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Ontario's economic development minister is playing down threats by Chrysler to pull out of Canada.

Michael Bryant says the province is still in talks with the automaker and adds there's a bailout deal to be had as long as Chrysler can prove it has a viable business plan.

Chrysler president Tom LaSorda said Wednesday the company may shut down Canadian plants if it doesn't get significant labour concessions and government aid.

"Chrysler LLC cannot afford to manufacture products in a jurisdiction that is uncompetitive, relative to other jurisdictions," LaSorda told a parliamentary committee.

Chrysler's labour costs in Canada work out to about $20 an hour more than automakers like Toyota Motor Corp. and Honda Motor Co., he said.

Bryant says those comments simply laid out the interests of investors and are part of ongoing discussions.

He says the government's key priority is keeping production and jobs in Ontario and it will continue to act in the public interest.

Ontario and Ottawa have been working with GM and Chrysler after the struggling companies asked for an aid package to help them survive the economic downturn.

Members of the Canadian Auto Workers union have already approved a new cost-cutting contract with General Motors.

Meanwhile, the head of the CAW union in Windsor, says Chrysler's threat to pull out of Canada unless it can slash labour costs by 25 per cent is offensive and a slap in the face to workers.

Rick LaPorte says CAW officials met with Chrysler Wednesday, but no progress has been made and no further talks are scheduled.

CAW president Ken Lewenza calls the threat blackmail.

The reduction in labour costs is far more than a new agreement between the CAW and General Motors will achieve.

But analysts say it will be difficult for Chrysler to break out of pattern bargaining and get more concessions from the union.

Chrysler also asked for roughly $2.3 billion dollars from the Canadian and Ontario governments and demanded relief in a tax dispute with Ottawa.

"Failure to satisfactorily resolve these three factors will place our Canadian manufacturing operations at a significant disadvantage relative to our manufacturing operations in North America and may very well impair our ability to continue to produce," LaSorda said.

The company has about 9,000 employees in Canada, where it operates assembly plants in Windsor and Brampton, and a casting plant in Toronto.

Chrysler LLC and its Canadian subsidiary have been hit particularly hard by the slump in auto sales payday loans. Chrysler's Canadian sales were down 27 per cent in February compared with a year earlier.

General Motors Canada, which has also asked for billions in government aid amid slumping sales, reached a new agreement with the Canadian Auto Workers union last weekend, providing labor cost concessions. Workers approved the deal in voting on Tuesday and Wednesday.

The contract freezes wages until 2012 and suspends cost-of-living adjustments for both wages and pensions. It also reduces paid time off by 40 hours a year, scraps an annual 1,700 Canadian dollar ($1,319) bonus and cuts company contributions to union-sponsored programs by a third.

However, the agreement does little to address health and pension costs that both Chrysler and GM say are growing at an unsustainable pace due to an increasing number of retired or laid-off workers, said Tony Faria, an auto expert at the University of Windsor.

Because the CAW follows pattern bargaining with the Canadian branches of the Detroit Three – Chrysler, General Motors Corp. and Ford Motor Co. – it's unlikely Chrysler will be able to negotiate a better deal, he added.

However, Joe D'Cruz, a professor at the University of Toronto's Rotman School of Management, said wages only account for 7 per cent of the company's costs, and Chrysler has bigger issues to deal with if it hopes to become financially viable again.

Both GM and Chrysler need to significantly cut their operations and brands and improve consumer perception, and even that may not be enough, he said.

Chrysler has examined several alternatives to help it stay afloat, including an alliance with Italian automaker Fiat Group SpA and a merger with GM.

D'Cruz said if Chrysler does declare bankruptcy, it's likely that another company will buy the company's minivan business and Jeep brand. That's good news for the company's minivan plant in Windsor, but means the future of Chrysler's car plant in Brampton remains "a big question mark.''

Ford Canada also plans to renegotiate its contract with the CAW, although the company has said it doesn't need financial assistance from the government. Instead, Ford has asked for incentives to bring consumers back to the showroom floor.

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