Restructuring Charges

9 Months Ended

Sep. 30, 2020

RESTRUCTURING CHARGES We periodically take action to improve operating efficiencies, typically in connection with business acquisitions or changes in the economic environment. Our footprint and headcount reductions and organizational integration actions relate to discrete, unique restructuring events, primarily reflected in the following plans.

On June 26, 2020, the Company committed to a workforce reduction plan in the United States, as part of the Company’s continued cost reduction efforts. The workforce reduction plan included a voluntary retirement program and involuntary severance actions which were effective as of the end of the second quarter of 2020. Total expected costs for these actions is $100 million. These actions are expected to be substantially complete in 2020. To date the Company has incurred $95 million in employee termination costs related to these actions.

During the third quarter, the Company committed to additional workforce reductions outside of the United States, as part of the Company’s previously announced continued cost reduction efforts. In connection with this action, the Company anticipates that it will incur approximately $145 million in employee-related costs, and approximately $3 million in other associated costs. All of these costs will result in future cash settlement. The Company estimates that approximately $86 million of the $148 million total costs will be incurred in 2020 and that approximately $79 million of the estimated $148 million total cash settlement will occur in 2020. The Company expects these actions to be substantially completed in 2021.

On May 31, 2019, we announced our intention to reconvert our Naples, Italy manufacturing plant and potentially sell the plant to a third party. On September 16, 2019, we entered into a preliminary agreement to sell the plant to a third-party purchaser and to support costs associated with the transition. In October 2019, we announced that, based on further discussions with unions and the Italian government, we will continue production at the Naples manufacturing plant in the near-term and resume negotiations with unions and the Italian government related to our exit of the plant. Our preliminary agreement to sell the plant to a third-party purchaser terminated in accordance with its terms in March 2020. We are ceasing production in the plant and exiting the facility in 2020 as previously disclosed.

In connection with this action, we have incurred approximately $63 million total costs comprised of $43 million in asset impairment costs, $14 million in other associated costs and $6 million in employee-related costs through September 30, 2020. As of September 30, 2020, we expect estimated total costs of $137 million and cash settlement of $89 million. We estimate that the remaining costs of approximately $74 million, including approximately $46 million in employee-related costs and approximately $28 million in other associated costs, will be substantially incurred in 2020.

The Company expected the cash settlement of these actions to be substantially complete in 2020. As a result of COVID-19 related external factors, substantially all of the approximately $89 million cash settlement is currently expected to occur in 2021.

In 2018, we announced actions in EMEA to reduce fixed costs by $50 million. The initiatives primarily include headcount reductions throughout the EMEA region. Additionally, we exited domestic sales operations in Turkey. These actions which totaled $83 million were substantially complete as of March 31, 2020.

The following table contains a subset of our restructuring actions above for the nine months ended September 30, 2020 and the total costs to date for each plan:


Millions of dollars	2020		Total
North America Fixed Cost Actions	$	95	$	95
Other Global Fixed Cost Actions	60		60
EMEA Naples Facility Closure	9		63
EMEA Fixed Cost Actions	6		83

The following table summarizes the changes to our restructuring liability during the nine months ended September 30, 2020:


Millions of dollars	December 31, 2019		Charges to Earnings		Cash Paid		Non-Cash and Other		September 30, 2020
Employee termination costs	$	57	$	163	$	(126)	$	—	$	94
Asset impairment costs	8		1		—		—		9
Facility exit costs	—		2		(2)		—		—
Other exit costs	12		20		(15)		2		19
Total	$	77	$	186	$	(143)	$	2	$	122

The following table summarizes the restructuring charges by operating segment for the period presented:


	Nine Months Ended
Millions of dollars	September 30, 2020
North America	$	77
EMEA	61
Latin America	21
Asia	7
Corporate / Other	20
Total	$	186