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GM Canada, union reach deal

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General Motors of Canada Ltd. (GM-N1.78-0.14-7.29%) has reached a cost-cutting deal with the Canadian Auto Workers union, paving the way for Canadian governments to join Washington in a massive bailout of the teetering auto giant.

The CAW has scheduled a news conference for this morning, but sources say the two parties have reached a deal that will make GM Canada competitive with Japanese-owned auto makers in Canada.

The tentative agreement – which must be approved by GM unionized workers in voting this weekend – comes a day after the Detroit-based parent reached agreement with the United Auto Workers on a new cost-cutting labour contract.

CAW president Ken Lewenza warned Thursday GM's Canadian operations would face liquidation if the company did not have a labour agreement in Canada that would be part of its restructuring plan.

U.S. and Canadian governments had rejected GM initial restructuring plan, saying it did not cut costs deeply enough to make the company competitive in the struggling North American car market.

As a result, unionized employees will have to vote for the second time this year on a new contract that slashes benefits, eliminates days off and achieves other cost-saving measures.

A major sticking point in the Canadian talks was GM Canada's huge pension shortfall, which sources have said tops $7-billion. That obligation had to be trimmed substantially to help the company achieve its competitiveness targets.

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Aweet another point checked off on the road to revival. :D

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