Question-and-Answer Session
Operator
(Operator Instructions). The first question is from Brian Johnson. Please state your company name.
Brian Johnson - Barclays Capital
Could you kind of recap for us some of the cost reduction numbers, the targets, and how those are spread across the geographies, and then where the timing is on those going forward?
It looks like if you said about half of the $100 million EBIT headwind was offset, that’s about $55 million of cost reduction in 1Q. Is that about right, and how is that split and I know you’re not done yet, but what can we look to going forward?
Ken Trammell
Brian from a cost reduction standpoint, I guess if you look at the SGA&E side of the mix, we were down about 30% compared to first quarter of last year in our total expense for SGA&E. That is a combination of restructuring activities that we’ve taken, the extraordinary efforts that our employees have put out to make sure we cut every dime of discretionary spending that we just absolutely don’t have to spend, and then the employee furloughs and other activities that Gregg talked about that we implemented in the first quarter.
We would look to continue to see significant SGA&E and cost savings as we move through the rest of the year and then, would remind you that the salary rollback that we talked about implementing on April 1st, we expect the same place until we begin to see recovery. So, that is a bit fluid. When recovery happens, we would expect to restore salaries back to where they were.
Brian Johnson - Barclays Capital
How about on the production cost side? Some of the other players with active in Europe like Borg Warner have moved to flexible work weeks. Can you quantify what the cost reduction was in Europe or alternatively what kind of decremental margins you're looking to in that segment?
Gregg Sherrill
I don’t know that I could quantify on this morning, but we have taking those exact same types of actions that you just mentioned, negotiated with our labor unions over there. Some of those were implemented in the first quarter. Some of them are now going into effect significantly in Germany and Belgium, where our bigger operations are, but I don’t know Ken that we could actually quantify those this morning.
Ken Trammell
Yes, I don’t have a quantification for you. I can tell you. I mean, obviously the volume hit us pretty hard in Europe in the first quarter because it takes longer to get some of the actions moving in Europe. We didn’t see as much of a benefit in the first quarter, as we would expect to see in the second quarter.
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