Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Deane Dray - Goldman Sachs
Deane Dray - Goldman Sachs
On the spending you’re seeing out of the consumer obviously weak, but I was wondering how that compares in the US versus Europe. Both are likely weak but any nuances there in terms of the rate of change or anything specific that you’re seeing differently in Europe versus the US on the consumer side?
Bob Arzbaecher
It’s a difficult question to answer because of the diverse markets that we play in, for example there’s no RV market in Europe and there is here in the US. I would say in general I’d say the US is twice as bad as Europe when it comes to the rate of decline. That would be my best answer to that question.
Deane Dray - Goldman Sachs
Is that your estimate that the US is just further along in a similar pattern perhaps or are you seeing different cycles altogether or is it too uncertain to tell at this point?
Bob Arzbaecher
My own thesis and everybody has their own, but my own is that the US consumer has been outspending his means for awhile and kind of the housing crash slowed that down. So I don’t think Europe saw the same kind of situation so I don’t think it’s as dramatic of a decline because they never really levered up as much as the US consumer would.
Deane Dray - Goldman Sachs
Could you bridge the year-over-margins in Electrical between the impact of the lower production, mix, any raw material or pricing headwinds you saw there as well?
Andy Lampereur
I would say that raw materials was not a significant factor in the fourth quarter. We did have certainly some increases along the way but we passed along price increases early on in the quarter. Mix definitely worked against us where some of our higher margin businesses such as marine in our North American electrical business which tend to be a little bit higher margins businesses were down but I don’t a specific bridge to say this much relates to this.
Inventory reductions also played a part of that but mix and absorption probably the biggest piece of it.
Bob Arzbaecher
The two businesses on the top line that were the weakest were the DIY Electrical and the marine and these are two businesses that have higher profit then the comp type of business. So there was absolutely a mix issue between that sales decline.
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