Impairment and Restructuring Charges

12 Months Ended

Dec. 31, 2022

Note 15 - Impairment and Restructuring Charges

Impairment and restructuring charges by segment were as follows:

Year ended December 31, 2022:


	Mobile Industries		Process Industries		Unallocated Corporate		Total
Impairment charges	$	38.3	$	—	$	—	$	38.3
Severance and related benefit costs	3.8		0.4		—		4.2
Exit costs	1.5		0.1		—		1.6
Total	$	43.6	$	0.5	$	—	$	44.1

Year ended December 31, 2021:


	Mobile Industries		Process Industries		Unallocated Corporate		Total
Impairment charges	$	1.1	$	3.4	$	—	$	4.5
Severance and related benefit costs	1.7		0.9		—		2.6
Exit costs	1.4		0.4		—		1.8
Total	$	4.2	$	4.7	$	—	$	8.9

Year ended December 31, 2020:


	Mobile Industries		Process Industries		Unallocated Corporate		Total
Impairment charges	$	0.2	$	0.2	$	—	$	0.4
Severance and related benefit costs	8.2		11.0		0.4		19.6
Exit costs	0.6		0.6		—		1.2
Total	$	9.0	$	11.8	$	0.4	$	21.2

The following discussion explains the major impairment and restructuring charges recorded for the periods presented; however, it is not intended to reflect a comprehensive discussion of all amounts in the tables above.

Mobile Industries:

In 2022, the Company classified the ADS business as assets held for sale and recorded impairment charges of $29.3 million. The Company subsequently completed the sale of the ADS business on November 1, 2022. In addition, the Company recorded impairment charges of $9.0 million related to certain assets of its joint venture in Russia. As a result of Russia's invasion of Ukraine (and associated sanctions), the Company suspended its operations in Russia.

On July 19, 2021, the Company announced the closure of its bearing manufacturing facility in Villa Carcina, Italy. The Company transferred the manufacturing of its single-row tapered roller bearing production to other bearing facilities in Europe, Asia and the United States. The Company completed the closure of the facility on October 31, 2022, and it affected approximately 110 employees. The Company expected to incur approximately $9 million to $11 million of expenses related to this closure. During 2022, the Company recorded severance and related benefits of $1.4 million and exit costs of $1.6 million related to this closure. During 2021, the Company recorded impairment charges of $1.0 million, severance and related benefit costs of $1.8 million and exit costs of $1.1 million related to this closure. The exit costs recognized in 2022 and 2021 primarily related to environmental remediation. The Company incurred cumulative pretax costs related to this closure of $9.9 million as of December 31, 2022, including rationalization costs recorded in cost of products sold. On November 1, 2022, the Company completed the sale of this facility and recognized a pretax gain of $3.6 million.

Note 15 - Impairment and Restructuring Charges (continued)

On October 16, 2019, the Company announced the reorganization of its bearing plant in Gaffney, South Carolina. The Company transferred its high-volume bearing production and roller production to other Timken manufacturing facilities in the U.S. The transfer of these operations was completed by the end of the fourth quarter of 2021, and it affected approximately 150 employees. The Company expected to incur approximately $8 million to $10 million of pretax costs in total related to this reorganization. During 2020, the Company recognized severance and related benefits of $0.3 million and exit costs of $0.4 million related to this reorganization. The Company has incurred cumulative pretax costs related to this reorganization of $7.9 million as of December 31, 2022, including rationalization costs recorded in cost of products sold.

On January 16, 2023, the Company announced the closure of its bearing plant, mentioned above, in Gaffney, South Carolina. The Company expects to transfer its remaining operations to other Timken manufacturing facilities in North America. The closure of this facility is expected to occur by the end of the fourth quarter of 2023 and is expected to affect approximately 225 employees. The Company expects to incur approximately $10 million to $12 million of pretax costs in total related to this closure. During 2022, the Company recognized severance and related benefits of $0.9 million under an ongoing benefit arrangement related to this closure.

Process Industries:

On February 4, 2020, the Company announced the closure of its chain plant in Indianapolis, Indiana. This plant was part of the Diamond Chain acquisition completed on April 1, 2019. The Company will be transferring the manufacturing of its Diamond Chain product line to its chain facility in Fulton, Illinois. The chain plant is expected to cease operations by the end of the first quarter of 2023 and is expected to affect approximately 240 employees. The Company expects to hire approximately 130 full-time positions in Fulton, Illinois and expects to incur approximately $12 million to $15 million of expenses related to this closure. During 2021 and 2020, the Company recorded severance and related benefit costs of $1.2 million and $3.1 million related to this closure, respectively. The Company has incurred cumulative pretax costs related to this closure of $14.0 million as of December 31, 2022, including rationalization costs recorded in cost of products sold.

In addition, the Company recorded impairment charges of $3.4 million related to certain engineering-related assets used in the business during the year ended December 31, 2021. Management concluded no further investment would be made in these assets and as a result, reduced the value to zero.

COVID-19 Pandemic Cost Reduction Initiatives:

During 2020, the Company recorded severance and related benefit costs of $12.0 million to eliminate approximately 200 salaried positions to align current employment levels with customer demand. Of the $12.0 million charge, $5.8 million related to the Mobile Industries segment, $5.8 million related to the Process Industries segment and $0.4 million related to Unallocated Corporate.

Consolidated Restructuring Accrual:

The following is a rollforward of the consolidated restructuring accrual for the years ended December 31, 2022 and 2021:


	2022		2021
Beginning balance, January 1	$	7.0	$	8.0
Expense	5.8		4.4
Payments	(9.7)		(5.4)
Ending balance, December 31	$	3.1	$	7.0

The restructuring accrual at December 31, 2022 and 2021 is included in other current liabilities on the Consolidated Balance Sheets.