Restructuring

On November 19, 2015, the Board of Directors of the Company approved adjustments to the Company’s footprint and capacity utilization, and reductions to selling, general and administrative costs. The restructuring and cost reduction actions began in the fourth quarter of 2015 and are expected to continue through 2017. These actions are expected to lower operating costs beginning in the first quarter of 2016.

The restructuring plan approved by the Board of Directors includes the following key activities:

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The closure of our Edgewood, Iowa facility and transfer of production to our Agua Prieta, Mexico facility. The closure was announced on December 3, 2015. The closure and subsequent transfer of production will improve our manufacturing capacity utilization in our wire harness business. We expect the closure to be completed in the second quarter of 2016. The costs are expected to approximate $0.6 million in cost of sales, consisting of $0.3 million in employee separation costs and $0.3 million in costs to move equipment and facility lease costs. Capital investment is expected to approximate $0.1 million. Employee separation costs were recorded totaling $0.1 million in cost of sales during the year ended December 31, 2015.


•	The closure of an administrative office in China and reduction in workforce occurred in the fourth quarter of 2015. The employee separation costs were $0.2 million in cost of sales.

•

The closure of additional manufacturing capacity and transfer of production to existing facilities is expected to occur between the first quarter of 2016 and the fourth quarter of 2017. The closures and subsequent transfers of production will further improve our manufacturing capacity utilization. The restructuring activities and associated capital expenditures are expected to total approximately $10 million to $14 million in cost of sales, consisting of $3 million to $4 million in employee separation costs, $5 million to $7 million in costs to move equipment and $2 million to $3 million of capital investment. Costs were recorded in 2015 of $0.3 million in employee separation costs in cost of sales and $0.2 million in selling, general and administrative expense for employee separation costs.

In 2014, management began the closure of its Tigard, Oregon facility and completed the closure in the third quarter of 2015. The closure and transfer of production to other facilities cost $2.4 million and is reflected in cost of sales, of which $1.2 million was incurred in each of the years ended December 31, 2015 and 2014. Of the $2.4 million incurred, $0.6 million pertained to employee separation costs and $1.8 million pertained to costs to move equipment, perform building repairs and other related expenditures.

A summary of the restructuring liability for the years ended December 31 is as follows (in thousands):



	2015
	Employee Costs	Facility Exit and Other Contractual Costs	Total
Balance - Beginning of the year	$531	$72	$603
Provisions	790	1,542	2,332
Utilizations	(779)	(1,571)	(2,350)
Balance - End of year	$542	$43	$585

	2014
	Employee Costs	Facility Exit and Other Contractual Costs	Total
Balance - Beginning of the year	—	198	198
Provisions	541	780	1,321
Utilizations	(10)	(906)	(916)
Balance - End of year	$531	$72	$603