The federal and Ontario governments say General Motors and Chrysler's Canadian restructuring plans are unrealistic and the companies must go further in cutting costs.
But the head of the Canadian Auto Workers says that the union has made enough concessions.
CAW president Ken Lewenza said that his union will not reopen its contract with Generals Motors despite pressure from the Canadian government for more cost-cutting.
He said reopening the recently completed contract, which featured a number of concessions, won't solve the problems facing the beleaguered industry.
"We can't resolve the crisis that we have in the auto industry at the bargaining table," Lewenza said at an afternoon news conference in Toronto.
But Industry Minister Tony Clement told CTV's Power Play Monday that the "goal posts" of collective bargaining have changed and that the GM-CAW agreement should be reopened.
"My point is, the place where it's got to change, is the so-called legacy costs," he said. "There are a lot of other benefits of the CAW-GM agreement that by right should be back on the table if we are going to be, in comparison to the United States, competitive."
Clement declined to go into specifics, but said he was not referring to pensions.
Earlier on Monday, Clement said he believes "in the long-term viability of these companies" but the companies must make deeper cuts in order to receive billions in taxpayer funding.
However, $4 billion in interim loans will still go forward to keep the companies alive while they rework their plans, Clement said Monday morning alongside Finance Minister Jim Flaherty and Ontario Economic Development Minister Michael Bryant.
Clement said the first installment of $250 million of the $1 billion going to Chrysler would be sent out immediately.
"Very clearly if the money had not been forwarded today, they would not been able to meet payroll today or tomorrow," he said.
The deadline for the two automakers was extended from March 31 for both companies, with necessary markers set out for the companies if they hope to receive bailout funds.
Chrysler has been given 30 days to work out a viable contract with the Canadian Auto Workers and organize a deal with Italian automaker Fiat SpA.
GM has 60 days to revise their plan to include serious cuts to labour and other costs.
"The companies must demonstrate their future competitiveness and that they have secured appropriate contributions from all stakeholders to improve their overall cost structures," Clement said.
"We have said all along, no profitable plan, no money," Bryant added.
Chrysler will receive $1 billion of the $4 billion in temporary funding, while GM will receive $3 billion.
Prime Minister Stephen Harper told a U.S. television network on Sunday that "given the scope and the size of this industry, we have no choice" but to provide emergency funding to auto makers.
GM employs about 12,000 people in Canada, and Chrysler, about 9,400. Tens of thousands of other jobs are directly built around the auto sector.
Talk of mergers, legacy costs
Lewenza said that his union will continue bargaining with Chrysler Canada and said that CAW approves of the possibility of a Chrysler-Fiat merger.
Chrysler has been given until the end of April to complete the merger.
Lewenza said the union is willing to look at legacy costs -- pensions and health-care -- but those costs are the responsibility of the employer.
"We're prepared to talk about the issue, but there's nothing we can do in collective bargaining about legacy costs," Lewenza said.
Lewenza said over and over again that his union could work for free but until the public starts buying cars, the industry can't recover.
He said that if one of the auto companies goes under it would turn "a recession into a depression."
CTV parliamentary correspondent Graham Richardson said that "senior government officials have told me that the union has conceded a lot . . . but I've been told that bond owners of the company are not taking cuts."
Richardson noted that when the steel industry ran into trouble, bond owners made concessions.
Richardson said that the main problem the government seems to have with the auto companies' restructuring plans is that their projections for future sales are overly optimistic.
"(In the government's view) these companies are being far too rosy on market conditions and how many cars they are going to sell," he said.
The Canadian announcement echoes one earlier in the day from U.S. President Barack Obama who said the two companies' plans in the U.S. did not go "far enough to warrant the substantial new investment."
On the weekend, the White House recommended that GM CEO Rick Wagoner step down, which he did shortly afterwards.
Obama said GM and Chrysler's U.S. operations must make "painful" concessions if they hope to receive government funds, and stay in business.
Both Wall Street and Bay Street responded unfavorably to the moves. The Toronto Stock Exchange dropped more than 200 points, while New York's Dow Jones industrial average dropped 254 points, ending March's market rally.
