Restructuring Expenses

In January 2018, the Company initiated a plan to further improve its manufacturing operations and cost structure by commencing a multi-year manufacturing optimization plan which includes the consolidation of its motorcycle assembly plant in Kansas City, Missouri, into its plant in York, Pennsylvania, and the closure of its wheel operations in Adelaide, Australia (Manufacturing Optimization Plan). As the U.S. operations are consolidated, the Company expects approximately 800 jobs will be eliminated with the closure of Kansas City operations and approximately 450 jobs will be added in York through 2019. Approximately 90 jobs will be eliminated in Adelaide.

The Company expects to incur restructuring and other consolidation costs of $152 million to $162 million in the Motorcycles segment related to the Manufacturing Optimization Plan through 2019, of which approximately 70% will be cash charges. The current Manufacturing Optimization Plan cost estimate has been revised down from the prior estimate by $3 million and $23 million at the low and high ends of the range, respectively.

The current estimate includes $129 million to $134 million of restructuring expense and $23 million to $28 million of costs related to temporary inefficiencies. The Company expects restructuring expenses to include the cost of employee termination benefits, accelerated depreciation, and other project implementation costs of $40 million to $41 million, $51 million to $53 million, and $38 million to $40 million, respectively.

In November 2018, the Company implemented a reorganization of its workforce (Reorganization Plan). As a result, approximately 70 employees left the Company on an involuntary basis. The Company incurred restructuring expenses of $3.9 million related to this action during 2018.

Restructuring expense related to these plans is recorded as a separate line item in the consolidated statement of income and the accrued restructuring liability is recorded in accrued liabilities in the consolidated balance sheet. The Company expects these plans to be completed by mid-2019. Changes in the accrued restructuring liability were as follows (in thousands):



	Twelve months ended December 31, 2018
	Manufacturing Optimization Plan												Reorganization Plan
	Employee Termination Benefits			Accelerated Depreciation			Other			Total			Employee Termination Benefits			Total
Balance, beginning of period	$	—		$	—		$	—		$	—		$	—		$	—
Restructuring expense	38,666			34,654			16,182			89,502			3,899			93,401
Utilized - cash	(13,060		)	—			(16,095		)	(29,155		)	(444		)	(29,599		)
Utilized - non cash	—			(34,654		)	—			(34,654		)	—			(34,654		)
Foreign currency changes	(648		)	—			(8		)	(656		)	6			(650		)
Balance, end of period	$	24,958		$	—		$	79		$	25,037		$	3,461		$	28,498

During 2018, the Company incurred $12.9 million of incremental cost of goods sold due to temporary inefficiencies related to implementing the Manufacturing Optimization Plan.