Business Restructuring

6 Months Ended

Jun. 30, 2019

Restructuring and Related Activities [Abstract]

The Company records restructuring liabilities that represent charges incurred in connection with consolidations of certain operations, including operations from acquisitions, as well as headcount reduction programs. These charges consist primarily of severance costs and asset write-downs.

2019 Restructuring Program

In June 2019, the Company approved a business restructuring plan which included actions to reduce its global cost structure. The program is the result of a comprehensive internal operational assessment to identify further opportunities to improve the profitability of the overall business portfolio. This program includes further manufacturing optimization; targeted pruning of low-profit business in certain regions; exiting certain smaller product lines that are not meeting profitability objectives; reorganization of certain business unit cost structures based on the current economic climate; and certain redundancy actions related to recent acquisitions.

A pretax restructuring charge of $184 million was recorded in PPG's second quarter 2019 financial results. This charge represents employee severance and other cash costs. The majority of restructuring actions are expected to be completed by the end of the fourth quarter 2020 with the remainder of the actions expected to be completed in 2022. There was no material activity on this reserve during the second quarter.

2018 Restructuring Program

In April 2018, the Company approved a business restructuring plan which included actions to reduce its global cost structure. The program was in response to the impacts of customer assortment changes in our U.S. architectural coatings business during the first quarter 2018 and sustained, elevated raw material inflation. The program aims to further right-size employee headcount and production capacity in certain businesses based on product demand, as well as reductions in various global functional and administrative costs. Substantially all actions from this business restructuring plan are expected to be complete by the end of the first quarter of 2020.

2016 Restructuring Program

In December 2016, PPG’s Board of Directors approved a business restructuring program which includes actions necessary to reduce the Company's global cost structure. The program is focused on certain regions and end-use markets where business conditions were the weakest, as well as reductions in production capacity and various global functional and administrative costs. Substantially all actions from this business restructuring plan are expected to be complete by the end of the third quarter of 2019.

The following table summarizes the reserve activity for the six months ended June 30, 2019:



($ in millions)	Total Reserve
December 31, 2018		$110
Second quarter 2019 restructuring charge	184
Cash payments	(23		)
Release of prior reserves	(11		)
Foreign currency impact	1
June 30, 2019		$261

Adjustments of approximately $8 million and $11 million were recorded in the three and six months ended June 30, 2019, respectively, to reduce the remaining restructuring reserves to reflect the current estimate of the costs to complete these actions.