Chrysler has warned that it may shutter its Canadian pants unless it gets sufficient concessions from labour unions as well as government aid and a tax change.

"Failure to satisfactorily resolve these three factors - the labour costs, 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 President and Vice Chairman Tom LaSorda said.

He told the Canadian House of Commons finance committee that the labour costs at its Canadian plants, all inclusive, were substantially higher than those of Asian transplants in Canada.

Chrysler does howvere have a tentative deal with the CAW that requires ratification by its members.

Chrysler nailed down a key piece of its North American restructuring plan on Sunday (8 March) when it reached the tentative deal that trims hourly labour costs at its Canadian operations and meets demands from governments in the country that have been asked to bail out the company.

"What we're trying to do is keep the Detroit Three and this company afloat for the long-term," CAW president Ken Lewenza told just auto, adding that reaching a deal created no joy among the union's bargaining team.

The deal would cut labour costs by several dollars an hour, Lewenza said, although neither he nor other union officials would give a specific figure.