A cost-cutting deal between General Motors of Canada and the Canadian Auto Workers doesn't go nearly far enough, industry observers say.

Union president Ken Lewenza said the accord preserves Canada's "investment advantage" over U.S. factories of the Detroit Three automakers and will be the pattern for imminent talks with Chrysler and Ford.

University of Toronto business professor Joe D'Cruz, however, estimates it will save $148 million a year at a time GM is seeking $6 billion in Canadian government support.

"In terms of what's going to save General Motors, it's trivial," D'Cruz said.

Dennis DesRosiers, an independent industry analyst, said General Motors is still avoiding tough decisions, as it has for decades: "It's a wet noodle of an agreement."

He calculates the total cost of a GM Canada assembly line worker at $75 to $78 an hour including all benefits and payroll taxes, though the union says the figure is in the "high 60s."

'I don't think what they've given so far is really that substantial.'—Kam Hong, DBRS

The tentative agreement must still be approved by the union membership. It also is contingent on GM winning federal and provincial taxpayer support. And it depends on a promise that Detroit-based parent General Motors will maintain the current 20 per cent Canadian portion of its total North American manufacturing volume.

The deal would extend the current collective agreement for an additional year to September 2012, with no reduction in average assembly-worker base pay of $34 an hour.

It would eliminate a $1,700 annual "special bonus," and reduce paid time off to 40 hours a year from 80 hours (this time is in addition to vacation entitlements ranging up to five weeks annually for high-seniority workers, reduced last year from six weeks).

'When you consider that wages are 7% of the cost of the vehicle, you can’t get at this problem by reducing wages, in fact, we could work for free.'—Peter Kennedy, CAW

GM workers would also for the first time make payments toward their own health benefits -- $30 a month per worker family.

"The reality is that from our vantage point this was never about wages and benefits, " said Peter Kennedy, a senior CAW official who deals specifically with General Motors. "The wages and benefit concessions on our part are part of the government regulations in terms of them giving the loans. They made it conditional upon us making some sacrifices as well.

"When you consider that wages are 7 per cent of the cost of the vehicle, you can’t get at this problem by reducing wages. In fact, we could work for free."

However, a DBRS analyst, Kam Hon, said the GM-CAW deal is "not really material."

The Dominion Bond Rating Service ranks General Motors debt CC — the second-lowest ranking short of outright default.

"I don't think what they've given so far is really that substantial," analyst Hon said, adding that "the company's survival is based first and foremost, obviously, on selling cars."

General Motors has said only that Sunday's agreement is "a positive further step" in the plan it submitted to the federal and Ontario governments last month, paralleling a global restructuring that entails 47,000 job cuts worldwide, including 4,000 in Ontario.

With files from the Canadian Press