WINNIPEG Union employees at Motor Coach Industries Fort Garry coach manufacturing facility here have voted overwhelmingly to reject a company contract proposal and to authorize a strike.

The strike vote came after plant workers rejected the companys contract offer that would have increased wages by 11 percent over three years, increased vacation time, improved health benefits, plus given each employee a $1,250 bonus once the contract was ratified.

But 93 percent of the 700 workers, which includes coach assemblers, welders, painters, tool makers and maintenance staff, voted in favor of a strike. A strike date was not announced.

Plant employees will remain on the job while the company and union continue discussions in a government-assisted conciliation process.

The union, Local 1953 of the International Association of Machinists, said a major point of contention is that MCI wants to contract out many services, and union members feared significant job losses.

MCI had approached the union three months ago to begin negotiations early for a new contract.

In a letter sent to employees two days before the contract and strike votes, MCI said it wanted to resolve issues and negotiate a contract early because it would help the company in its efforts to emerge from Chapter 11 bankruptcy.

MCI filed for Chapter 11 protection in September in an effort to shed more than $400 million in debt and to deal with shrinking sales and a weakening economy.

"We informed the union leadership that Motor Coach (Industries) would have to get financing from lenders to successfully leave bankruptcy in early 2009," MCI told its employees.

"We believed that an early settlement of the collective agreement would improve the chances to get the loans needed to leave bankruptcy."

When MCI filed for bankruptcy protection in September and again when its reorganization plan was approved by a federal bankruptcy COURT in Delaware in late January, MCI executives said they hoped to complete the reorganization process, conclude financial negotiations and emerge from bankruptcy by the end of February.

MCI said it made numerous requests of Local 1953 in November and December to begin negotiations, but the union didnt agree to start talks Jan. 8.

The company said it and the union negotiated through January and even beyond the expiration date of the contract, trying to reach an agreement. On Feb. 4, the company presented what it said was its final offer to the union and asked that the proposal be turned over to member for a vote.

In its letter to employees, MCI said it believes it presented "a very good offer," especially given theres a worldwide recession thats exacting a heavy toll on manufacturing industries.

The union agreed to let members vote on MCIs offer, but the union leadership did not recommend approval.