Costs Associated with Rationalization Programs

In order to maintain our global competitiveness, we have implemented rationalization actions over the past several years to reduce excess and high-cost manufacturing capacity and to reduce associate headcount.

The following table presents the roll-forward of the liability balance between periods:



(In millions)	Associate-related Costs			Other Costs			Total
Balance at December 31, 2013	$	232		$	5		$	237
2014 charges	76			52			128
Incurred, Net of Foreign Currency Translation of $(18) million and $0 million, respectively ⁽¹⁾	(186		)	(49		)	(235		)
Reversed to the Statement of Operations	(5		)	(6		)	(11		)
Balance at December 31, 2014	$	117		$	2		$	119
2015 charges	86			30			116
Incurred, Net of Foreign Currency Translation of $(12) million and $0 million, respectively ⁽¹⁾	(106		)	(25		)	(131		)
Reversed to the Statement of Operations	(1		)	—			(1		)
Balance at December 31, 2015	$	96		$	7		$	103
2016 charges	202			16			218
Incurred, Net of Foreign Currency Translation of $(13) million and $0 million, respectively	(75		)	(18		)	(93		)
Reversed to the Statement of Operations	(9		)	—			(9		)
Balance at December 31, 2016	$	214		$	5		$	219


(1)	Incurred in 2015 of $131 million excludes $25 million, and incurred in 2014 of $235 million excludes $20 million, of rationalization payments for labor claims relating to a previously closed facility in Greece.

Rationalization actions accrued at December 31, 2016 include $110 million related to our announced plan to close our tire manufacturing facility in Philippsburg, Germany. The plan is in furtherance of our strategy to capture the growing demand for premium, large-rim diameter tires in part by reducing excess capacity in declining, less profitable segments of the tire market. The plan, which remains subject to consultation with relevant employee representative bodies, would result in approximately 890 job reductions. The charges related to the announced closure are expected to be paid through 2018.

The remainder of the accrual balance at December 31, 2016 is expected to be substantially utilized within the next 12 months and includes $32 million related to our global plan to reduce SAG headcount, $22 million related to manufacturing headcount reductions in certain countries in Europe, Middle East and Africa ("EMEA"), $16 million related to the closure of our Wolverhampton, U.K. mixing and retreading facility and the plan to transfer consumer tire production from our manufacturing facility in Wittlich, Germany to other manufacturing facilities in EMEA, and $13 million related to the closure of one of our manufacturing facilities in Amiens, France.

The net rationalization charges included in Income before Income Taxes are as follows:



(In millions)	2016		2015			2014
Current Year Plans
Associate Severance and Other Related Costs	$	188	$	66		$	22
Other Exit and Non-Cancelable Lease Costs	1		7			1
Current Year Plans - Net Charges	$	189	$	73		$	23

Prior Year Plans
Associate Severance and Other Related Costs	$	5	$	19		$	49
Benefit Plan Curtailment / Settlement Loss (Gain)	1		(1		)	(22		)
Other Exit and Non-Cancelable Lease Costs	15		23			45
Prior Year Plans - Net Charges	21		41			72
Total Net Charges	$	210	$	114		$	95
Asset Write-off and Accelerated Depreciation Charges	$	20	$	8		$	7

Substantially all of the new charges in 2016 related to future cash outflows. Net current year plan charges at December 31, 2016 include charges of $116 million related to the announced plan to close our tire manufacturing facility in Philippsburg, Germany, $34 million related to a plan to reduce global SAG headcount, and $25 million related to manufacturing headcount reductions in EMEA to improve operating efficiency.

Net prior year plan charges recognized in the year ended December 31, 2016 include charges of $12 million related to the closure of one of our manufacturing facilities in Amiens, France.

Net charges for the year ended December 31, 2016 included reversals of $9 million for actions no longer needed for their originally intended purposes. Ongoing rationalization plans had approximately $595 million in charges through 2016 and approximately $80 million is expected to be incurred in future periods.

Approximately 1,700 associates will be released under new plans initiated in 2016, of which approximately 200 associates have been released as of December 31, 2016. In 2016, approximately 600 associates were released under plans initiated in prior years. In total, approximately 1,600 associates remain to be released under rationalization plans.

At December 31, 2016, approximately 840 former associates of the closed Amiens, France manufacturing facility have asserted wrongful termination or other claims against us. Refer to Note 19.

Accelerated depreciation charges in 2016 primarily related to the closure of our Wolverhampton, U.K. mixing and retreading facility and the announced plan to close our tire manufacturing facility in Philippsburg, Germany. Asset write-off and accelerated depreciation charges for all periods were recorded in cost of goods sold (“CGS”).

Rationalization activities initiated in 2015 consisted primarily of charges of $38 million related to the plan to close our Wolverhampton, U.K. mixing and retreading facility and a plan to transfer consumer tire production from our manufacturing facility in Wittlich, Germany to other manufacturing facilities in EMEA. Additional charges for the year ended December 31, 2015 primarily related to plans to reduce manufacturing and SAG headcount in EMEA and Americas. Net prior year plan charges recognized in the year ended December 31, 2015 include charges of $33 million related to the closure of one of our manufacturing facilities in Amiens, France and our exit from the farm tire business in EMEA.

Accelerated depreciation charges in 2015 primarily related to the plan to close our Wolverhampton, U.K. mixing and retreading facility.

Rationalization activities initiated in 2014 consisted primarily of manufacturing headcount reductions related to EMEA's plans to improve operating efficiency. In addition, EMEA, Americas and Asia Pacific also initiated plans to reduce SAG headcount. Net prior year plan charges for the year ended December 31, 2014 of $72 million include charges of $74 million for associate severance and idle plant costs, partially offset by a pension curtailment gain of $22 million, related to the closure of one of our manufacturing facilities in Amiens, France.

Asset write-off and accelerated depreciation charges of $7 million in 2014 related to property and equipment in our Wolverhampton, U.K mixing and retreading facility and property and equipment in one of our manufacturing facilities in Amiens, France.