Chrysler LLC is warning its Canadian employees that the company won't survive if the Canadian Auto Workers union fails to accept government requested concessions that would make its labour costs competitive with non-unionized plants in Canada.

CEO Robert Nardelli and Chrysler President Tom LaSorda said Friday in a letter to employees that the automaker has to get its labor costs at Chrysler Canada down from 76 Canadian dollars ($62.68) per hour to Toyota Motor Corp's Canada's labor rate of about 57 Canadian dollars ($47) per hour. It said the CAW's refusal "to work within the government's guidelines jeopardizes the future of Chrysler and our operations in Canada."

"Time is very short. We have only two weeks before a final decision must be made. Let me be clear: Our negotiations are about saving Chrysler Canada. We are coming down to the wire in the fight for our company's survival - and we need your support," the letter said.

The governments of Canada and the United States have given Chrysler until the end of April to form a partnership with Italian carmaker Fiat SpA and to come up with an acceptable restructuring plan for the company to qualify for long-term aid.

"As recent as Wednesday this week, the CAW continues to ignore this clear mandate from the government stating that they will not go any further. This unwillingness to work within the government's guidelines jeopardizes the future of Chrysler and our operations in Canada," the letter states. It adds that thousands of good-paying jobs are in jeopardy, as well as the economic health of two communities in Ontario.

In a separate e-mail to all Chrysler employees Nardelli noted the CAW talks and said, "Without a successful resolution, the alliance with Fiat and our continued viability is at risk."

Ken Lewenza, the president of the CAW, said that the $19 per hour figure is "ridiculous" because the CAW's labor costs don't compete with Toyota, they compete on labour costs with Chrysler facilities in the US and that it should be about maintaining that investment advantage.

Fiat CEO Sergio Marchionne, in an interview published Wednesday, said the Italian automaker will walk away from a nonbinding agreement to take a 20 per cent stake in Chrysler and share its small car technology unless the US automaker's unions agree to major cost cuts. He also said the CAW must reduce labour costs - by up to C$19 an hour - if it is to partner with Chrysler. (See: Fiat keen on Chrysler deal, but sees union resistance)

The federal Canadian government and Ontario provincial government have already given Chrysler Canada C$750 million ($618 million) of a C$1 billion ($825 million) Canadian loan and have promised further support if a viable plan is put forward by 30 April.

The Canadian government has said Chrysler and General Motors Corp. must present plans that maintain the 20 per cent Canadian share of production. The auto industry directly employs over 150,000 Canadians plus another 340,000 Canadians indirectly.