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TORONTO (Reuters) - The Canadian Auto Workers union said on Wednesday its members had agreed to contract concessions with General Motors of Canada to help the automaker qualify for government loans, but the president of rival Chrysler panned the deal.
The union said 87 percent of GM's 10,000 hourly Canadian workers voted to support the agreement, which will see wages frozen, more health care costs shifted to employees, paid time off cut, and cost of living adjustments suspended or eliminated.
It also will divert employee bonuses to cover retiree health care costs, and reduce expenses for union-sponsored programs.
But Chrysler President and Vice Chairman Tom LaSorda said the moves did not go far enough, and warned lawmakers his company could pull out of Canada without bigger labor concessions.
The union has said the GM agreement will cut several dollars an hour from active member costs and will result in "substantial" cost reductions on liabilities related to retired members.
"These changes are difficult for our members and retirees, but CAW members at GM agree that accepting these changes is the best choice under the circumstances," CAW President Ken Lewenza said in a statement.
"Our labor costs did not cause this global crisis, and labor concessions -- no matter how deep they go -- cannot solve that crisis," Lewenza said. "However, our members understand that the CAW must be part of the solution, and we have done that."
GM has plants in Oshawa, St. Catharines, Windsor and Woodstock, Ontario.
The company said in a statement that the CAW agreement would significantly close the competitive gap with U.S. transplant automakers on active employee labor costs and substantially reduce the company's legacy costs.
"This demonstration of leadership and shared sacrifice by CAW members provides a very significant positive boost to GM Canada's business restructuring progress in Canada," the company said.
GM is seeking up to C$7 billion ($5.4 billion) in emergency loans from the governments of Canada and the province of Ontario.
The CAW said the deal would be implemented as soon as the proposed government aid is finalized and begins to flow.
The union plans to move on to negotiations with the Canadian arms of Chrysler and Ford Motor Co, where it would look to strike deals based on the GM agreement.
GM and Chrysler have already received a combined $17.4 billion from Washington, and have sought up to another $22 billion in emergency funding.
Ford said it would not likely need any government aid in either Canada or the United States.
In testimony to Canada's House of Commons finance committee earlier in the evening, Chrysler's LaSorda called the CAW-GM agreement "unacceptable."
He said the agreement would not eliminate even half the labor cost gap with the Japanese plants operating in Canada.
"The current agreement with GM is unacceptable and we have to break the pattern," he said.
LaSorda warned that Chrysler could pull out of Canada if it fails to win sufficient labor concessions from the CAW. He also said the company could shutter its Canadian plants if it does not get government aid, and a tax dispute is not resolved.
Chrysler is seeking $2.3 billion in aid from Canada, representing a quarter of the $9 billion being requested of the United States.
A recent deal between Ford and the United Auto Workers union trimmed average labor costs at Ford's U.S. operations to about $55 an hour and will bring them down to about $50 an hour, on par with its Japanese rivals, by 2011.
The CAW said its labor costs were around C$70 before the agreement. Taking into account an 80 cent Canadian dollar, the hourly all in labor costs would be around $56 dollars, and the GM-CAW agreement reduces that by "several" dollars an hour.
The CAW also says that Canadian plants have a 10 percent productivity advantage over the Detroit-based automakers' U.S. plants.
Reporting by John McCrank; additional reporting by Randall Palmer in Ottawa; Editing by Carol Bishopric and Lincoln Feast