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Canadian Auto Workers president Ken Lewenza talks to reporters Sunday in Toronto after announcing that talks with Ford Motor Co. appear to be on track to setting the pattern contract.

J.P. MOCZULSKI/The Globe and Mail

The Canadian Auto Workers has narrowed its focus in contract talks to Ford Motor Co., as it tries to negotiate a deal with Ford aimed at forcing a settlement with Chrysler Group LLC and General Motors Co.

The union's strategy – adopted amid tough stands the companies have taken to reduce hourly labour costs in Canada – will play out Monday as an 11:59 p.m. ET deadline approaches for a strike, which the union warned could hit all three auto makers if they don't agree to a deal.

Sources said Ford had been the most flexible company all along – including on the key question of a time limit on lower starting wages for new employees – even as it insisted that its hourly labour costs in Canada match those at its U.S. operations.

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Ford "have clearly told us they want a deal in Canada that recognizes that Canada is a good place to invest," CAW president Ken Lewenza said Sunday. "I've told General Motors and Chrysler that they better show a desire to get a collective agreement before the deadline because our strategy is to withdraw our labour where we don't have a deal."

Chrysler signalled late Sunday that it might not be able to accept a deal negotiated with Ford as a template for an agreement. "These negotiations are pivotal in shaping the future of an automotive landscape in this country," Chrysler Canada Inc. said, in an another twist in what has been an eventful set of contract talks.

"While we respect Ford as a competitor, we do not think they are in the best position to take on this role given the significant reduction in their Canada footprint in recent years."

Ford Motor Co. of Canada Ltd. vice-president of human resources Stacey Allerton, said the company is confident it will able to reach a deal with the CAW.

The key sticking point with all three companies has been how to reduce hourly wage costs, which have risen at the companies' Canadian operations to a point where they're now the highest in the world. The companies want the CAW to reduce those rates to match costs at their U.S. operations.

Mr. Lewenza said the union recognizes that the rise in the value of the Canadian dollar has helped make the companies' plants here less competitive, but described the CAW as offering "modest proposals" that would recognize the sacrifices its members made to help the companies survive during the recession of 2008-2009.

"The CAW is not overzealous," he told reporters at a downtown Toronto hotel where the union has been negotiating with representatives of the three companies since last month.

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The union has submitted a plan that would reduce overall labour costs by cutting the starting wage for new employees from the current figure of about $24 an hour. That compares with the $34 an hour paid to longer-term employees.

Under the current contract, newly hired employees reach the $34 an hour level after six years. The union has proposed stretching that time out to 10 years.

Chrysler and GM have rejected that proposal, Mr. Lewenza said, insisting that so-called second-tier workers never reach the $34-an-hour level.

"We are not ever going to agree to a permanent two-tier wage system," he declared.

Ford has said that it wants competitive labour costs, but is not insisting on a permanent two-tier system.

The union's decision to concentrate on Ford came after marathon weekend negotiations during which the CAW insisted it was prepared to shut down the Canadian operations of all three companies if they maintained their stances of substantial cuts in pay and benefits.

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That poses the danger of a strike that would put 20,000 auto workers on the street and deal a blow to an already sluggish economic recovery.

The union is pushing hard to win new investments from Ford, where about 1,200 members are on layoff after the closing of a car assembly plant near St. Thomas, Ont., last year.

"We've got to find them work," Gary Beck, chairman of the CAW's Ford bargaining committee said earlier Sunday. "If we don't have that in this agreement, then we won't have any agreement."

The union has been seeking a third shift at Ford's Oakville, Ont., assembly plant and investment at an engine plant in Windsor, Ont., which supplies V-8 and V-10 engines that are declining in popularity amid high gas prices.

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