Emerson 2009 Annual Report Download - page 35

Annual Report 33
    2007 e x p e n s e p A i d /ut i l i z ed 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
Expense includes $6 and $8 in 2008 and 2007, respectively, related to the European appliance motor and pump busi-
ness classied as discontinued operations.
Rationalization of operations by segment is summarized as follows:
     2007 2008 2009
Process Management $15 12 55
Industrial Automation 14 19 47
Network Power 23 28 118
Climate Technologies 9 22 48
Appliance and Tools 14 11 27
Total $75 92 295
Given ongoing economic conditions, the Company currently expects rationalization expense for 2010 in the range of
$125 to $175, including the costs to complete actions initiated before the end of 2009 and actions anticipated to be
approved and initiated during 2010.
Costs incurred during 2009 included action to exit approximately 25 production, distribution or ofce facilities and
eliminate approximately 20,000 positions, of which approximately one-half were from restructuring actions and the
remainder through layoffs and attrition, as well as costs related to facilities exited in previous periods. All the Compa-
ny’s business segments incurred shutdown costs due to workforce reductions and/or the consolidation of facilities.
Start-up and moving costs were primarily attributable to Network Power and Industrial Automation, and Network
Power accounted for most of the asset write-downs. Vacant facilities and other costs were immaterial for any segment.
Actions during 2009 included Process Management reducing worldwide headcount; Industrial Automation consoli-
dating production facilities and reducing North American headcount; Network Power primarily incurring integration
costs for the Embedded Computing acquisition, but also consolidating power systems production areas in
North America and Europe and shifting some production and engineering capabilities from Europe to Asia; Climate
Technologies consolidating or downsizing production facilities in North America, Europe and Asia; and Appliance
and Tools reducing salaried workforce and consolidating or downsizing production facilities in North America.
During 2008, rationalization of operations expense primarily related to exiting approximately 10 production, distribu-
tion or ofce facilities, and included the elimination of approximately 2,300 positions as well as ongoing costs related
to facilities exited in previous periods. Noteworthy actions in 2008 included Process Management expanding capacity
in China and consolidating European production facilities; Industrial Automation consolidating power transmission
and valve facilities in North America; Network Power consolidating production in North America and transferring other
production in Asia; Climate Technologies shifting certain production to Mexico and consolidating production facilities
in Europe; and Appliance and Tools shifting production from Canada to the U.S. and closing motor production facilities
in Europe.
Costs for 2007 related primarily to exiting approximately 25 production, distribution or ofce facilities, and included
the elimination of approximately 2,200 positions plus costs related to facilities exited in previous periods. Process
Management expanded capacity in China and moved certain operations from Western Europe to Eastern Europe and
Asia; Industrial Automation consolidated certain power transmission facilities in Asia and North America; Network
Power closed certain power conversion facilities and also shifted power systems production from the U.S. and Europe
to Mexico; Climate Technologies expanded capacity in Mexico and Eastern Europe and consolidated production
facilities in the U.S.; and Appliance and Tools consolidated certain North American production and closed production
facilities in Europe.