Restructuring costs

Our accounting for employee separations is dependent upon how the particular program is designed. For voluntary programs, eligible separation costs are recognized at the time of employee acceptance unless the acceptance requires explicit approval by the company. For involuntary programs, eligible costs are recognized when management has approved the program, the affected employees have been properly notified and the costs are estimable.

Restructuring costs for the three and nine months ended September 30, 2018 and 2017 were as follows:




(Millions of dollars)	Three Months Ended September 30
	2018		2017
Employee separations ¹	$	44	$	8
Contract terminations ¹	—		6
Long-lived asset impairments ¹	18		31
Other ²	48		45
Total restructuring costs	$	110	$	90


	Nine Months Ended September 30
	2018		2017
Employee separations ¹	$	121	$	514
Contract terminations ¹	—		32
Long-lived asset impairments ¹	49		306
Defined benefit plan curtailments and termination benefits ³	—		29
Other²	123		130
Total restructuring costs	$	293	$	1,011

¹ Recognized in Other operating (income) expenses.
² Represents costs related to our restructuring programs, primarily for accelerated depreciation, project management costs, equipment relocation, inventory write-downs and LIFO inventory decrement benefits from inventory liquidations at closed facilities, all of which are primarily included in Cost of goods sold.
³ Recognized in Other income (expense).

For the nine months ended September 30, 2018, the restructuring costs were primarily related to ongoing facility closures across the company.

Restructuring costs of $649 million for the nine months ended September 30, 2017, were related to the closure of the facility in Gosselies, Belgium, within Construction Industries. The remaining restructuring costs for the first nine months of 2017 were primarily related to restructuring actions in Resource Industries.

Restructuring costs are a reconciling item between Segment profit and Consolidated profit before taxes. See Note 15 for more information.

The following table summarizes the 2017 and 2018 employee separation activity:




(Millions of dollars)
Liability balance at December 31, 2016	$	147
Increase in liability (separation charges)	525
Reduction in liability (payments)	(423		)
Liability balance at December 31, 2017	$	249
Increase in liability (separation charges)	121
Reduction in liability (payments)	(233		)
Liability balance at September 30, 2018	$	137

Most of the liability balance at September 30, 2018 is expected to be paid in 2018 and 2019. About one-third of this balance is for employee separation payments related to closure of the Gosselies, Belgium, facility.

In March 2017, Caterpillar informed Belgian authorities of the decision to proceed to a collective dismissal, which led to the closure of the Gosselies site, impacting about 2,000 employees. Production of Caterpillar products at the Gosselies site ended during the second quarter of 2017. The other operations and functions at the Gosselies site were phased out by the end of the second quarter of 2018. We estimate restructuring costs incurred under this program to be about $675 million. In the first nine months of 2018, we incurred $11 million of restructuring costs, and we incurred $653 million in 2017 for a total of $664 million through September 30, 2018. We expect to recognize the remaining costs in 2018.

In September 2015, we announced a large scale restructuring plan (the Plan) including a voluntary retirement enhancement program for qualifying U.S. employees, several voluntary separation programs outside of the U.S., additional involuntary programs throughout the company and manufacturing facility consolidations and closures expected to occur through 2018. The largest action among those included in the Plan was related to our European manufacturing footprint, which led to the Gosselies, Belgium, facility closure as discussed above. In the first nine months of 2018, we incurred $109 million of restructuring costs related to the Plan, and we have incurred $1,776 million related to the Plan through September 30, 2018. We expect to recognize approximately $50 million of additional restructuring costs related to the Plan in 2018.