Restructuring Costs

9 Months Ended

Sep. 30, 2019

Restructuring costs

Our accounting for employee separations is dependent upon how the particular program is designed. For voluntary programs, eligible separation costs are recognized at the time of employee acceptance unless the acceptance requires explicit approval by the company. For involuntary programs, eligible costs are recognized when management has approved the program, the affected employees have been properly notified and the costs are estimable.

Restructuring costs for the three and nine months ended September 30, 2019 and 2018 were as follows:




(Millions of dollars)	Three Months Ended September 30
	2019		2018
Employee separations ¹	$	8	$	44
Long-lived asset impairments ¹	3		18
Other ²	13		48
Total restructuring costs	$	24	$	110


	Nine Months Ended September 30
	2019		2018
Employee separations ¹	$	33	$	121
Long-lived asset impairments ¹	39		49
Other²	110		123
Total restructuring costs	$	182	$	293

¹ Recognized in Other operating (income) expenses.
² Represents costs related to our restructuring programs, primarily for inventory write-downs, project management costs, accelerated depreciation, building demolition and equipment relocation, all of which are primarily included in Cost of goods sold.

For the nine months ended September 30, 2019, the restructuring costs were primarily related to restructuring actions in Construction Industries and Energy & Transportation. For the nine months ended September 30, 2018, the restructuring costs were primarily related to ongoing facility closures across the company.

Certain restructuring costs are a reconciling item between Segment profit and Consolidated profit before taxes. See Note 16 for more information.

The following table summarizes the 2018 and 2019 employee separation activity:




(Millions of dollars)
Liability balance at December 31, 2017	$	249
Increase in liability (separation charges)	112
Reduction in liability (payments)	(276		)
Liability balance at December 31, 2018	85
Increase in liability (separation charges)	33
Reduction in liability (payments)	(73		)
Liability balance at September 30, 2019	$	45

Most of the liability balance at September 30, 2019 is expected to be paid in 2019 and 2020.

In September 2015, we announced a large scale restructuring plan (the Plan) including a voluntary retirement enhancement program for qualifying U.S. employees, several voluntary separation programs outside of the United States, additional involuntary programs throughout the company and manufacturing facility consolidations and closures that occurred through 2018. The largest action among those included in the Plan was related to our European manufacturing footprint, which led to the Gosselies, Belgium, facility closure. In the first nine months of 2019, we incurred $30 million of restructuring costs related to the Plan. Total restructuring costs incurred since the inception of the Plan were $1,818 million. The remaining costs of approximately $20 million related to the Plan are expected to be recognized in 2019.