and others, would be closing.
"This came as an incredible shock to us on Friday, that, in the middle of the bargaining, they would make that announcement," said Hargrove.
The 45-year-old Windsor plant makes four-speed front-wheel-drive transmissions for GM vehicles like the Chevrolet Malibu, HHR and Pontiac G6.
"We have worked extensively with our labor and government partners but have been led to the unavoidable conclusion that there are no available replacement products in the relevant timeframe for this location," GM said in a release.
The automaker has been cutting costs and production capacity in North America as part of a turnaround effort.
The CAW agreed there is no replacement product to put in the Windsor plant, but said it believes that there is room to put new products in GM's St. Catharines and Oshawa plants, which would be a key issue in the union's bargaining with the company.
CAW Economist Jim Stanford blamed the Windsor closure on a continuing loss of market share by the "Big Three" North American automakers -- GM, Ford Motor Co and Chrysler LLC. He said the three account for less than 50 percent of vehicles sold in North America due to unfair trade.
"Most of the vehicles are sold by companies that are not based here and most of those sales are imported from offshore. Places like Japan, Korea, Europe," he said.
Stanford said South Korea, for example, sells about 130,000 vehicles in Canada, and yet buys only around 300 Canadian-made vehicles a year.
He called on the federal government to help come up with a multifaceted strategy for Canada's auto industry, including trade and investment policies, and technology measures to help the industry adapt to environmental rules and other issues.
Jim Prentice, the federal minister of industry told reporters in Ottawa that the government was working with GM and other auto companies to try to preserve Canadian jobs.
"The Windsor plant is part of a restructuring that is taking place within the industry. It's part of changes in consumer preferences," Prentice said.
"The transmission that has been produced there is a four-speed transmission. GM is moving to a six-speed transmission that is more fuel-efficient so they will be making changes to their mandates here in Canada."
Separately, the CAW said it began talks with Chrysler on Monday. Chrysler employs about 8,000 CAW members. The current three-year contract expires in September, as does GM's.
About 9,000 CAW members ratified a new contract with Ford Canada earlier this month, agreeing to freeze wages and give up a week of vacation as part of the three-year deal.
Additional reporting by Kevin Krolicki in Detroit and Louise Egan in Ottawa; editing by Rob Wilson