The word order of Union Local is simple to explain.
Local, a noun here, is a subset of a larger Union; local union would mean a union particular to a certain place and would have local as an adjective, rather than a noun. In the term Union Local, Union acts as a qualifier of Local.
The construction Union Local is possible because English adopted the adjective local as a noun in the 15th Century.
early 15c., "a medicament applied to a particular part of the body," from local (adj.). The Old French adjective also was used as a noun, "place, position." Meaning "inhabitant of a particular locality" is from 1825. The meaning "local item in a newspaper" is from 1869; that of "a local train" is from 1879; "local branch of a trade union" is from 1888; "neighborhood pub" is from 1934.-Etymonline
I don't think much more can be made of this. The term Union Local seems to have developed in a fairly ordinary way.