Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Brian Johnson - Barclays Capital.
Brian Johnson - Barclays Capital
Can you give us a sense of how Performance Plus 2 is dealing with the lower volumes especially in Europe, and in particular are there assumptions you’d baked into Performance Plus that were dependent on a certain level of staffing and volume that would actually result in lower savings, and then how are you offsetting that to keep on the track you’ve outlined?
Charles G. McClure, Jr.
Let me start and I’ll obviously let Jay weigh in a little bit more on the details.
As we kind of indicated, we did at a previous earnings call indicate that our wave two of Performance Plus would focus on Europe and some of that we’re doing with our overhead structure and SG&A as we indicated is one of the pillars that way which is somewhat volume independent, and I think some of what you saw with the actions we even indicated on October 31 are some of the actions we’ve pulled ahead that way.
Secondly, as we look at it in the direct material side, some of that obviously is volume related and with the current downturn it does allow us to better focus resources on that so that if the market does pick back up we’ll see the opportunity that way.
Jeffrey A. Craig
As Chip mentioned we’ve now headquartered wave two of Performance Plus in Europe and Carsten and I are attending monthly meetings there. I would say the first material outcome of that exercise was the announcements we made on October 31. The majority of those cost reductions were actually in Europe and did take our capacity down from a labor perspective almost 20% to 25% just based on those announcements. We’ve taken the cost reduction actions already to be in line with the guidance we provided today so those have already been executed.
We’ve also gone through as I mentioned in my presentation all the Performance Plus initiatives, particularly those that we thought would be volume dependent to make certain that the guidance we provided today on our expected $75 million of savings, $50 million of which will be in continuing operations, that we have assurance that we believe we’ll achieve that number. So we have gone through those issues to look at the ones that might be volume dependent.
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