Ford Motor Co. on Friday announced aggressive cuts of North American vehicle production, a move which may force the struggling U.S. auto giant to shut down some plants in the U.S. and Canada.

The company said it was reducing North American fourth-quarter production by 21 percent, or 168,000 units, compared with the fourth quarter a year ago. The revised plan also reduces the company's previously announced third-quarter plan by 20,000 units.

Bill Ford, the company's chairman and CEO, outlined the decision to cut production in a note to employees, explaining the decision was part of broader efforts to accelerate the company's North American turnaround.

"We know this decision will have a dramatic impact on our employees, as well as our suppliers," Bill Ford told employees. "This is, however, the right call for our customers, our dealers and our long-term future."

Full details of additional actions would be announced in September, he said.

For the full year of 2006, Ford plans to produce 3.048 million vehicles at its North American assembly plants, 1.134 million cars and 1.914 million trucks, a nine percent reduction from 2005.

The revised production plan is expected to sharply reduce the supply of several models and reduce pressure on sales incentives and dealer inventory carrying costs.

The plan also reflects expectations for lower industry sales of light trucks and truck-based sport utility vehicles, as high gasoline prices are expected to continue to encourage the demand for more fuel-efficient passenger cars and crossovers.

Mark Fields, executive vice president and Ford's president of The Americas, said the "tough-but-important" reduction in production plans underscored the seriousness with which the company was approaching its North American turnaround.

"We are basing our business plans on the customer, and we are determined to match production and inventories with consumer demand," Fields said.

"In doing so, we'll reduce incentive spending and inventory carrying costs for our dealers with the intent to improve residual values for our customers and stabilize operating patterns for our plants and our suppliers," he noted.

Source: Xinhua