Emerson 2008 Annual Report Download - page 45

[ 38 ] Emerson 2008
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The change in the liability for the rationalization of operations during the years ended September 30 follows:
    2007 e x p e n s e p A i d /ut i lize d 2008
Severance and benefits $28 49 44 33
Lease/contract terminations 8 3 6 5
Fixed asset write-downs – 4 4 –
Vacant facility and other shutdown costs 1 8 8 1
Start-up and moving costs – 34 33 1
$37 98 95 40
    2006 e x p e n s e p A i d /ut i lize d  2007
Severance and benefits $31 40 43 28
Lease/contract terminations 12 4 8 8
Fixed asset write-downs – 2 2 –
Vacant facility and other shutdown costs 1 8 8 1
Start-up and moving costs 1 29 30 –
$45 83 91 37
Expense includes $6, $8 and $4 in 2008, 2007 and 2006, respectively, related to the European appliance motor and
pump business classied as discontinued operations.
Rationalization of operations by segment is summarized as follows:
     2006 2007 2008
Process Management $14 15 12
Industrial Automation 12 14 19
Network Power 19 23 28
Climate Technologies 14 9 22
Appliance and Tools 21 14 11
Total $80 75 92
Rationalization of operations comprises expenses associated with the Company’s efforts to continuously improve
operational efciency and to expand globally in order to remain competitive on a worldwide basis. These expenses
result from numerous individual actions implemented across the divisions on a routine basis. Rationalization of opera-
tions includes ongoing costs for moving facilities, starting up plants from relocation as well as business expansion,
exiting product lines, curtailing/downsizing operations because of changing economic conditions, and other items
resulting from asset redeployment decisions. Shutdown costs include severance, benets, stay bonuses, lease/contract
terminations and asset write-downs. Start-up and moving costs include employee training and relocation, movement
of assets and other items. Vacant facility costs include security, maintenance and utility costs associated with facilities
that are no longer being utilized.
During 2008, rationalization of operations primarily related to the exit of approximately 10 production, distribution, or
ofce facilities, including the elimination of approximately 2,300 positions, as well as costs related to facilities exited
in previous periods. Noteworthy rationalization actions during 2008 are as follows. Process Management included
start-up costs related to capacity expansion in China to serve the Asian market and severance related to consolidation
of certain production facilities in Europe to obtain operational efciencies. Industrial Automation included severance
and start-up and moving costs related to the consolidation of certain power transmission and valve facilities in North
America to obtain operational efciencies. Network Power included severance and start-up and moving costs related
to the consolidation of certain production in North America to remain competitive on a global basis and start-up
and moving costs related to the transfer of certain embedded computing production in Asia. Climate Technologies
included severance and shutdown and start-up and moving costs related to the shifting of certain production in the
United States to Mexico, and severance and shutdown costs related to the consolidation of certain production facilities
in Europe to obtain operational efciencies. Appliance and Tools included severance and start-up and moving costs