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Costs Associated with Rationalization Programs | 9 Months Ended
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Sep. 30, 2020
Restructuring And Related Activities [Abstract] |
Costs Associated with Rationalization Programs | NOTE 3. COSTS ASSOCIATED WITH RATIONALIZATION PROGRAMS In order to maintain our global competitiveness, we have implemented rationalization actions over the past several years to reduce high-cost and excess manufacturing capacity and associate headcount. The following table shows the roll-forward of our liability between periods:
|  | Associate- |  |  |  |  |  |  |  |  |
(In millions) |  | Related Costs |  |  | Other Costs |  |  | Total |
Balance at December 31, 2019 |  | $ | 220 |  |  | $ | — |  |  | $ | 220 |
2020 Charges(1) |  |  | 115 |  |  |  | 15 |  |  |  | 130 |
Incurred, net of foreign currency translation of $5 million and $0 million, respectively |  |  | (124 | ) |  |  | (15 | ) |  |  | (139 | )
Balance at September 30, 2020 |  | $ | 211 |  |  | $ | — |  |  | $ | 211 |
(1) | Charges of $130 million in 2020 exclude net charges of $3 million for benefit plan curtailments and settlements recorded in Rationalizations in the Statement of Operations.
On April 17, 2020, we reached a tentative bargaining agreement, which was ratified on May 1, 2020, and subsequently permanently closed our Gadsden, Alabama tire manufacturing facility (“Gadsden”) as part of our continuing strategy to strengthen the competitiveness of our manufacturing footprint by curtailing production of tires for declining, less profitable segments of the tire market. The plan will result in approximately 470 job reductions. We have $38 million accrued related to this plan at September 30, 2020, which is expected to be substantially paid through 2021. During the first quarter of 2019, we approved a plan to modernize two of our tire manufacturing facilities in Germany. We have $91 million accrued related to this plan at September 30, 2020, which is expected to be substantially paid through 2022. The remainder of the accrual balance at September 30, 2020 is expected to be substantially utilized in the next 12 months and includes $33 million related to the closed Amiens, France tire manufacturing facility, $16 million related to global plans to reduce Selling, Administrative and General Expense (“SAG”) headcount, $11 million related to plans to reduce manufacturing headcount and improve operating efficiency in Europe, Middle East and Africa ("EMEA"), and $8 million related to a plan primarily to offer voluntary buy-outs to certain associates at Gadsden. The following table shows net rationalization charges included in Income (Loss) before Income Taxes:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
(In millions) |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Current Year Plans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Associate Severance and Other Related Costs |  | $ | 6 |  |  | $ | 17 |  |  | $ | 72 |  |  | $ | 115 |
Benefit Plan Curtailments/Settlements/Termination Benefits |  |  | 2 |  |  |  | — |  |  |  | 7 |  |  |  | 1 |
Other Exit Costs |  |  | 5 |  |  |  | 3 |  |  |  | 7 |  |  |  | 7 |
Current Year Plans - Net Charges |  | $ | 13 |  |  | $ | 20 |  |  | $ | 86 |  |  | $ | 123 |
Prior Year Plans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Associate Severance and Other Related Costs |  | $ | 10 |  |  | $ | (2 | ) |  | $ | 43 |  |  | $ | (2 | )
Benefit Plan Curtailments/Settlements/Termination Benefits |  |  | — |  |  |  | 1 |  |  |  | (4 | ) |  |  | — |
Other Exit Costs |  |  | 2 |  |  |  | 2 |  |  |  | 8 |  |  |  | 7 |
Prior Year Plans - Net Charges |  |  | 12 |  |  |  | 1 |  |  |  | 47 |  |  |  | 5 |
Total Net Charges |  | $ | 25 |  |  | $ | 21 |  |  | $ | 133 |  |  | $ | 128 |
Asset Write-off and Accelerated Depreciation Charges(1) |  | $ | 4 |  |  | $ | 1 |  |  | $ | 94 |  |  | $ | 2 |
(1) | Asset write-off and accelerated depreciation charges for the three and nine months ended September 30, 2020 are primarily related to the permanent closure of Gadsden.
Substantially all of the new charges for the three and nine months ended September 30, 2020 and 2019 related to future cash outflows. Current year plan charges for the three and nine months ended September 30, 2020 primarily related to the permanent closure of Gadsden, including pension settlement and termination benefits of $2 million and $7 million, respectively, for one of our defined benefit pension plans. Net current year plan charges for the three and nine months ended September 30, 2019 include $11 million and $105 million, respectively, related to plans to reduce manufacturing headcount and improve operating efficiency in EMEA, including the plan to modernize two of our tire manufacturing facilities in Germany, and $9 million and $18 million, respectively, related to plans to reduce manufacturing headcount and improve operating efficiency in Americas. Net prior year plan charges for the three and nine months ended September 30, 2020 included $5 million and $30 million, respectively, related to additional termination benefits for associates at the closed Amiens, France manufacturing facility. Refer to Note to the Consolidated Financial Statements No. 14, Commitments and Contingent Liabilities. In addition, net prior year plan charges for the three and nine months ended September 30, 2020 included $4 million and $11 million, respectively, related to the plan to modernize two of our tire manufacturing facilities in Germany. Net prior year plan charges for the nine months ended September 30, 2020 also included $4 million related to a plan primarily to offer voluntary buy-outs to certain associates at Gadsden and a curtailment credit of $4 million for a postretirement benefit plan related to the exit of employees under an approved rationalization plan. Net prior year plan charges for the three and nine months ended September 30, 2019 primarily related to EMEA manufacturing plans. Net prior year plan charges for the nine months ended September 30, 2019 also included reversals of $3 million for actions no longer needed for their originally intended purposes. Ongoing rationalization plans had approximately $930 million in charges incurred prior to 2020 and approximately $80 million is expected to be incurred in future periods. Approximately 650 associates will be released under new plans initiated in 2020, of which approximately 450 were released through September 30, 2020, primarily related to Gadsden. In the first nine months of 2020, approximately 1,050 associates were released under plans initiated in prior years. Approximately 600 associates remain to be released under all ongoing rationalization plans.

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -URI http://asc.fasb.org/topic&trid=2175745 + Details
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