Restructuring Costs

9 Months Ended

Sep. 30, 2020

Restructuring Charges [Abstract]

Restructuring Costs

Restructuring costsOur accounting for employee separations is dependent upon how the particular program is designed. For voluntary programs, we recognize eligible separation costs at the time of employee acceptance unless the acceptance requires explicit approval by the company. For involuntary programs, we recognize eligible costs 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, 2020 and 2019 were as follows:

(Millions of dollars)	Three Months Ended September 30
	2020		2019
Employee separations 1	$	98	$	8
Long-lived asset impairments 1	2		3
Other 2	12		13
Total restructuring costs	$	112	$	24
	Nine Months Ended September 30
	2020		2019
Employee separations 1	$	232	$	33
Contract terminations 1	3		—
Long-lived asset impairments 1	25		39
Other 2	36		110
Total restructuring costs	$	296	$	182
1 Recognized in Other operating (income) expenses.
2 Represents costs related to our restructuring programs, primarily for inventory write-downs, equipment relocation, project management, accelerated depreciation and building demolition, all of which are primarily included in Cost of goods sold.

For the nine months ended September 30, 2020, the restructuring costs were primarily related to various voluntary and involuntary employee separation programs implemented across the company and strategic actions to address certain product lines, which were partially offset by a gain on the sale of a manufacturing facility that had been closed. For the nine months ended September 30, 2019, the restructuring costs were primarily related to restructuring actions in Construction Industries and Energy & Transportation.

The following table summarizes the 2019 and 2020 employee separation activity:

(Millions of dollars)
Liability balance at December 31, 2018	$	85
Increase in liability (separation charges)	48
Reduction in liability (payments)	(85)
Liability balance at December 31, 2019	48
Increase in liability (separation charges)	232
Reduction in liability (payments)	(131)
Liability balance at September 30, 2020	$	149

Most of the liability balance at September 30, 2020 is expected to be paid in 2020 and 2021.