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UPDATE 1-Dow locks union workers out of Houston-area plant

(Recasts with lockout in place, adds union statement)

HOUSTON, April 22 (Reuters) - Dow Inc locked 226 employees out of its Houston-area chemical plant in Deer Park, Texas, on Monday afternoon after United Steelworkers union (USW) workers rejected the latest labor contract proposal, USW officials said.

"Our Deer Park site will continue to operate in the safe and reliable manner our neighbors, employees and customers have come to expect of us; but it will be without the United Steelworkers after 2 p.m. on April 22nd," Dow spokeswoman Ashley Mendoza said on Monday.

Dow has twice made contract proposals it called "last, best and final." The first was rejected by 96 percent of the membership and the second by 98 percent, said Lee Medley, president of Local 13-1, which represents the Dow workers.

USW District 13 Director Ruben Garza said overtime distribution as well as fatigue and safety due to understaffing were at the heart of the dispute.

"The USW is committed to making sure that we have consistent and safe staffing levels," Garza said in a statement. "These negotiations are about more than just money. We also must consider the safety and well-being of the workers and the entire community."

Mendoza said Dow and the USW had reached an impasse.

"Although we have made progress on many elements, we have come to an impasse on others," she said. "Harmonization of collective bargaining agreements within Dow across North America is critical."

(Reporting by Erwin Seba Editing by Tom Brownand Leslie Adler)