Industry Minister Tony Clement issued a blunt message Thursday to Chrysler and the Canadian Auto Workers as time winds down to an April 30 deadline to reach a new labour deal.
Clement told reporters in Toronto he has said to both the union and Chrysler management: "You have to be cost competitive."
"The clock is ticking," he added.
The union and the company are due to return to negotiations on Monday.
"With April 30 looming on the horizon… [the] CAW must do its part," Clement said.
A new labour deal between the company and the union is one of the preconditions the federal government has set before it will give any public money to the automaker.
The alternative, he said, is that if there is no deal in place, there will be no funding deal with the government, and Clement said it will call in its loans to company.
The other precondition of public support for Chrysler is that the company must also reach a deal with European automaker Fiat on sharing products and technology.
Earlier this week, Fiat CEO Sergio Marchionne said the union must make concessions to make Chrysler more cost-competitive.
However, on Wednesday, the CAW ruled out any special concessions for Chrysler, despite the threat that potential saviour Fiat could walk away.
Clement made his comments as he unveiled a $145-million program meant to stimulate research and development in the automotive sector.