TORONTO - Chrysler Canada could lower its labour costs by eliminating workers' life insurance, out-of-province health coverage and some benefits like child care, according to a management letter that says the company's future hinges on talks with the CAW starting Monday.

In an email to employees, Chrysler president Tom LaSorda and CEO Bob Nardelli outlined seven ways for the money-losing and cash-starved auto maker to cut its labour costs.

"Unfortunately, the (Canadian Auto Workers union) has been opposed to these solutions," LaSorda and Nardelli wrote in the email, sent to employees Friday. "However, we are open to alternative ideas."

According to Chrysler's estimates, the proposed cuts outlined in the letter -- including higher prescription drug fees, reduced benefits for hospitalized workers and reduced shift premiums -- would save the company $8.24 per hour worked.

But the company has said it needs to cut costs by $19 an hour to be competitive with non-unionized plants in Canada -- a number the federal government has agreed with -- meaning further cuts, including wage reductions, will likely be on the table.

The CAW has so far refused to bend from a pattern established last month with the Canadian subsidiary of General Motors Corp. (NYSE:GM) that reduces GM's labour costs by about $7 an hour.

"While we have made some progress with the CAW, it falls significantly short of closing the $19 gap," the email said.

"And yet, as recent as Wednesday this week, the CAW continues to ignore this clear mandate from the (Canadian) 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."

CAW president Ken Lewenza said the letter was one of a number of recent "unprecedented and outrageous" attacks on workers, and "the most offensive yet."

"Every time we negotiate a new agreement ... the goalposts are shifted by companies who sense an opportunity to inflict long-term damage on the credibility and influence of the union," Lewenza said in a statement.

Lewenza said Chrysler's estimate of its labour costs is inflated by "non-relevant" factors like legacy costs, payroll taxes and the cost of plant shutdowns and layoffs.

And he added that the federal government's involvement is only serving to make negotiations more difficult.

"Seeing our own government echoing perfectly the painful demands made on hard-working, tax-paying Canadians by the executives of multinational corporations is deeply troubling," Lewenza said.

"Worse yet, by clearly taking sides in private negotiations between an employer and the union, and hence emboldening the company to keep asking for more, the federal government is making it harder to reach a deal."

In an act of defiance, workers in Windsor burned their copies of the company's letter on Friday.

Ontario Premier Dalton McGuinty urged both sides to let cooler heads prevail during the negotiations.

"Dealing with this challenge presented by the auto sector here in Ontario, Canada and even North America is a major undertaking, so the first piece of advice I have for all parties concerned is we personally have to keep the temperature down," McGuinty said.

He said he understands the CAW's position, but urged them to evaluate their options.

"I understand where they're coming from, but on the other hand, look at the options here, because there aren't a lot."

Chrysler has been under increasing pressure from the federal government and potential partner Fiat to slash its labour costs to a level that will make it competitive with Toyota and Honda plants in Canada.

The company has until the end of the month to reach an agreement with its unions and cement the alliance with Fiat in order to receive long-term bailout loans from governments in Canada and the U.S.

If this doesn't happen in time, it is widely assumed Chrysler will be forced to file for bankruptcy protection and possibly liquidate, potentially putting thousands of Canadians out of work.

"Without labour concessions, Chrysler Canada's manufacturing operations will not survive long-term. Thousands of good-paying jobs are in jeopardy, as well as the economic health of communities such as Windsor and Brampton," LaSorda and Nardelli wrote.

"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."

GM CEO Fritz Henderson reiterated Friday that General Motors' agreement with the CAW is competitive.

"We certainly believe we've reached a competitive agreement with the CAW," Henderson said in a conference call with media.

He added that the Ontario government has expressed concern about the company's legacy costs, including pensions, and GM is "committed to be part of a dialogue with Ontario and the CAW with respect to pensions."

Chrysler spent several days in intensive labour negotiations with the CAW at the end of March, but those talks broke off after governments rejected its original restructuring plans.

The federal and Ontario governments have already lent $750 million to Chrysler Canada out of $1 billion promised, and more could be forthcoming if the company produces an acceptable restructuring plan by the end of April.

Chrysler employs about 10,000 hourly workers at assembly plants in Brampton, Ont., and Windsor, Ont., and a casting plant in Toronto.