The decision was based on falling demand for traditional medium-sized cars in Europe from 13% of the market in 2002 to 11.5% now.
It means plans to build the next generation Focus at Ford's Genk plant in Belgium have been shelved, while Mondeo production will be reduced from three shifts to two.
Lewis Booth, president and chief operating officer of Ford of Europe, said: 'We must concentrate on maximising our product line-up while minimising our spending. We need to adjust our business to new realities in the European industry. We are taking steps to accelerate cost reductions while maintaining the new product momentum our business depends on.'
Ford says the announcement is part of a series of actions the company is taking to strengthen its business in Europe, including steps to reduce total salaried costs, acceleration of variable cost reductions and increasing efficiency in manufacturing and engineering and reductions in operating costs.
Genk will continue to produce the Mondeo and remains the preferred location for the next generation model. Ford is working with unions and the Genk Works Council to help employees who will lose their jobs. Some will be offered opportunities at Volvo's Ghent plant, also in Belgium.