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

Tue May 19, 2009 2:57pm EDT
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By John McCrank and Matthew Bigg

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.   Continued...

<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. REUTERS/Blair Gable</p>