General Motors and the Canadian Auto Workers (CAW) must reach a cost-savings deal by 31 May to qualify for a government rescue package, Canada’s industry minister Tony Clement said, days after the two sides failed to meet an earlier target date.

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The federal government in Ottawa had set a deadline of 15 May for the two sides to substantially reduce labour costs to help the company qualify for long-term federal aid, but no agreement was reached and the bargaining continued, Reuters reported.


Without long-term funding, GM’s Canadian operations risk liquidation.


“We are trying to exhibit as much patience as possible but from Canada’s perspective there are certain things that have to happen in order for there to be a deal,” Clement told the news agency in Atlanta.


He said the 31 May was necessary because GM faces a 1 June deadline set by the US and Canadian governments for the company to prove it can be viable. The automaker has said bankruptcy is probable.

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Ottawa has told GM Canada it needs to get its labor costs down to the level of Toyota’s non-unionised plants in Canada but he CAW has said that is not possible because GM Canada has far more retired workers than Toyota Canada, and their pension compensation shows up in the overall labour costs.


“We know that we are making progress on certain issues, other issues are more problematic so we will continue the discussions until the very last minute,” Clement told Reuters.


“For sure we need a resolution by 31 May, of course, because the 1 June deadline looms.”


Clement was in Washington yesterday to discuss GM’s restructuring with the US administration.