Contract talks between Irving Shipbuilding and workers at East Isle Shipyard in Georgetown, P.E.I., have failed to reach an agreement, leaving the union in a position to hold a strike vote Wednesday.

The two sides have been in negotiations since October 2009. The 115 workers will have to decide whether to strike or to accept Irving's latest offer, which includes a three per cent raise in each of the next three years.

If they vote against it, they will be in a legal position to strike.

A union spokesperson said the workers want a five per cent raise in each of the next three years.

In a recent letter to the union, Irving said that delays caused by a strike could hurt the company's reputation.

That, in turn, would hurt its bottom line and its ability to pay its workers.

The letter said the shipyard is "operating in very difficult markets," because its costs are higher than its international competitors, and demand for and sales of the tugboats it builds are low.

Tough times

It added that Blue Cross benefits would stop if workers went on strike and that they were not eligible to collect Employment Insurance.

"We think that we've put forward a fair and reasonable offer, one that certainly is well above what we've seen in any increases in inflation, and one that take into account their cost of living on the Island as well as the type of work that's being done at the yard," Irving spokeswoman Mary Keith said Monday.

Lewis Lavandier, mayor of Georgetown, said he hoped an agreement could be reached.

"When you're not making any money, you have problems," he said. "It wouldn't be good."

On Monday, workers told CBC News they were not sure how they would vote, but hoped an improved last-minute offer from Irving would scrap the vote altogether.

East Isle workers held an illegal strike in April. Irving had laid off half a dozen staff and then asked the remaining employees to work overtime.