May 15, 2008 / 2:45 AM / in 10 years

Canadian union nears GM, Chrysler contract deals

DETROIT (Reuters) - The Canadian Auto Workers union expects to reach contract deals with General Motors Corp (GM.N) and Chrysler LLC by Thursday after extending talks overnight, CAW President Buzz Hargrove said late on Wednesday.

The CAW had set an initial deadline of Wednesday evening to reach contracts with the two Detroit-based automakers that would follow the pattern it established in a now-ratified three-year contract with Ford Motor Co.(F.N)

Hargrove, speaking to reporters on a conference call, said a “handful” of contract issues still divided the Canadian union and Chrysler and GM, but he repeated that the CAW would not accept a two-tier wage system for workers at either company.

“We’ve moved the envelope pretty well at both tables,” Hargrove said, adding “We’re very proud of the fact that we’re close with GM and Chrysler.”

Hargrove said the CAW, Canada’s largest private sector union, was pushing for both automakers to commit to future product investment in their Canadian facilities under the new contracts, a provision the union won from Ford.

In one sign of progress, Hargrove said the CAW and GM had reached agreement on the terms of buyout and early retirement offers that would be given to some 1,200 union-represented workers at a Windsor, Ontario transmission plant GM plans to close in 2010.

GM announced plans to close that 45-year-old plant on Monday, a decision that Hargrove said had come as a shock, although union leaders have also said they believe dwindling market share left GM with no other choice.

“We’ve put together a close-out plan,” said Hargrove, who spoke to reporters from a Toronto hotel. “That’s done.”

The union had set a deadline of 6 p.m. EDT Wednesday, saying that if there was no headway on new three-year deals with GM and Chrysler, it would suspend talks until summer, when the union would be in a position to set a strike deadline.

The CAW’s current contracts with GM and Chrysler do not expire until September 16, but the union ratified an early agreement with Ford on May 4, and hopes to reach quick deals with GM and Chrysler that would follow the Ford pattern.

The talks come at a difficult time for both the Canadian union and the Detroit-based automakers, which have been cutting production and jobs in North America in a bid to return to profitability.

GM, which has lost a combined $51 billion over the past three years, has cautioned the U.S. auto market has become weaker than it had projected earlier this year. The No. 1 U.S. automaker now expects an only modest recovery in the second half of this year.

Chrysler, now owned by Cerberus Capital Management, no longer reports earnings publicly, but it has taken a number of steps to cut costs in recent months, including offering buyouts to its 44,000 U.S. hourly workers. The No. 3 U.S. automaker lost $1.6 billion in 2007.

The CAW also faces pressure from a Canadian manufacturing base that has been hit by the economic downturn in the United States -- the main market for Canadian exports -- and the 60 percent gain in the Canadian dollar since 2002.

The CAW began negotiations with GM last Thursday and with Chrysler on Monday.

“We’ve managed to come a long, long way in a short while but we’ve still got some more to do,” Hargrove said.

GM produces the Chevy Silverado and GMC Sierra trucks and the Buick Lacrosse and Chevrolet Impala sedans at Oshawa, Ontario assembly plants.

Chrysler also assembles its Dodge and Chrysler-branded minivans in Windsor, Ontario. Last Thursday, it started production of its limited-run Dodge Challenger muscle car in Brampton, Ontario.

GM employs about 15,000 CAW members. Chrysler employs about 8,000 union workers.

Additional reporting by John McCrank in Toronto; Editing by Lincoln Feast

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