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Canadian Auto Workers union president Ken Lewenza at a news conference in Toronto Tuesday before meeting with Chrysler

Moe Doiron/The Globe and Mail

The future of 20,000 of the best-paying jobs in Canada's battered manufacturing centre is on the line as the Canadian Auto Workers union seeks to reverse concessions that helped keep auto makers afloat during the recession, while the companies insist labour costs must be cut at what they say are the most expensive plants in the world.

The sharp contrast in those positions was outlined Tuesday as negotiations kicked off and General Motors of Canada Ltd. made what CAW president Ken Lewenza called "multiple demands in multiple areas that we would consider concessionary."

That meeting started negotiations that are the most critical yet for the union as it tries to protect jobs and win new GM investments in the Ontario cities of Oshawa and St. Catharines, to convince Ford Motor Co. of Canada Ltd. to expand operations in Oakville, Ont. and Windsor, Ont., and to persuade Chrysler Canada Inc. to invest in assembly plants in Windsor and Brampton, Ont.

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The CAW's effort to increase wages that have been frozen since 2008 and to restore vacations and other benefits comes amid a strong comeback by the Detroit Three from the crisis that sent two of them into bankruptcy protection and led to the elimination of tens of thousands of jobs in Canada and the United States.

Four years later, the companies have "no ethical or economic right to demand more concessions," Mr. Lewenza declared. "Our members have to make some progress in this round. They have to receive some recognition for the sacrifices they have made."

But GM needs to cut hourly labour costs, said a person familiar with the talks.

"In a highly competitive global marketplace, we can't sit still as the rest of the world races forward, particularly with rising commodity prices, a higher Canadian dollar and other cost pressures," the source said.

All three companies are profitable, and their sales have been robust amid the North American recovery – with the exception of GM Canada's sales, which have fallen this year while the overall Canadian market has improved.

Mr. Lewenza said the companies have told him their manufacturing operations in Canada are profitable, even while they describe Canada as a "terrible" place to invest, noting that more auto plants have closed in the past decade in this country than in Europe since the end of the Second World War.

The competitive landscape has shifted in another critical way for the Canadian union and the companies since the recession. The United Auto Workers union has agreed to a fundamental change in the way its members are compensated at the Detroit Three's U.S. operations, surrendering automatic annual wage increases for profit sharing.

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The companies want the CAW to agree to that change, which would be a rejection of the key reason for the founding of the union and its split from the UAW in 1984.

Mr. Lewenza remained steadfast Tuesday in his opposition to profit sharing and to another UAW move that lets the auto makers pay newly hired workers less than half of what they pay longer-term workers, and offer them almost no benefits.

"We have to be creative, but the CAW is opposed to profit sharing," he told reporters. In addition "the CAW will not rescind its position on the two-tiered wage system."

One creative solution, he said, could involve the companies giving workers signing bonuses or Christmas bonuses. Such bonuses were eliminated during the crisis-laden 2009 negotiations, when the federal and Ontario governments insisted labour costs be cut drastically in Canada before they would contribute about $14-billion to the bailouts of Chrysler LLC and General Motors Corp.

The auto makers and Mr. Lewenza have both said the negotiations will be more difficult than in past years.

Chrysler hinted at that Tuesday after its first meeting with the union, which sources described as constructive and different from the atmosphere in the GM discussions. The Chrysler statement noted the contributions Canadian employees made to its recovery. It added, however, that "while the industry and Chrysler have demonstrated some improvements to date, those gains have been modest and it is critical that we not return to an uncompetitive state."

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Ford, which opens negotiations Wednesday, has said there are no gains to be had by workers in these contract talks.

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