LAWRENCE, Mass. (AP) – Members of a union representing 700 workers at Malden Mills Inc. have accepted a three-year contract proposal that increases pay 7 percent, but also raises employee contributions for health insurance coverage.

The membership voted 301-to-136 Thursday night in favor of ratifying the contract, said Warren Pepicelli, an international vice president for the Union of Needletrades, Industrial and Textile Employees. The deal, retroactive to Nov. 30, raises wages 2 percent in the first two years and 3 percent in the third year for Malden Mills employees in Lawrence, Methuen and Hudson, N.H. Production workers make on average $12.50 an hour.

Malden Mills presented changes to its contract offer on Tuesday, after the union voted 231-to-198 last week to reject a previous offer.

and authorize a strike.

Pepicelli did not offer exact figures on the health insurance increase but characterized it as “steep.”

“It’s reflective of national trend in country,” he said. “Unfortunately workers are being asked to work more and more for health care.”

The company said the increase in health care contribution is consistent with that paid by its non-union employees and is significantly below the national average.

Malden Mills emerged from bankruptcy protection last year under new ownership, ending three generations of leadership under the Feuerstein family.

The current contract talks are the first since bankruptcy reorganization put lenders in control of the company and its 1,000 employees. GE Capital Corp. holds the largest stake.

Aaron Feuerstein’s bid to buy back Malden Mills was rejected by the company’s board in the fall, raising fears that hundreds of jobs could be lost or moved overseas. Feuerstein gained national renown for his decision to keep workers on the payroll after a December 1995 fire destroyed the company’s main factory, helping trigger the bankruptcy.

Malden Mills makes Polartec fleece for customers including Lands’ End, The North Face and the U.S. military.

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On the Net:

Malden Mills: www.polartec.com

AP-ES-12-09-04 2132EST