DETROIT – In another indication of the struggling American auto industry, Ford Motor Co. (F) on Friday announced plans to slash production in the fourth quarter by 21 percent to accelerate its "Way Forward" turnaround plan.
Ford said it will begin lowering output in the third quarter, and will partially close several plants in the United States and Canada. The announcement, which marks a major downshift for the automaker, means that production for the full year will fall about 9 percent from a year earlier.
"We know this decision will have a dramatic impact on our employees, as well as our suppliers," Chief Executive Bill Ford told employees, but he said it was the "right call."
The automaker said it would cut North American production in the fourth quarter by 168,000 units and reduce third-quarter production by 20,000 vehicles.
He said full details of the accelerated plan would be announced in September.
Ford, which is battling shrinking U.S. market share and rising costs, had said it would accelerate its turnaround plan to respond to the weakening demand for fuel-hungry trucks and sport utility vehicles in the U.S. market as gasoline prices have remained high.
For the full year, Ford now plans to make 3.048 million vehicles in North America.
"We are determined to match production and inventories with consumer demand," said Ford's president of the Americas, Mark Fields.
"We'll reduce incentive spending and inventory carrying costs for our dealers — with the intent to improve residual values for our customers."
Ford, which posted a second-quarter loss of $254 million and has hired an outside financial adviser, has said it will close 14 plants and cut up to 30,000 factory jobs to return its North American unit to profitability by 2008.
The Associated Press and Reuters contributed to this report.