updated 12/22/2006 9:08:29 PM ET 2006-12-23T02:08:29

Goodyear Tire & Rubber Co. and a union representing about 12,600 active union workers in the United States tentatively agreed Friday to a contract that would end an 11-week strike over health care benefits and Goodyear’s plan to close a tire factory in Texas.

The third-largest tiremaker and the United Steelworkers union reached the deal after both sides resumed talks in Pittsburgh early this week. The strike began Oct. 5.

The deal allows Goodyear to stick with its plans to close the plant in Tyler, Texas, but not immediately. It provides for a one-year transition period during which workers can take retirement buyouts. The plant employs 1,100 workers.

Goodyear announced Oct. 30 that it was planning to shut down its unprofitable Tyler plant, which makes wholesale private label tires. The plant’s fate had been a key difference in negotiations. But the union was unable to save the plant beyond the end of 2007.

“Though we’re not entirely happy with the outcome at Tyler, we were able to ensure that as long as Goodyear stays in the market for the tires built at Tyler, those tires will have to be produced at USW-represented plants in the U.S.,” said Thomas Conway, USW vice president and the head of the union’s Goodyear negotiations.

The previous three-year labor agreement expired July 22.

“This agreement validates the solidarity of our members and their families, who wouldn’t allow the company to walk away from obligations earned through a lifetime of hard work and loyalty,” USW President Leo W. Gerard said.

Steelworkers will vote at ratification meetings in their communities on Thursday.

Besides the 12,600 active workers, about another 1,400 steelworkers who are considered inactive, including those on layoff, will have an opportunity to vote on the contract agreement.

The union said it agreed to a company-financed trust of more than $1 billion that will secure medical and prescription drug benefits for current and future retirees. The USW also said Goodyear would triple its capital investments to at least $550 million in plants covered in the contract.

The 12 Goodyear plants covered by the tentative agreement are in Akron, Marysville and St. Marys in Ohio; Tonowanda, N.Y.; Danville, Va.; Fayetteville, N.C.; Gadsden, Ala.; Lincoln, Neb.; Sun Prairie, Wis.; Topeka, Kan.; Tyler, Texas; and Union City, Tenn.

Goodyear said it has made a proposal to its Canadian workers and is awaiting a response. Goodyear has two in plants Toronto and plants in Collingwood and Owen Sound.

Goodyear said the agreement helps the company to significantly reduce costs and improve competitiveness in its North American tire business.

“Our goal was always to reach a fair agreement that improves our ability to compete and win with customers. This agreement would accomplish that goal,” said Chief Executive Robert J. Keegan.

Goodyear said the deal will result in improved labor costs and productivity and the immediate implementation of market-based wage and benefit levels for all new hires. Specifics were not disclosed.

During the strike, Goodyear has made tires at some of its North American plants with nonunion and temporary workers as well as some managers. That pushed the union to publicly express concerns about the safety of the newly trained workers and the quality of the tires they made. Goodyear said the workers followed the same safety and quality standards union employees did.

Goodyear has about 80,000 employees and makes tires, engineered rubber products and chemicals in 29 countries.

Gary Schaefer, vice president of the Steelworkers Local 286 in Lincoln, Neb., said he hadn’t read the entire agreement and was unsure how members might respond to it.

“We’ll call this hurdle one,” Schaefer, 54, said of the tentative deal. “There’s all kinds of things that still got to happen.”

Schaefer, a 34-year employee of Goodyear, expected the deal would lift the spirits of members.

Mark Pratt, a Goodyear maintenance worker and treasurer of Steelworkers Local 904 in Sun Prairie, Wis., said he feels optimistic.

“We have to see it,” he said. “It’s better than nothing. It’s nice that something is going to be coming across, and at least we have a chance now. It would be a fantastic Christmas gift.”

The deal was announced after the market closed Friday. Goodyear shares rose 29 cents, or 1.5 percent, to $19.72 on the New York Stock Exchange. In the past 52 weeks, the stock price has ranged from $9.75 to $19.75.

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