The federal and Ontario governments set last Friday as the deadline for GM to reach a new labour agreement with the Canadian Auto Workers, but the two sides were still mired in negotiations Tuesday. (Canadian Press)

Ottawa is flexible about when General Motors Canada and its union reach a new labour agreement, as long as it's part of a finished restructuring plan to be delivered by the end of May, Industry Minister Tony Clement says.

The federal and Ontario governments set last Friday as the deadline for GM to reach a new labour agreement with the Canadian Auto Workers, but the two sides were still mired in negotiations Tuesday.

Industry Minister Tony Clement says GM has until the end of May to provide governments in Canada and the United States with a restructuring plan. (Jacques Boissinot/Canadian Press)

"We need a resolution one way or the other by May 31," Clement told reporters Tuesday in Atlanta, where he was attending a biotechnology conference.

"GM is a very complex situation involving a multitude of countries and we are trying to exhibit as much patience as possible from Canada's perspective, though there are certain things that have to happen in order for there to be a deal."

The CAW said in a pamphlet sent to members that the federal and provincial governments are interfering in the talks, making an agreement difficult.

"Their lack of experience in labour relations, and their repeated threats to pull the plug entirely on GM Canada, have made this process all the more difficult," the pamphlet says.

Meanwhile, more than 250 General Motors dealerships across Canada will find out Wednesday that they will be shut down, according to TV news station CP24, which cited a source inside the company.

The company had initially slated the letters to be sent out by the end of the month, but will now send them to 264 auto outlets tomorrow instead.

Pension benefits a sticking point, union says

The union said the major sticking point is pension benefits. GM had a pension deficit of about $4.9 billion as of November 2007, but reports say that ballooned to $7 billion after financial markets crashed last year.

"We have moved mountains in trying to reduce the cost of pensions, without tampering with the level of benefits our retirees receive," the union said.

"We will not be blackmailed by governments and employers who see this as an opportunity to take away from all workers [not just CAW members], the principle that a worker deserves a fair and secure pension."

CAW members ratified a deal with GM in March, less than a year after settling a three-year contract, but the two levels of government almost immediately said it didn't do enough to cut costs.

Without a more stringent deal, the governments have said they won't give GM Canada the $6 billion in financial assistance it has requested, meaning in a worst-case scenario the company's Canadian assets could be liquidated.

GM has until the end of May to provide governments in Canada and the United States with a restructuring plan that could include filing for bankruptcy protection.

Clement will be in Washington, D.C., on Wednesday to discuss the progress of the talks with U.S. officials.