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Costs Associated with Rationalization Programs | 9 Months Ended
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Sep. 30, 2023
Restructuring and Related Activities [Abstract] |
Costs Associated with Rationalization Programs | NOTE 3. COSTS ASSOCIATED WITH RATIONALIZATION PROGRAMS In order to improve our global competitiveness, we have implemented, and are implementing, rationalization actions to reduce high-cost and excess manufacturing capacity and operating and administrative costs, as well as actions related to the integration of Cooper Tire & Rubber Company ("Cooper Tire"). The following table presents a roll-forward of the liability balance between periods:
|  | Associate- |  |  |  |  |  |  |
(In millions) |  | Related Costs |  |  | Other Costs |  |  | Total |
Balance at December 31, 2022 |  | $ | 115 |  |  | $ | 2 |  |  | $ | 117 |
2023 Charges |  |  | 269 |  |  |  | 40 |  |  |  | 309 |
Incurred, net of foreign currency translation of ($1) million and $0 million, respectively |  |  | (45 | ) |  |  | (28 | ) |  |  | (73 | )
Reversed to the Statement of Operations |  |  | (7 | ) |  |  | — |  |  |  | (7 | )
Balance at September 30, 2023 |  | $ | 332 |  |  | $ | 14 |  |  | $ | 346 |
During the third quarter of 2023, we approved a rationalization and workforce reorganization plan in EMEA to improve our cost structure. The proposed actions would lead to a reduction of approximately 1,200 positions across multiple countries within EMEA, while also creating approximately 500 new roles principally in our existing shared services organization in Romania, resulting in an overall net reduction of approximately 700 positions. In certain countries, relevant portions of the plan remain subject to consultation with employee representative bodies. We expect these actions will be substantially complete in 2025. The total pre-tax charges associated with the plan are expected to be $210 million to $230 million, substantially all of which are expected to be cash charges primarily for associate-related and other implementation and exit costs. During the third quarter of 2023, we accrued $167 million of pre-tax charges related to this plan, which is expected to be substantially paid through 2024. During the third quarter of 2023, we approved a plan in Asia Pacific to improve profitability in our Australia and New Zealand operations. The proposed plan will change our operating model to a third-party distribution and retail sales model instead of a company-owned approach. The proposed plan will lead to a reduction of approximately 700 positions, the exit of nine warehouse locations, and the sale or exit of approximately 100 retail and fleet store locations. The plan remains subject to consultation with employee representative bodies. We expect to substantially complete this plan by the end of 2024 and estimate total pre-tax charges associated with this action will be between $55 million and $65 million, of which $40 million to $50 million are expected to be cash charges primarily for associate-related and lease exit costs, with the remainder primarily representing non-cash charges for accelerated depreciation and other asset-related charges. During the third quarter of 2023, we accrued $20 million of pre-tax charges related to this plan, which is expected to be substantially paid through 2024. During the second quarter of 2023, we approved a plan to permanently reduce production capacity at our Fulda, Germany tire manufacturing facility (“Fulda”) by approximately 50% aligned with our goal to reduce our production cost per tire in EMEA. We have $60 million accrued for this plan at September 30, 2023, which is expected to be substantially paid through 2024. Relevant portions of the rationalization plan remain subject to consultation with employee representative bodies. During the second quarter of 2023, we also approved a plan to reduce costs associated with our global operations and technology organization. We have $5 million accrued for this plan at September 30, 2023, which is expected to be substantially paid through the first quarter of 2024. Relevant portions of the rationalization plan remain subject to consultation with employee representative bodies. During the first quarter of 2023, we approved a plan designed to streamline our EMEA distribution network that will result in the eventual closure of our Philippsburg, Germany distribution center. The rationalization plan will lower our operating costs while maintaining or improving the existing service levels to our customers. We have $18 million accrued for this plan at September 30, 2023, which is expected to be substantially paid during the first half of 2024. During the first quarter of 2023, we also approved a plan in EMEA to reduce staffing levels and capacity at several manufacturing facilities commensurate with the decline in demand. We have $3 million accrued for this plan at September 30, 2023, which is expected to be substantially paid during the first half of 2024. The remainder of the accrual balance at September 30, 2023 is expected to be substantially utilized in the next 12 months and includes $34 million related to the closure of Cooper Tire's Melksham, United Kingdom manufacturing facility ("Melksham"), $30 million related to plans to reduce Selling, Administrative and General Expense ("SAG") headcount, $5 million related to the closed Amiens, France tire manufacturing facility, $1 million related to the integration of Cooper Tire, and various other plans to reduce headcount and improve operating efficiency. At September 30, 2023 and December 31, 2022, $237 million and $106 million were recorded in Other Current Liabilities in the Consolidated Balance Sheets, respectively. 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) |  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Current Year Plans |  |  |  |  |  |  |  |  |  |  |  |
Associate Severance and Other Related Costs |  | $ | 187 |  |  | $ | 39 |  |  | $ | 262 |  |  | $ | 61 |
Other Exit Costs |  |  | 3 |  |  |  | 1 |  |  |  | 16 |  |  |  | 1 |
Current Year Plans - Net Charges |  | $ | 190 |  |  | $ | 40 |  |  | $ | 278 |  |  | $ | 62 |
Prior Year Plans |  |  |  |  |  |  |  |  |  |  |  |
Associate Severance and Other Related Costs |  | $ | (2 | ) |  | $ | — |  |  | $ | — |  |  | $ | 4 |
Other Exit Costs |  |  | 10 |  |  |  | 5 |  |  |  | 24 |  |  |  | 16 |
Prior Year Plans - Net Charges |  | $ | 8 |  |  | $ | 5 |  |  | $ | 24 |  |  | $ | 20 |
Total Net Charges |  | $ | 198 |  |  | $ | 45 |  |  | $ | 302 |  |  | $ | 82 |
Asset Write-offs (Recoveries) and Accelerated Depreciation, net |  | $ | 8 |  |  | $ | 6 |  |  | $ | 21 |  |  | $ | 6 |
Substantially all of the new charges for the three and nine months ended September 30, 2023 and 2022 relate to future cash outflows. Net current year plan charges for the three months ended September 30, 2023 primarily relate to the rationalization and workforce reorganization plan in EMEA and the plan to improve profitability in Asia Pacific. Net current year plan charges for the nine months ended September 30, 2023 also include the plan to reduce production capacity at Fulda, the plan to streamline our EMEA distribution network, the plan to reduce costs associated with our global operations and technology organization, and the plan to reduce manufacturing staffing levels and capacity in EMEA. Net current year plan charges for the three and nine months ended September 30, 2022 are related to the closure of Melksham, the integration of Cooper Tire, and a plan to exit retail operations in South Africa. Net prior year plan charges for the three months ended September 30, 2023 include $3 million related to the closure of Melksham, $3 million related to the integration of Cooper Tire, $1 million related to a plan in South Africa, $1 million related to the permanent closure of our Gadsden, Alabama tire manufacturing facility ("Gadsden"), and reversals of $1 million for actions no longer needed for their originally intended purpose. Net prior year plan charges for the nine months ended September 30, 2023 include $9 million related to the closure of Melksham, $7 million related to the integration of Cooper Tire, $5 million for various plans to reduce global SAG headcount, $4 million related to the permanent closure of Gadsden, $2 million related to discontinued operations in Russia, $1 million related to a plan in South Africa, and reversals of $7 million for actions no longer needed for their originally intended purpose. Net prior year plan charges for the three and nine months ended September 30, 2022 included $4 million and $14 million, respectively, related to the permanent closure of Gadsden, $1 million and $7 million, respectively, related to the modernization of two of our tire manufacturing facilities in Germany, and reversals of $3 million and $5 million, respectively, for actions no longer needed for their originally intended purpose. Asset write-offs (recoveries) and accelerated depreciation for the three months ended September 30, 2023 primarily relate to $3 million for the integration of Cooper Tire and $3 million for the closure of Melksham. Asset write-offs (recoveries) and accelerated depreciation for the nine months ended September 30, 2023 primarily relate to $18 million for the integration of Cooper Tire and $11 million for the closure of Melksham, partially offset by $10 million of recoveries of previously written-off accounts receivable and other assets in Russia. Ongoing rationalization plans had approximately $960 million in charges incurred prior to 2023 and approximately $100 million is expected to be incurred in future periods. Approximately 2,100 associates will be released under plans initiated in 2023, of which approximately 400 were released through September 30, 2023. In the first nine months of 2023, approximately 600 associates were released under plans initiated in prior years. Approximately 2,100 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://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482017/420-10-50-1 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482017/420-10-50-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//420/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482017/420-10-50-1 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 5.P.4(e)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479823/420-10-S99-2 + Details
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