TORONTO (Reuters) - Concession talks between Chrysler and the Canadian Auto Workers union are making good headway and a deal aimed at helping the company stave off bankruptcy could be announced this week, an Ontario provincial government cabinet minister said on Thursday.
Chrysler and the CAW were back at the bargaining table on Thursday working on a cost-savings arrangement to help Chrysler meet an end-of-month deadline to qualify for billions of dollars in emergency aid from governments in Canada and the United States.
Chrysler has said it wants concessions from the union worth C$19 ($15.60) an hour so that it can compete with offshore-based automakers operating in Canada.
“I do believe that there was progress made over the past 24 hours that should give people hope about the future of Chrysler and about the ability of Chrysler to reorganize itself outside of a bankruptcy and continue to be a viable company,” Ontario Economic Development Minister Michael Bryant told reporters.
He said there could be announcement on Thursday. If not, he said he was hopeful that a deal would be announced by the end of the week.
One of the CAW’s lead negotiators with Chrysler said it was too soon to know if the union would be able to find common ground with Chrysler, but that it was pushing hard to get a deal done.
“We’re getting there,” Jerry Dias, an assistant to CAW President Ken Lewenza, told Reuters. “I mean it’s too early to tell, but we’re all running like hell trying to get it done.”
A spokeswoman for Chrysler Canada said the company had no comment at this time. The company employs around 9,400 people in Canada, about 8,000 of whom are CAW members.
In Ottawa, Industry Minister Tony Clement said the Canadian government was in negotiations with the U.S. Treasury to contribute to debtor in possession financing for General Motors Corp and Chrysler if they fall into bankruptcy.
“It’s pretty clear the banks are not going to be the financiers (for debtor in possession financing),” he said.
“So... the suggestions to both the United States government and the Canadian government -- and the Ontario government as well -- is we would be the DIP financiers in those cases. So that is a bridge we have not crossed yet, but obviously we are looking at all the permutations.”
Canada and the province of Ontario were in advanced negotiations to provide the companies with up to $6 billion to help them emerge from bankruptcy protection if need be, the Globe and Mail newspaper reported.
The talks included the U.S. Treasury and senior auto executives and would see Canada contribute about 15 percent of total funding that could reach $40 billion, the Globe said.
Ontario’s Bryant said that DIP financing gives whomever is providing the funding significant control over a company and is the type of financing that is recovered first in the event the company cannot emerge from bankruptcy protection and is forced to liquidate, he said.
“It’s our hope that we don’t have to get to that point,” he said.
Additional reporting by Randall Palmer in Ottawa; editing by Peter Galloway