Employee Separation Actions and Exit and Disposal Activities (Notes)

9 Months Ended

Sep. 30, 2023

Restructuring Cost and Reserve [Line Items]

Restructuring and Related Activities Disclosure [Text Block]

EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES

We generally record costs associated with voluntary separations at the time of employee acceptance. We record costs associated with involuntary separation programs when management has approved the plan for separation, the affected employees are identified, and it is unlikely that actions required to complete the separation plan will change significantly. Costs associated with benefits that are contingent on the employee continuing to provide service are accrued over the required service period.

Company Excluding Ford Credit

Employee separation actions and exit and disposal activities include employee separation costs, facility and other asset-related charges (e.g., impairment, accelerated depreciation), dealer and supplier payments, other statutory and contractual obligations, and other expenses, which are recorded in Cost of sales and Selling, administrative, and other expenses. Below are actions that have been initiated:

•Brazil. Exited manufacturing operations in 2021 resulting in the closure of facilities in Camaçari, Taubaté, and Troller. A sale of the Taubaté plant was completed in the second quarter of 2023

•India. Ceased vehicle manufacturing in Sanand in the fourth quarter of 2021 and ceased manufacturing in Chennai in the third quarter of 2022. A sale of the Sanand vehicle assembly and powertrain plants was completed in the first quarter of 2023 (see Note 17)

•Spain. Ceased production of the Mondeo at the Valencia plant in the first quarter of 2022

•China. Ceased development of certain product programs in the first half of 2023

In addition, we are continuing to reduce our global workforce and take other restructuring actions, including the separation of salaried workers as announced during 2023.

The following table summarizes the activities for the periods ended September 30, which are recorded in Other liabilities and deferred revenue (in millions):

	Third Quarter				First Nine Months
	2022		2023		2022		2023
Beginning balance	$	691	$	1,277	$	950	$	588
Changes in accruals (a)	329		148		445		1,067
Payments	(188)		(298)		(539)		(493)
Foreign currency translation and other	(21)		(54)		(45)		(89)
Ending balance	$	811	$	1,073	$	811	$	1,073

__________

(a)Excludes pension costs of $11 million and $58 million in the third quarter of 2022 and 2023, respectively, and $27 million and $117 million in the first nine months of 2022 and 2023, respectively.

We recorded $35 million and $101 million in the third quarter and first nine months of 2022, respectively, for accelerated depreciation, impairment of our India assets, and other non-cash items and recognized a $38 million pre-tax net gain on sale of assets during the first nine months of 2022. We recorded $0 and $50 million in the third quarter and first nine months of 2023, respectively, for accelerated depreciation and other non-cash items. In addition, we recognized a $4 million and $23 million pre-tax net gain on sale of assets in the third quarter and first nine months of 2023, respectively.

We recorded costs of $535 million and $1.2 billion in the first nine months of 2022 and 2023, respectively, related to the actions above. We estimate that we will incur about $1.5 billion in total charges in 2023 related to such actions, primarily attributable to employee separations and supplier settlements. In October 2023, we announced that 1,000 positions will be retained as part of a planned new technology center at our Saarlouis facility in Germany after 2025. Accordingly, we will engage in discussions with our Social Partners related to the remaining affected positions at the Saarlouis Body and Assembly Plant. Our plans for the site beyond the 1,000 positions are uncertain, and there are no existing employee benefit programs covering non-voluntary separations. Therefore, potential future charges are not included in the estimate of total charges to be incurred in 2023 but could be significant once decisions are made. In addition, we continue to review our global businesses and may take additional restructuring actions where a path to sustained profitability is not feasible when considering the capital allocation required for those businesses.

NOTE 16. EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES (Continued)

Ford Credit

Accumulated foreign currency translation losses included in Accumulated other comprehensive income/(loss) at September 30, 2023 of $223 million are associated with Ford Credit’s investments in Brazil and Argentina that have ceased operations. We expect to reclassify these losses to income upon substantially complete liquidation of Ford Credit’s investments, which may occur over multiple reporting periods. In the first nine months of 2022, we reclassified losses of $155 million to Other income/(loss), net, upon the liquidation of three investments in Brazil.