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UPDATE 2-Canada's CAW union says deals far off but Ford talks advance
7:04am IST

* CAW head says Ford talks "less controversial" than GM, Chrysler

* Talks to run with all three automakers through Sat night

* Companies adamant fixed costs must come down

* CAW deadline for strike late Monday night

* Lewenza says still time for deal before deadline

By Susan Taylor and Nicole Mordant

TORONTO/VANCOUVER, Sept 15 (Reuters) - Two days before a strike deadline, the head of the Canadian Auto Workers said the union has made more headway in contract talks with Ford Motor Co than with General Motors Co and Fiat SpA's Chrysler Group LLC, but that any deal remains far off.

Negotiations between representatives of the Detroit Three and the union, which represents around 21,000 of their workers, would go straight through Saturday night after all-day talks, CAW President Ken Lewenza said.

"I would like to say things are moving smoothly but they are not. The companies continue to suggest that fixed costs absolutely have to be reduced... Today is just a tug-of-war," Lewenza said in an interview.

The three automakers adamantly argue that Canadian labor costs are the highest in the world and must drop to match those of their workers in the United States, or future production and investment will be put in question.

The union counters that its members deserve some payback from the now-profitable automakers after their concessions in 2009 during a North American auto sector meltdown that pushed GM and Chrysler into bankruptcy.

Negotiators, trying to reach new three-year agreements, are racing against a deadline of 11:59 p.m. EDT on Monday (0359 GMT, Tuesday), when the CAW has said it will launch an unprecedented simultaneous strike at all three automakers unless it has a deal with at least one.

"It is fair that we are further ahead at Ford than we are with GM and Chrysler," Lewenza said.

"Negotiations with Ford are less controversial and more constructive. That does not mean, by any stretch of the imagination, that we have dotted the i's and crossed the t's."

Ford did not respond to a request for comment on Saturday. GM said it continues to have open and constructive talks and Chrysler said it would not comment on the status of the talks.

SEEKING AGREEMENT WITH ALL

At this point the idea is still to reach a deal with each of the three companies before Monday's deadline, CAW economist Jim Stanford said in an interview.

The union has broken with tradition this year by not selecting a lead company for talks. In previous years, talks with the other two companies would be temporarily suspended until an agreement was reached with the chosen automaker. That deal would then become a blueprint for pacts with the other two.

Earlier on Saturday, CAW National Secretary-Treasurer Peter Kennedy said he hoped a morning meeting with one of the companies, which he did not name, would lead to a conclusion of discussions on a union proposal regarding new employees so that talks could move onto other issues. Kennedy could not be reached later in the day.

On Thursday, the CAW offered the automakers key concessions on wages and pensions for new hires, yielding ground that might not overly upset current union members who must ratify any contract agreement. In return, the union wants automakers to commit to investing in Canadian plants and allocating new product, ensuring members' job security.

Under the CAW proposal, new hires would start at lower wages than the approximate C$24 ($24.78) an hour they currently get and be paid less than current workers for a longer period.

This is the so-called "two-tier" wage scale that the three Detroit-based automakers and the United Auto Workers (UAW) in the United States have used for the past several years to bring labor costs closer to those of foreign automakers.

The CAW is adamant that new workers must over time reach the same pay scales as existing workers. It may be willing to extend its "earn-in," the time it takes new hires to reach the highest end of the pay scale, from six to as many as 10 years, a union source close to the talks told Reuters earlier this week.

Current employees do not contribute to their pensions but under the union's proposal, new workers would do so. The new workers still would be entitled to a defined-benefit pension, not a defined-contribution pension.

The union also has said it could relax the "30-and-out" provision for new hires. Instead of being allowed to retire after 30 years under any circumstances, they would be able to retire after 30 years only if they were above a particular age.

TALKS TOUGH

The talks, which began last month at a Toronto hotel, have been challenging, with labor costs a key sticking point.

CAW workers at the Detroit Three earn an average of C$34 in a base hourly wage, compared with an average $28 for UAW employees, the CAW says.

Including benefits such as pensions, healthcare and overtime pay, the CAW's total average labor cost is about $60 an hour, according to the Center for Automotive Research in Ann Arbor, Michigan. That compares with $58 for U.S. workers at Ford, $56 for GM and about $52 at Chrysler.

The CAW says that the companies also want to permanently eliminate the cost of living allowance, move current and new hires to a defined contribution pension plan from a defined benefit pension plan, and eliminate the "30-and-out" pension.

The automakers have not publicly said how they propose to bring Canadian labor costs in line with those of the UAW.

Canada's auto industry has suffered five plant closures and the loss of a third of its assembly jobs in the past decade as costs climbed along with a stronger Canadian dollar.

Despite the many issues that need to be ironed out between the CAW and the Detroit Three over the next 48 hours if a strike is to be avoided, Lewenza, a veteran of many rounds of auto talks, said it could be done.

"I've seen us wrap up collective bargaining in a couple of hours once both sides understands that it's either this or a work stoppage," he said.

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