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Canada Wants Automakers To Cut Labor Costs

Federal Industry Minister wants GM and Chrysler to submit plans to slash labor costs in Canada to U.S. levels as a condition of the $4-billion government bailout.

TORONTO (CP) -- Federal Industry Minister Tony Clement wants General Motors Corp. and Chrysler LLC to submit a plan to slash labor costs in Canada to U.S. levels, and ultimately to those of Japanese car makers in North America.

Clement told the Globe and Mail that such a plan will be necessary if the struggling automakers want to tap into a $4-billion government bailout fund.

Ottawa's insistence car makers cut costs could provoke a battle between the companies and the Canadian Auto Workers union, which has said it is prepared to help improve competitiveness but has resisted contract concessions.

The companies have yet to draw on the bailout package, which was announced before Christmas, and have until Feb. 20 to indicate how they will comply with terms and conditions that are now being hammered out.

But Clement said those conditions will mirror tough terms laid out in the U.S. bailout package that require the Detroit-based companies to get their hourly compensation in line with Japanese-owned plants.

He said the industry could not survive in Canada without being more cost-competitive.

"If they wish to meet the conditions by Feb. 20, they have to have filed a plan of action for Canada which includes getting labour costs in line with the U.S," he told the Globe.

Chrysler is expected to begin talks with the CAW this week, while General Motors has indicated to CAW president Ken Lewenza that its executives will consult with the union before submitting its plan.

Some analysts have estimated Canadian workers could see wage and benefit cuts of $15 to $20 an hour.

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