Restructuring Costs

12 Months Ended

Dec. 31, 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 2019, 2018 and 2017 were as follows:




(Millions of dollars)	2019		2018			2017
Employee separations ¹	$	48	$	112		$	525
Contract terminations ¹	1		7			183
Long-lived asset impairments ¹	65		93			346
Defined benefit plan curtailments and termination benefits ²	—		(8		)	29
Other ³	122		182			173
Total restructuring costs	$	236	$	386		$	1,256

¹ Recognized in Other operating (income) expenses.
² Recognized in Other income (expense).
³Represents costs related to our restructuring programs, primarily for project management, inventory write-downs, accelerated depreciation and equipment relocation, and also LIFO inventory decrement benefits from inventory liquidations at closed facilities, all of which are primarily included in Cost of goods sold.

The restructuring costs in 2019 were primarily related to restructuring actions across the company. The restructuring costs in 2018 were primarily related to ongoing facility closures across the company. In 2017, about half of the restructuring costs were related to the closure of the facility in Gosselies, Belgium, within Construction Industries, and the remainder was related to other restructuring actions across the company.

Certain restructuring costs are a reconciling item between Segment profit and Consolidated profit before taxes. See Note 23 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)	48
Reduction in liability (payments)	(85		)
Liability balance at December 31, 2019	$	48

Most of the remaining liability balance as of December 31, 2019 is expected to be paid in 2020.

In March 2017, Caterpillar informed Belgian authorities of the decision to proceed to a collective dismissal, which led to the closure of the Gosselies site, impacting about 2,000 employees. Production of Caterpillar products at the Gosselies site ended during the second quarter of 2017. The other operations and functions at the Gosselies site were phased out by the end of the second quarter of 2018. The program concluded in 2018, and we incurred a total of $647 million of restructuring costs (primarily in 2017) under the program. Those costs were primarily related to employee separation costs, long-lived asset impairments, and other costs which were partially offset by a LIFO inventory decrement benefit.

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. The largest action among those included in the Plan was related to our European manufacturing footprint which led to the Gosselies, Belgium, facility, closure as discussed above. We incurred $43 million, $121 million and $817 million of restructuring costs associated with these actions in 2019, 2018 and 2017, respectively. The Plan concluded in 2019, and total restructuring costs incurred since inception of the Plan were $1,831 million.