Trouble looms in Michigan by Matt Vella @FortuneMagazine December 11, 2012, 4:40 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons By Doron Levin, contributor FORTUNE — Rick Snyder came into office as a newly elected governor in 2010 vowing to avoid open warfare with his state’s labor unions — as Gov. Scott Walker of Wisconsin had. But organized labor in Michigan had other ideas. Snyder last week disclosed a change in his position: right-to-work legislation — a potential gut shot to the United Auto Workers and other unions — is “on the agenda” and likely will be signed Tuesday following passage by the GOP majorities in the state House and Senate. “Today is the time to step up and make some decisions,” he told a capitol press conference. Snyder said less than 18% of the state’s work force is unionized. The state’s police and fire departments are excluded from legislation “due to the dangerous nature of their work,” he said. In all likelihood, the state where the United Auto Workers was founded in 1935, is set to become the 24th in the U.S. to adopt legislation that makes the payment of union dues optional and prohibits union membership as a condition of employment. Last month Michigan voters rejected a ballot proposal championed by organized labor meant to entrench union power. The GOP (and Snyder) regarded the ballot initiative as a betrayal of his non-aggression initiative. Republican legislators decided to push for right-to-work passage during the legislature’s lame-duck session this month. MORE: Fortune Exclusive: Larry Page on Google Last Thursday afternoon the capitol in Lansing, Michigan was jammed with union activists chanting slogans such as “union busting is disgusting.” The police used Mace to subdue some of the rowdier demonstrators. More demonstrations were expected Monday and Tuesday. The move in Michigan, the fifth most unionized state in the country, follows on the heels of similar legislation earlier this year in Indiana. That state’s economic development arm says a record number of businesses are indicating intentions to locate or expand — something that Michigan hopes to replicate. The Mackinac Center for Public Policy says that Michigan has lost 7,300 jobs just this year, continuing a decade-long trend. Bob King, president of the UAW, said to the digital publication MLive: “Labor wanted to keep this state on the right track. We think right-to-work is divisive. The governor said it for two years. He needs to lead. He needs to say he’s going to veto. If he doesn’t want to divide the state, then he’s got to veto right to work. For some Michigan families, the union movement has represented a ticket to a middle-class living and benefits like medical insurance, tuition assistance and defined-benefit pensions. Others see bitter labor struggles in the auto industry as a prime factor behind the flight of businesses to the South, where right to work status means unions have less money and, therefore, less power to compel employers to sign non-competitive labor agreements. Jennifer Granholm, Snyder’s Democratic predecessor, was and is a fervent union supporter. MORE: Should Bloomberg buy Linkedin? A big test for right-to-work in Michigan will be whether — and how soon — a major automotive supplier or vehicle assembler considers opening a new factory in the state. So far the Japanese and German manufacturers have avoided the state. But an automaker might benefit from the abundance of skills and the transportation infrastructure by locating or expanding in the industry’s birthplace. Certainly if employment losses are reversed, the Michigan GOP will take credit. Otherwise the UAW and its allies could stage a last-ditch stand in the next year or so to reverse right-to-work in the legislature or at the ballot box.