Ford Motor Co. will offer exit option to about 1,300 workers at assembly plants in Chicago and Louisville, Kentucky, as it strives to adjust capacity with demand for its vehicles. Addition workers at an engine plant in Cleveland also will be offered the exit option.

The plants will move from two shifts to one this summer while the restarting of an idled second engine plant in Cleveland will be delayed until the fourth quarter, Ford spokeswoman Angie Kozleski said.

The proposal will affect about 800 workers at the Chicago plant and 500 at the Louisville factory.

The Louisville plant makes the Explorer sport utility vehicle, whose sales plummeted to 7,356 last month, a 38 per cent drop from April 2007.

The Chicago factory makes the Ford Taurus and Mercury Sable sedans and Taurus X crossover vehicle, whose sales dropped with rising prices of gasoline.

Ford, which is trying to cut labor costs during a turnaround, has not announced the terms and dates of the severance plan.

Not all workers at each of the three plants will be offered buyouts, Kozleski added.

Ford, which aims to enter the Indian small car market by 2010, plans to make the country a regional hub for exports, both for the cars and engines.

"While our primary focus will remain the domestic market in India, we have plans to export the small car and also the engines that we produce in India to Ford's other markets," Ford India president-designate Michael Boneham said.

Ford had earlier this year announced a $500 million expansion programme in India, which includes setting of a greenfield small car plant with a capacity of 2 lakh units and expanding the engine production capacity to 2.5 lakh from the current 60,000 units.

He said as the company expands its engine production capacity in India, Ford would also be increasing localisation levels up to 85 per cent by 2010.

"Currently, we export from Europe and when we achieve that level of localisation, the cost advantage could be in the range of 10-15 per cent," he said.