2nd UPDATE:CAW,Chrysler:No Cost-Cutting Deal; Talks Continue

The Canadian Auto Workers and Chrysler LLC have not yet reached a cost-cutting accord, threatening production jobs in that country.

"Twice we were within inches of reaching a collective agreement and both times, the deal was pulled back and the goal posts were shifted," CAW President Ken Lewenza said. The two sides will continue negotiations through Tuesday.

Chrysler wanted to reach a deal before it submitted a report to the U.S. Department of Treasury detailing its cost-cutting efforts to win access to $5 billion in low-interest loans. The union and auto maker have been talking since Monday in Toronto.

"The company has been very clear and consistent in its position and the Canadian government testimony with the CAW: we must 'close the competitive gap' of $19 an hour immediately," Chrysler said in a written statement. "Although we made progress toward closing the gap, significant issues remain."

The sticking point is the CAW stance to follow pattern bargaining. It wants an accord is similar to the deal it reached with General Motors Corp. (GM) earlier this month. Chrysler said the deal doesn't address the need to trim the hourly wage and benefit package in that country.

"These are not normal business circumstances and all Chrysler constituents have been asked to break pattern," Chrysler said. "These requests have been made to all of our constituents, including the CAW, to ensure Chrysler's viability."

Lewenza said the union made offers that would lower those wage packages.

Chrysler threatened to pull production from Canada if the CAW didn't agree to cut union workers' compensation by as much as 25%. The company wants compensation packages - including benefits - reduced to $45 (C$57) an hour from its current rate of $60.

-By Jeff Bennett; Dow Jones Newswires; [e-mail], 248-204-5542