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Canadian Industry Minister Tony Clement on Thursday unveiled the Automotive Partnership Canada, a C$145 million (US$121 million) initiative to strengthen research and development in Canada's automotive sector.

Clement said the funds, which come from the 2008 budget, will be used to support research in 10 key areas, including energy storage, advanced power train, alternative fuels and vehicular software.

The goal of the program is to stimulate research on automotive technologies that reduce environmental impacts and increase manufacturing efficiencies.

At an event in Toronto, Clement fielded a number of questions from reporters about the Canadian government's support for Chrysler LLC's (C.XX) Canadian operations. He said the "clock is ticking," with the auto-maker having until the end of this month to reach agreements with both the Canadian Auto Workers union and Fiat SpA (F.MI) in order to get additional financial support from the Canadian government.

He noted that Fiat has indicated that its investment in Chrysler is dependent on the car maker obtaining further labor-cost concessions from the CAW. Fiat is looking for Chrysler to bring its hourly costs in line with those of Canadian plants operated by Toyota Motor Corp. (TM) and Honda Motor Co. (HMC).

CAW President Ken Lewenza this week rejected Fiat's call for more cost concessions, and said the Canadian union aims to be cost-competitive with the unionized plants of North American auto makers. He has also repeatedly said his union remains committed to pattern bargaining, and won't agree to more cuts at Chrysler than it has already agreed to with General Motors Corp.'s (GM) Canadian unit.

Clement said Thursday that, in order for Chrysler to survive in Canada, it must be cost-competitive with the rest of the Canadian market, which includes Japanese auto makers.

"We're beyond pattern bargaining," he added.

-Carolyn King; 416-306-2100; AskNewswires@dowjones.com