Restructuring and Other Initiatives
We have previously executed various restructuring and other initiatives and we plan to execute additional initiatives in the future, if necessary, in order to align manufacturing capacity and other costs with prevailing global automotive production and to improve the utilization of remaining facilities. To the extent these programs involve voluntary separations, no liabilities are generally recorded until offers to employees are accepted. If employees are involuntarily terminated, a liability is generally recorded at the communication date. Related charges are recorded in Automotive cost of sales and Automotive selling, general and administrative expense.
The following table summarizes the reserves related to restructuring and other initiatives and charges by segment, including postemployment benefit reserves and charges (dollars in millions):
|
| | | | | | | | | | | | | | | | | | | |
| GMNA | | GME | | GMIO | | GMSA | | Total |
Balance at January 1, 2011(a) | $ | 1,135 |
| | $ | 664 |
| | $ | 3 |
| | $ | — |
| | $ | 1,802 |
|
Additions, interest accretion and other | 104 |
| | 449 |
| | — |
| | 81 |
| | 634 |
|
Payments | (366 | ) | | (395 | ) | | (2 | ) | | (68 | ) | | (831 | ) |
Revisions to estimates | 19 |
| | (9 | ) | | — |
| | — |
| | 10 |
|
Effect of foreign currency | (8 | ) | | (22 | ) | | — |
| | (1 | ) | | (31 | ) |
Balance at December 31, 2011(a) | 884 |
| | 687 |
| | 1 |
| | 12 |
| | 1,584 |
|
Additions, interest accretion and other | 140 |
| | 254 |
| | 84 |
| | 92 |
| | 570 |
|
Payments | (304 | ) | | (344 | ) | | (46 | ) | | (55 | ) | | (749 | ) |
Revisions to estimates | (78 | ) | | (17 | ) | | (1 | ) | | (11 | ) | | (107 | ) |
Effect of foreign currency | 11 |
| | 10 |
| | 1 |
| | — |
| | 22 |
|
Balance at December 31, 2012(a) | 653 |
| | 590 |
| | 39 |
| | 38 |
| | 1,320 |
|
Additions, interest accretion and other | 58 |
| | 202 |
| | 404 |
| | 50 |
| | 714 |
|
Payments | (182 | ) | | (299 | ) | | (111 | ) | | (68 | ) | | (660 | ) |
Revisions to estimates | (16 | ) | | (9 | ) | | (3 | ) | | (1 | ) | | (29 | ) |
Effect of foreign currency | (16 | ) | | 19 |
| | 4 |
| | (3 | ) | | 4 |
|
Balance at December 31, 2013(a) | $ | 497 |
| | $ | 503 |
| | $ | 333 |
| | $ | 16 |
| | $ | 1,349 |
|
__________
| |
(a) | The remaining cash payments related to these reserves for restructuring and other initiatives, including temporary layoff benefits of $353 million, $356 million and $376 million at December 31, 2013, 2012 and 2011 for GMNA, primarily relate to postemployment benefits to be paid. |
Year Ended December 31, 2013
GMNA recorded charges, interest accretion and other and revisions to estimates primarily related to cash severance incentive programs for skilled trade U.S. hourly employees and service cost for hourly layoff benefits. Due to the expected closure of the Oshawa Consolidated Plant in December 2016, affected employees will be eligible for a voluntary restructuring separation incentive program in accordance with the existing collective bargaining agreement that provides cash and a car voucher. During 2013 some of the affected employees separated and the related costs were recorded.
GME recorded charges, interest accretion and other and revisions to estimates primarily related to our plan to terminate all vehicle and transmission production at our Bochum, Germany facility by the end of 2014. Through December 31, 2013 the active separation programs related to Germany had a total cost of $194 million and had affected a total of 450 employees. We expect to complete these programs in 2014 and incur additional charges of $650 million, which will affect an additional 3,300 employees.
GMIO recorded charges, interest accretion and other and revisions to estimates for separation programs in Australia and Korea and programs related to the withdrawal of the Chevrolet brand from Europe described below. Through December 31, 2013 the active separation programs in GMIO had a total cost of $420 million and had affected a total of 4,100 employees. We expect to complete these programs in 2017 and incur additional restructuring and other charges of $640 million.
GMSA recorded charges for active separation programs in Brazil. Through December 31, 2013 the active separation programs related to Brazil had a total cost of $103 million.
Year Ended December 31, 2012
GMNA recorded charges, interest accretion and other and revisions to estimates related to our 2011 UAW labor agreement and increased production capacity utilization in Canada. Our 2011 UAW labor agreement included cash severance incentive programs which were completed at March 31, 2012 for skilled trade U.S. hourly employees. A total of 1,400 skilled trade U.S. hourly employees participated in these programs at a total cost of $99 million which was recorded upon irrevocable acceptances by both parties. Substantially all of the program cost was recorded in the three months ended March 31, 2012.
GME recorded charges, interest accretion and other and revisions to estimates for previously announced separation and early retirement programs. Through December 31, 2012 the active separation programs related to Germany and the United Kingdom had a total cost of $400 million and had affected a total of 2,550 employees, of which $310 million related to a program initiated in Germany in 2010.
GMIO recorded charges, interest accretion and other related to voluntary separation programs primarily in Korea and Australia. Through December 31, 2012 these programs had a total cost of $69 million which affected 650 employees.
GMSA recorded charges of $87 million for employee separation costs related to a separation program in Brazil.
Year Ended December 31, 2011
GMNA recorded charges, interest accretion and other primarily related to special attrition programs for skilled trade U.S. hourly employees, service cost for hourly layoff benefits and Canadian restructuring activities.
GME recorded charges, interest accretion and other for separation programs primarily related to previously announced programs in Germany. Through December 31, 2011 these programs had a total cost of $1.1 billion and affected a total of 6,700 employees and included the December 2010 closure of the Antwerp, Belgium facility.
GMSA recorded charges, interest accretion and other for separation programs primarily related to the voluntary separation program in Brazil implemented in the three months ended December 31, 2011. A total of 900 employees in Brazil participated in the separation program at a total cost of $74 million.
Withdrawal of the Chevrolet Brand from Europe
In December 2013 we announced our plans to focus our marketing and product portfolio on our Opel and Vauxhall brands in Western and Central Europe and cease mainstream distribution of Chevrolet brand in those markets in 2015. This decision impacts 1,200 Chevrolet dealers and distributors in the affected countries and 480 Chevrolet Europe employees. In the three months ended December 31, 2013 we recorded pre-tax charges of $636 million, net of noncontrolling interests of $124 million. These charges included dealer restructuring costs of $233 million and employee severance costs of $30 million which are reflected in the table above. The remaining charges for intangible asset impairments of $264 million and sales incentive, inventory related and other costs of $233 million are not included in the table above. We may incur additional charges for exit costs of up to $300 million primarily through the first half of 2014. Refer to Note 11 for additional information on the intangible asset impairment charges.
Manufacturing Operations at Holden
In December 2013 we announced plans to cease vehicle and engine manufacturing and significantly reduce engineering operations at Holden by the end of 2017. Holden will continue to sell imported vehicles through its Holden dealer network and maintain its global design studio. This decision affects 2,900 employees from the Elizabeth vehicle manufacturing plant and Holden's Victorian workforce. In the three months ended December 31, 2013 we recorded pre-tax charges of $536 million in Automotive cost of sales consisting primarily of asset impairment charges of $477 million, including property, plant and equipment, which are not included in the table above. The remaining charges relate to exit-related costs, including certain employee severance related costs, of $59 million which are included in the table above. We expect to incur additional charges through 2017 for incremental future cash payments of employee severance once negotiations of the amount are completed. Refer to Note 9 for additional information on the property, plant and equipment impairment charges.
