Employee Separation Actions and Exit and Disposal Activities (Notes)

6 Months Ended

Jun. 30, 2022

Restructuring Cost and Reserve [Line Items]

Restructuring and Related Activities Disclosure [Text Block]

EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES

We record costs associated with voluntary separations at the time of employee acceptance, unless the acceptance requires explicit approval by the Company. We record costs associated with involuntary separation programs when management has approved the plan for separation, the affected employees are identified, and it is unlikely that actions required to complete the separation plan will change significantly. Costs associated with benefits that are contingent on the employee continuing to provide service are accrued over the required service period.

Company Excluding Ford Credit

Employee separation actions and exit and disposal activities include employee separation costs, facility and other asset-related charges (e.g., accelerated depreciation), dealer and supplier payments, other statutory and contractual obligations, and other expenses, which are recorded in Cost of sales and Selling, administrative, and other expenses. Below are actions initiated, primarily related to the global redesign of our business:

•Ford Motor Company Brasil Ltda. exited manufacturing operations in Brazil, which resulted in the closure of facilities in Camaçari, Taubaté, and Troller in 2021

•Ford Motor Company Limited ceased production at the Bridgend plant in the United Kingdom and the facility was closed in September 2020

•Ford India Private Limited ceased vehicle manufacturing in Sanand in fourth quarter 2021 and plans to cease manufacturing in Chennai in third quarter 2022

•Ford Espana S.L. ceased production of the Mondeo at the Valencia plant in Spain in March 2022

In addition, we are continuing to reduce our global workforce and take other restructuring actions.

The following table summarizes the activities for the periods ended June 30, which are recorded in Other liabilities and deferred revenue (in millions):

	Second Quarter				First Half
	2021		2022		2021		2022
Beginning balance	$	1,499	$	829	$	1,732	$	950
Changes in accruals (a)	176		50		369		116
Payments	(966)		(146)		(1,257)		(351)
Foreign currency translation	130		(42)		(5)		(24)
Ending balance	$	839	$	691	$	839	$	691

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(a)Excludes pension costs of $46 million and $9 million in the second quarter of 2021 and 2022, respectively, and $84 million and $16 million in the first half of 2021 and 2022, respectively.

We recorded $86 million and $43 million in the second quarter of 2021 and 2022, respectively, and $388 million and $66 million in the first half of 2021 and 2022, respectively, for accelerated depreciation and other non-cash items. In addition, we recognized a pre-tax net gain on sale of assets of $6 million and $38 million in the second quarter and first half of 2022, respectively.

We estimate that we will incur about $1.5 billion in total charges in 2022 related to the actions above, primarily attributable to employee separations and dealer and supplier settlements. We recorded $160 million in the first half of 2022 for such actions. We continue to review our global businesses and may take additional restructuring actions in markets where a path to sustained profitability is not feasible when considering the capital allocation required for those markets.

NOTE 16. EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES (Continued)

Ford Credit

Accumulated foreign currency translation losses included in Accumulated other comprehensive income/(loss) at June 30, 2022 of $223 million are associated with Ford Credit’s investments in Brazil and Argentina that have ceased operations. We expect to reclassify these losses to income upon substantially complete liquidation of Ford Credit’s investments, which may occur over multiple reporting periods. In the second quarter and first half of 2022, we reclassified losses of $36 million and $155 million, respectively, to Other income/(loss), net, upon the liquidation of three investments in Brazil. Although the timing for the completion of the remaining actions is uncertain, we expect the majority of losses to be recognized in 2024 or later.