The layoffs will affect nearly a quarter of the automaker's North American workforce.
Ford said it hoped its “Way Forward” plan would restore profitability in North America by 2008 and result in cost savings of US$6 billion by 2010.
"These cuts are a painful last resort and I'm deeply mindful of their impact," company chairman and chief executive Bill Ford told a press conference. "We will be making painful sacrifices to protect Ford's heritage and secure our future."
Unions called it "Black Monday" for the workers and castigated the company for failing to offer a complete list of affected plants months after it first warned of closures.
The announcement "left a cloud hanging over the entire workforce," United Auto Workers president Ron Gettelfinger said in a statement.
The facilities to be closed, including seven assembly plants, will cease production by 2012, although the bulk of the shutdowns will happen by 2008.
The closures will effectively reduce Ford’s North America capacity by 1.2 million units, or 26 percent by 2008.
Five assembly plants will be shut in Missouri, Georgia, Michigan, Ohio, and Windsor in Canada with another two sites to be named later this year.
Declining market share
In the past 10 years, Ford has seen its share of the US vehicle market drop from about 26 percent to 17 percent.
Ford boosted overall sales in the 1990s with sport-utility vehicles (SUVs), but its market share in that segment waned as Japanese rivals introduced smaller, crossover models.
The real trouble hit in 2005, when US petrol prices topped US$3 per gallon and Ford's light truck and SUVs sales fell.
The car-maker's net earnings slumped 43 percent in 2005 down to US$2 billion, compared with US$3.5 billion in 2004.
Bill Ford said his second restructuring plan in four years included plans to revitalise the company's products and focus on bold design.
The car-maker hopes to reduce costs and the time it takes a new vehicle to get to market by introducing more commonality across its various products and brands.
Ford plans to produce 250,000 hybrid vehicles by 2010 and also hopes to expand in the small car market, which it sees growing by 40 percent in the next four years.
The company said in addition to the job cuts, salary-related costs were being cut 10 percent in North America with the previously announced reduction of 4,000 white-collar positions.
But Ford's savings from job cuts are limited by the automaker's contract with its union.
The restructuring comes just four years after Ford cut 35,000 jobs worldwide and eliminated several struggling brands.