May 19, 2009 / 3:51 PM / 8 years ago

Ottawa says GM-CAW deal must be in place by May 31

3 Min Read

<p>Canada's Minister of Industry Tony Clement speaks during Question Period in the House of Commons on Parliament Hill in Ottawa April 20, 2009.Blair Gable</p>

TORONTO/ATLANTA (Reuters) - General Motors Corp and the Canadian Auto Workers must have a cost-savings deal in place by May 31 to qualify for a government rescue package, the industry minister said on Tuesday, days after the two sides failed to meet an earlier target date.

Ottawa had set a deadline of May 15 for the two sides to substantially reduce labor costs to help the company qualify for long-term federal and provincial aid, but no agreement was reached and the bargaining continues.

Without long-term funding, GM's Canadian operations risk liquidation.

"We are trying to exhibit as much patience as possible but from Canada's perspective, there are certain things that have to happen in order for there to be a deal," Clement told reporters in Atlanta.

The government later said that because of the complexity of some of the issues and because some progress was being made, it had given the two sides more time, but that a ratified deal would have to be in place by May 31.

GM's key deadline is June 1, by which time it must show the U.S. and Canadian governments that it has a credible plan to become a viable enterprise.

As part of the process, CAW workers would have to ratify any deal struck between the company and union negotiators.

Ottawa has told GM Canada it needs to get its labor costs down to the level of Toyota Motor Corp's nonunionized plants in Canada.

The union, which is bargaining its third collective agreement with GM in less than a year, said roadblocks are standing in the way of a fresh deal.

"There are a number of different things on the go, so I can't talk about what the specific hold-up is," said Jim Stanford, the CAW's economist.

"There is no one particular thing, just that we're carrying on and we're four days past the 15th now, and it's very, very tough," he said.

Officials at GM could not be reached immediately for comment.

One of the CAW's main complaints is that GM Canada -- in business for nearly a century -- has far more retired workers than Toyota Canada, which has operated for about 20 years.

Compensation to retired workers is one component of overall labor costs, along with the costs of active workers, benefits, payroll taxes and other items.

Clement called some of the issues in the talks problematic, but said progress was being made in other areas and that discussions would continue.

"For sure we need a resolution by May 31st, of course, because of the June 1st deadline looms," he said.

Clement said he was set to head to Washington to discuss GM's restructuring with the U.S. administration.

Reporting by John McCrank and Matthew Bigg; Editing by Frank McGurty

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