By Robert Melnbardis

TORONTO (Reuters) - The Canadian Auto Workers union said on Sunday that a three-year contract offer from Ford Motor Co. appeared to satisfy its members concerns on compensation, and union negotiators were hopeful of reaching a definitive agreement on Monday.

Buzz Hargrove, president of the CAW, said the offer includes moderate improvements to wages and addresses other concerns about pensions, benefits and job security.

Calling Ford's settlement proposal a "responsible response" and a major step forward in bargaining, Hargrove said his team would be working hard to finalize an agreement with the big auto maker by Monday.

He declined to elaborate on details of Ford's offer, or indicate whether any of the auto maker's plants were in jeopardy of closing in Canada.

"This is not the richest settlement that we've ever negotiated as a union," Hargrove told reporters in Toronto.

Hargrove said the CAW made the right decision in choosing Ford to negotiate a new contract that would form the pattern of similar pacts at the other two members of Canada's Big Three auto makers, DaimlerChrysler.and General Motors.

The union represents about 41,000 workers at the Big Three. Its current contract with them ends September 20 and union leadership has a strike mandate from the membership.

Although Ford was chosen as the union's target to kick off talks, the CAW was prepared to switch negotiations to DaimlerChrysler, the most prosperous of the Big Three, if bargaining failed with Ford.

The Ford offer on Sunday was the culmination of months of talks with the CAW, and the union will be focusing its resources on reaching a definitive pact with the auto maker on Monday.

"We're still hopeful that we can pull this thing together and announce a settlement tomorrow," Hargrove said.

The Big Three are trying to rein in labor costs because of mounting economic and market share losses in the face of tough competition from overseas auto makers.

The settlement offer from Ford has elements that would help CAW members cope with restructuring at the auto maker, including job cuts, Hargrove said.

Hargrove said he hoped that by the end of 2008, any workers at Ford facing job cuts would be offered early retirement incentives or voluntary termination compensation.

Hargrove said CAW members at Ford face restructuring issues at all of its operations in Canada.

"We will come out of '08 with significantly less people working at Ford Motor Co. than we have today in Canada," Hargrove said.

The CAW has 12,138 members at Ford in Canada, including 525 on layoff. It has 17,549 members at GM and 11,600 at DaimlerChrysler.

Hargrove praised Ford's attitude in the contract talks, and said the auto maker was not blaming its unionized work force for its North American market share and profit problems.

Hargrove said that if the CAW reaches an agreement with Ford on Monday, the union would schedule member ratification of the deal for next Saturday and Sunday and then move onto bargaining with DaimlerChrysler the following Monday.