Goodyear Tire & Rubber Co. (GT) said Tuesday it will cut $215 million in expenses, drop its defined benefit pension plan and make its U.S. tire plants more efficient under a new four-year union contract.

The largest North American tire maker said sweeping changes in job assignments, combined with the ability to offer more buyouts, will give the company more flexibility to quickly expand or contract its work force based on market trends.

This is the first time Goodyear has released details about the contract ratified by the United Steelworkers union on Sept. 18. The contract covers plants in Akron, Ohio; Buffalo, N.Y.; Danville, Va.; Fayetteville, N.C.; Gadsden, Ala. Topeka, Kan.; and Union City, Tenn.

Goodyear has spent the past seven years attempting to alter past U.S. union edicts in order to reduce excess capacity and cut worker costs amid a volatile market dominated by consolidation, increased import competition and higher raw material expenses. This year, tire makers have also been hit by falling sales amid a worldwide recession.

The Akron, Ohio-based company posted a $221 million net loss for the second quarter compared with a net income of $75 million the same period the year before as tire industry sales fell in North America and around the world.

"This innovative agreement can truly change the way we run these factories," Goodyear Chief Executive Richard Kramer said in a statement Tuesday. "We can improve our efficiency, flexibility and competitiveness in both the near-term and long-term, driving working capital improvements and allowing us to be more responsive to the needs of our customers."

The contract still leaves the company's Union City plant in an "unprotected" status meaning Goodyear could shut the plant. None of the company's other U.S. plants have unprotected status. Goodyear wouldn't comment on the plant's future.

Production at Union City was shifted from a continuous operating schedule to a five-day, three-shift operation on July 6. The plant produced about 12 million tires and employed about 2,300 workers before the change.

The next step would be another round of buyouts and more production cutbacks followed by closure. Goodyear closed high-cost plants in six countries, eliminating the production of 25 million tires, between 2005 and 2008. The company has also shed more than 9,000 jobs since the middle of last year.

The contract also allows for the suspension of a general wage increase, the introduction of a defined contribution plan instead of a defined benefit pension, the ability to use buyouts to respond to unexpected market changes and the outsourcing of some maintenance positions.

-By Jeff Bennett; Dow Jones Newswires; jeff.bennett@dowjones.com; 248-204-5542