General Motors Canada has reached an agreement on further cost-cutting measures with the Canadian Auto Workers (CAW) union, the head of the union confirmed on Friday.

The agreement is an important step for the automaker as it struggles to put out a restructuring plan in return for government loans to avoid bankruptcy.

Union leader Ken Lewenza said the deal allows GM to meet the cost benchmarks set by the Canadian and American governments and stipulates that GM's plants in three Canadian cities will stay open.

Under the agreement, the union has preserved and secured the pension benefits of its members, and it will see the pension plan restructured, he said.

The deal comes a day after workers in the United States reached a tentative deal with the U.S. government and General Motors Corp.

The moves are key to GM's efforts to restructure outside of bankruptcy court. Governments in Canada and the United States have set June 1 as the deadline for the company to restructure with government aid, or it will be forced into bankruptcy protection. About 20 percent of GM's total production in North America is based in Canada.

(Xinhua News Agency May 23, 2009)