WASHINGTON (AP) _ The Brotherhood of Locomotive Engineers is proposing a massive restructuring of railroad jobs which would cut the size of train crews in half on new freight business, the union's president says.

John F. Sytsma said in a speech Sunday night in Kansas City that cutting the number of railroad crewmen on new trains from four to two would result in labor cost savings that would spur railroad industry growth and actually create 169,000 new railroad jobs over five years.

However, the engineers' proposal, called the Lake Erie plan, would eliminate from new trains job slots which traditionally have been held by members of another rail labor organization, the United Transportation Union, such as trainmen, conductors and firemen.

The engineers are offering the plan as an alternative to a tentative contract of the UTU, which is undergoing a ratification vote this month. The UTU contract would phase out the jobs of 8,000 firemen and other workers through attrition.

Separate negotiations are to resume shortly between the engineers' union and the nation's major freight railroads.

''The Lake Erie plan is totally unfounded, unworkable, unrealistic, a fantasy, an absurdity,'' said UTU president Fred A. Hardin. ''The sole purpose is eliminating jobs. He (Sytsma) would have two engineers on a train and no conductors or trainmen to perform the work.''

Trainmen and conductors oversee the hooking and unhooking of train cars and a variety of other duties.

Four-man crews on existing trains would remain under the Lake Erie plan, said Sytsma. The text of his speech was released in Washington before delivery.

Under the Erie proposal, an acronym for Engineering a New Rail Industry Environment, crews aboard new trains would receive individual pay increases of 50 to 75 percent. Even with the added pay, according to the union, railroad operating labor costs would fall 60 percent in the first year of the plan and 80 percent in succeeding years.

UTU members would continue to be eligible as they now are to undergo training and move up to the rank of engineer.

The National Railway Labor Conference, management's bargaining unit, issued a statement saying the ''specifics of the plan seem geared more for show than reality, more for possible public relations points ... than for practical application. The plan explicitly provides for the extinction of the UTU. ... This is one way to end a rivalry.''

The management group also said that labor costs would rise, because of the large pay increases and other proposed changes.

The Cleveland-based BLE says it has nearly 30,000 members on the job, while the UTU has 120,000 working members.

At a news briefing last Thursday in Washington, a spokesman for Sytsma, Arthur B. Shenefelt, said the engineers' proposal was not designed to torpedo the UTU contract, but ''if you ask me will it torpedo the UTU contract, I can't answer that. ... I would say the timing is exquisite.''