UPS calls looming strike vote a gesture. Is it?

United Parcel Service (UPS) employee Alfred Vasquez refuels his vehicle with compressed natural gas (CNG) at a UPS facility in Los Angeles, California July 22, 2008.

CHICAGO (Reuters) - The 1,400 U.S. mechanics who maintain United Parcel Service Inc's (UPS.N) worldwide fleet of 263 aircraft will hold a strike authorization vote next week, on the cusp of the company's peak shipping season.

Should investors or customers care?

It depends on whom you ask. UPS, the world's largest package delivery company, says the vote is meaningless. The union, Teamsters Local 2727, disagrees -- and at least one analyst thinks a walkout is possible, though he says a strike like the one that crippled UPS in 1997 is highly unlikely.

"If the mechanics go out," David Ross, an analyst at Stifel Nicolaus, warned in a recent note to investors, "it could potentially disrupt activity heading into company's busiest shipping period ... and could have a material impact on near-term financials."

Atlanta-based UPS insists the September 14 vote is just a negotiating feint that will not affect contract talks with the machinists, which began in October 2006 and continue under the supervision of a federal mediator.

It points out that more talks are scheduled for late September, a sign the process is far from deadlocked. And until the talks officially break down, and the union endures at least one cooling-off period, a strike -- even one authorized by members -- would be illegal.

"This strike vote basically is a union show of solidarity," said UPS spokesman Mike Mangeot. "It's contract posturing and it has absolutely no legal significance whatsoever."

PLAYING WITH FIRE

But Local 2727, frustrated by what it claims is an impasse on central issues and emboldened by the new pro-labor occupant in the White House, insists the vote is deadly serious.

Its president, Bob Combine, warns UPS is "playing with fire" by thinking otherwise. He raises the specter of 1997, when a two-week walkout by ground-side workers cost UPS $850 million and sent customers to rivals. Some never returned.

"This is not a ploy," Combine said. "This most certainly could result in service failures during their busiest time of the year ... This thing may go sour in a hurry."

Analyst Ross thinks the strike threat is remote but real and that UPS, which is expected to make $1.9 billion this year, according to Reuters Estimates, "is not in the best bargaining position."

"They could double all the mechanics' salaries and it would not affect earnings at all," Ross said of the dispute, which revolves around healthcare costs and the offshoring of routine maintenance work more than pay.

TIMELINE IN DISPUTE

So if the mechanics, who maintain the airplanes that move about 16 percent of the 15.5 million packages UPS handles on an average day, authorize a strike, could the workers walk out during the company's peak shipping season?

The short answer is yes -- but only if the union obtains the mediator's OK to break off talks and only if President Barack Obama maintains a hands-off approach to the dispute.

Unlike UPS's roughly 260,000 unionized ground workers, who are covered by regular U.S. labor law, its 2,900 pilots and 1,363 aircraft mechanics are covered by the Railway Labor Act, Depression-era legislation designed to protect the nation's transport network and commerce by making strikes difficult.

Strikes can happen under the RLA. Once the federal mediator determines talks have reached an impasse, a determination that can come after a request from either side, walkouts are legal following a 30-day cooling-off period.

That can be extended another 60 days -- but only if the U.S. president believes the dispute "threatens substantially to interrupt interstate commerce to a degree such as to deprive any section of the country essential transportation service."

Mangeot at UPS says that makes a peak-season strike "not a mathematical impossibility but an extremely remote possibility."

But presidential intervention in airline disputes is rare; the last time it happened was 2001 in a dispute involving mechanics at United Air Lines UAUA.O. Four years later, when mechanics at Northwest Airlines Inc (DAL.N) went on strike, no presidential board was convened to slow down the strike clock.

That is why Combine insists a dispute could come to a head this fall. "We aren't looking at months ahead," he said. "The pressure is on to get this thing done quick. And if that doesn't happen, it could most assuredly have interruptions in service coming into the holiday season."

CONTINGENCY PLAN

Retailers, especially, would be unwilling to see any holiday season sales lost because of a shipping dispute. J.C. Penney Co Inc (JCP.N), for instance, said it already has contingency plans.

"Our customer delivery process will not be interrupted," said Penney spokeswoman Darcie Brossart, who declined to elaborate.

But many appear to be unfazed -- or like Saks Inc (SKS.N) unaffected because they use UPS rivals FedEx Corp (FDX.N) or the United States Postal Service.

Combine, at Local 2727, still holds out hope that a strike can be averted, though a lot depends on the next round of negotiations scheduled for September 23-25.

"The last thing we want to do is go on strike, and so we're going to continue as long as there's movement," he said.

"(But) if we hit a roadblock and it's a dead end and we're not going anywhere, that will be the time that we ask to be released. A lot can happen between now and the end of the month. But we're getting prepared to act if it doesn't."

(Reporting by James B. Kelleher, additional reporting by Aarthi Sivaraman in Seattle, editing by Matthew Lewis)