General Motors is desperately trying to keep its Canadian operations running as its parent heads towards bankruptcy court protection in the United States and possibly Canada during the next week, a top union leader says.

GM is even paying edgy suppliers in advance for parts to assure that production of popular models can continue at assembly plants during any court proceedings when payments might be in doubt, Ken Lewenza, president of the Canadian Auto Workers, said yesterday.

"They have indicated to us they are doing everything possible and in their power to avoid a Canadian shutdown," Lewenza said in an interview. "Whether they are successful remains to be seen."

Chrysler LLC immediately shut down its operations in the U.S. and Canada earlier this month when it gained temporary court protection from creditors south of the border.

Insiders said it did not matter if Chrysler assembly plants stopped production because high inventories could easily meet dealer demand for a short bankruptcy stay of 60 days or longer.

Furthermore, some parts makers had halted deliveries to Chrysler plants on both sides of the border because of payment concerns. Those moves made auto production impossible because a shortage of only a few parts can disrupt output.

The shutdowns have triggered the layoffs of thousands of Chrysler workers and their counterparts at parts makers that were already struggling to stay alive through a major downturn in North American sales in the past year.

A temporary GM shutdown would cause thousands more layoffs here and even more damage to the reeling auto sector, a key cog in Ontario's economy.

Lewenza explained GM wants to maintain output particularly at operations that build popular models, including the new Chevrolet Camaro sports car and Impala mid-size car in Oshawa and the Chevrolet Equinox sport-utility vehicle at the CAMI plant in Ingersoll.

Already, GM has scheduled overtime at the Oshawa plant for extra Camaro output and just started production of the new generation 2010 Equinox. It is also launching the GMC Terrain in August and does not want any delays for the fall selling season.
GM sees the models as important vehicles that will pull motorists into stores so they can consider other cars and trucks.

The company also runs parts plants in St. Catharines and Windsor that depend on U.S. assembly operations.

GM spokesman Stew Low would not comment on any production plans if the parent company pursues court protection in the U.S. and Canada.

"(I) can't comment on what has not happened," said Low, director of communications for GM of Canada.

But GM Corp. officials have said bankruptcy proceedings in the U.S. are probable within the next week. That appeared more likely yesterday after bondholders rejected an offer whereby they would exchange $27 billion (U.S.) in debt for 10 per cent of a reorganized GM.

Industry watcher Dennis DesRosiers added that whether plants stay open or not will depend on whether GMAC, the automaker's financing arm, can provide funds for dealers to buy vehicles from factories.

GM, the biggest industrial firm in Canada at one time, faces a June 1 deadline to resubmit a restructuring plan to governments in the U.S. and Canada to receive billions more dollars in additional public loans.

If there is no resolutions of debts with bondholders, GM would have little choice but to seek court protection where a judge would decide.

Also still in dispute is how much government aid would be used to address a huge shortfall in GM of Canada's pension plans.

This week, GM workers here accepted significant concessions to lower labour costs for the third time in a little more than a year to bolster the restructuring plan and quest for aid. GM's U.S. workers are now voting on concessions.

Analysts say Chrysler's bankruptcy protection proceedings, shutdowns and resulting negative media coverage are hurting sales. Early reports say business at Chrysler dealers in Canada plunged more than 50 per cent in the first 20 days of May, despite heavy incentives.