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Ken Lewenza, president of the Canadian Auto Workers, in a Feb. 11, 2009, file photo.Tory Zimmerman/The Globe and Mail

General Motors Co. chairman Dan Akerson has added to the pressure being heaped on the Canadian Auto Workers to cut hourly labour costs as the Detroit Three auto makers and the union skirmish ahead of a critical set of negotiations on a new contract.

"Canada is the most expensive place to build a car in the world right now," Mr. Akerson was quoted as telling a news conference held before the company's annual meeting Tuesday in Detroit.

"We have to run a business here and the union understands that better than at any time in its history," he was quoted as saying.

GM spokesman Jim Cain confirmed the quotes, but added the company chairman and CEO also pointed out that the goal of the contract talks is to make sure that the Canadian operations remain an important part of GM's North American manufacturing base.

The drumbeat of demands that the union address hourly wage costs is reaching a crescendo three months before the scheduled September expiry of the contracts between the union and the three companies.

Each of the companies sent letters to the CAW late in May asking the union to change a 28-cent-an-hour cost of living adjustment to a lump-sum payment, citing the impact the first wage increase since 2007 would have on hourly wage costs. The union refused.

"They're all positioning themselves for bargaining," CAW president Ken Lewenza said Tuesday in response to Mr. Akerson's comments.

"The reality is that we all are fully aware of the influence of the Canadian dollar and what it's meant to the competitive advantages and disadvantages," he said.

Mr. Lewenza added that when the Canadian dollar was trading at record low levels to the U.S. dollar, GM still cut jobs in Canada. Now that the loonie is near par, "they've got to show some balance."

Even before bargaining, the companies and the union are debating the size of the difference in hourly labour costs between Canadian and U.S. assembly plants, or whether there is one at all.

GM's labour costs in Canada are about $60 an hour. Prior to a new contract signed in 2011 with the United Auto Workers, GM's U.S. hourly labour costs were $56 (U.S.). The CAW believes higher productivity in Canada more than compensates for that difference.

The key battle in the talks will be the companies' demand that the CAW agree to give up annual percentage increases in wages and instead accept bonuses based on company profits.

The union has consistently rejected that demand and Mr. Lewenza has maintained that stand.

Nonetheless, Mr. Akerson said he believes an agreement can be reached that benefits both GM and its workers. His comments came a little more than a week after GM told the union it will stop producing vehicles on one of its two Oshawa, Ont., assembly lines, a move that could eliminate up to 2,000 jobs.

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