Chrysler warns of Canadian plant closures

Chrysler LLC has warned that it could close its plants in Canada unless it gets enough concessions from its workers, along with government aid and resolution of a tax dispute.

Chrysler president Tom LaSorda told the House of Commons Finance Committee on Wednesday that the concessions deal between the Canadian Auto Workers union and General Motors is not acceptable to Chrysler.

The union has said that it hopes to use the agreement with GM as a model for pacts with Chrysler Canada and Ford of Canada. CAW officials announced Wednesday that members have voted 87 per cent in favour of the deal, which was reached last weekend.

The agreement would extend the contract with GM until 2012, while freezing wages and suspending cost-of-living adjustments for both wages and pensions.

It also reduces paid time off by 40 hours a year, scraps an annual $1,700 bonus and cuts company contributions to union-sponsored programs by one-third.

LaSorda said if the CAW-GM deal were applied to Chrysler, it wouldn't eliminate even half the labour cost gap with Japanese auto plants in Canada.

"As a corporation with operations in multiple jurisdictions, we cannot afford to manufacture products in jurisdictions that are not competitive," he said.

"The labour cost, government assistance, and of course the transfer tax will place our Canadian manufacturing operations at a significant disadvantage relative to our manufacturing operations in North America and may very well impair our ability to continue to produce in Canada."

Chrysler Canada is involved in a dispute with the federal government over up to $1 billion in back taxes due to a reassessment by the Canada Revenue Agency.

Chrysler has asked for about $2.8 billion in aid from the Ontario and federal governments.

With files from the Canadian Press