Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Michael Rehaut - J.P. Morgan.
Michael Rehaut - J.P. Morgan
My first question has to do with your rationalization efforts and how that relates to the gross margins. You kind of laid out that this has been an ongoing effort and you broke out some of the facilities and headcount reductions in '08, but it just seems like the margins are obviously falling still at a pretty precipitous rate, particularly in the fourth quarter, and would suggest that the efforts really aren't enough right now in this environment. And I know you've talked before in terms of trying to balance cutting too deep in the near term and what that would do in terms of hurting the ability to recover, but at the end of the day we're in, as you've noted, a pretty prolonged downturn, a pretty difficult spot.
I was hoping you could give us some thoughts in terms of why you haven't cut deeper given that the reality has kind of set in over the last year that we're not getting out of this anytime soon, and what future plans you might have to really take some more aggressive steps to restructure and return to profitability, particularly in the Cabinets, the Installation and the Other Specialty, which are really the laggards here.
Timothy Wadhams
Well, I guess I would say, Mike, that I really think that we have been fairly aggressive in terms of the actions that we have taken. As you know, as we indicated, we've closed 17 different plants over the couple-year period, 2.5 year period, we're talking about. And I can't tell you exactly how many of those are in the cabinet segment that you alluded to, but a fair number of them are. The headcount reductions represent about 40% of our North American work force over that same time period.
And I think you're also aware - and Donny will elaborate on this in a second - but we have been very active in terms of changing the manufacturing footprint in the cabinet section as well as taking a hard look at our manufacturing process in our window-related business. In addition to that, we're very actively engaged in rationalizing products that we install, getting out of several diversified products.
So I think there's an awful lot under way that has been ongoing and will continue to be ongoing. A fair amount of the rationalization charges in the fourth quarter - I think about $15 million related to businesses in Europe. And so I guess I certainly feel that we are on a pretty good pace in terms of trying to keep up with some of the challenges there.
- To read the full transcript on Seeking Alpha, click here »
