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The key players who will determine whether Chrysler LLC has a future in Canada are digging in their heels, increasing the danger that a rescue effort could collapse.

The campaign to convince the Canadian Auto Workers to offer more concessions to Chrysler Canada Inc. is growing increasingly public, with would-be Chrysler saviour Fiat SpA jumping into the fray this week, followed by Industry Minister Tony Clement, and yesterday, Chrysler Canada president Reid Bigland.

Senior officials from Ottawa and Ontario outlined their conditions for continued government support to the company and the CAW at a one-hour meeting in Toronto on Tuesday, Mr. Bigland said.

CAW president Ken Lewenza, Chrysler LLC president Tom LaSorda and Mr. Bigland were told that the government insists on three conditions before it will advance more money to the battered auto maker.

The most contentious condition is reaching an agreement with the CAW that cuts hourly labour costs by $19 an hour to $57. Ottawa also insists on a strategic alliance between Fiat and Chrysler and a commitment by the company to maintaining a little more than 20 per cent of its North American vehicle production in Canada.

Unless those three conditions are met by April 30, the government will call its loan to Chrysler and offer no more money.

"Everyone is done playing softball," Mr. Bigland said. "The game has turned to Rollerball."

Two of the three conditions were linked together by Fiat chief executive officer Sergio Marchionne this week when he said his company will walk away from a deal to take a 20-per-cent stake in Chrysler unless unions in both Canada and the United States agree to labour deals that are competitive with offshore auto makers operating in North America.

Mr. Clement ratcheted up the pressure on the CAW yesterday.

"I don't think it is in the interests of the Canadian public to have continued funding to a company if there is no deal with their union and if there is no outside investor or no outside partner in the case of Fiat," he said at a news conference in Toronto where he announced a new $145-million auto innovation fund.

Mr. Lewenza reiterated that the union will not provide Chrysler with the $19 in hourly labour cost reductions it seeks, but has offered the same $7 an hour in concessions it gave General Motors of Canada Ltd. in what is known as pattern bargaining.

"There's no question we're being pushed into a corner," he said yesterday.

Mr. Clement insisted that the government will not get involved in the negotiations, but said the discussion has moved beyond pattern bargaining.

"We're talking about competitiveness in the case of Chrysler; Chrysler has to be competitive."

A similar meeting has not been held with GM. Talks between the CAW and Chrysler Canada will resume on Monday with 10 days left to reach a deal before the April 30 deadline.

But there is a growing body of opinion in the auto industry that Chrysler will go into bankruptcy protection by April 30, in part because of the short time available to swing a deal between all the parties involved: debt holders; the unions on both sides of the border; Fiat; Daimler AG, which owns 19.9 per cent of Chrysler; and its majority owner, private equity fund Cerberus Capital Partners LLC.

"I'd be floored if it doesn't go into Chapter 11," one auto industry source said yesterday.

"The CAW has to consider their bargaining position not only now, but after Chapter 11," the source said.

Wages and benefits will come under even closer scrutiny in a Chapter 11 or Companies' Creditors Arrangement Act filing and the danger that Chrysler's two assembly plants in Canada might close will be heightened.

If the United Auto Workers agrees to a greater reduction in wages and benefits than the CAW, Chrysler - or a new owner - could follow through on threats Mr. LaSorda made in March to shift operations south. That would cost about 8,500 CAW jobs at a car plant in Brampton, Ont., a minivan plant in Windsor, Ont., and an engine parts plant in Toronto.