GM Generali

OTTAWA (AFP) -- Canadian Auto Workers union head Ken Lewenza on Wednesday slammed reported threats by Fiat that it may walk away from a tie-up with U.S.-based Chrysler unless unions agreed to lower wage deals.

In an interview with Canada's Globe and Mail newspaper, Fiat Chief Executive Sergio Marchionne said he would scrap the merger unless Chrysler unions agreed to match the lower costs of Japanese and German-owned plants in Canada and the U.S.

"Absolutely we are prepared to walk. There is no doubt in my mind," Marchionne said in the interview, published Wednesday. "We cannot commit to this organization unless we see light at the end of the tunnel."

Because of the lack of progress on labor negotiations, especially on the Canadian side, there is only a 50-50 chance the partnership will be formed, Marchionne added.

Lewenza responded he was "surprised" and "disappointed" by the comments, and accused Fiat of trying to exploit the weakness in the union's collective bargaining position.

"There's no question that we need the Fiat deal," he said.

"But there's also no question that you (Fiat) walk away from this (buying) opportunity as a result of labor costs in Canada," which he said amount to less than seven% of the cost of manufacturing a vehicle.

Chrysler and Fiat should instead focus on resolving multibillion-dollar issues with U.S. bondholders and private investors, he said, publicly extending an invitation to Marchionne to meet with the CAW's bargaining committee.

"I want to give him (Marchionne) a great deal of credit for turning around Fiat Corporation, but he didn't turn around Fiat by attacking workers in Italy," Lewenza said.

"He restructured the company and he introduced new products that consumers wanted."

The CAW and Chrysler are to resume negotiations next Monday.