Despite the effects of the European economic recession in the early 1990s, the markets for portable power tool accessories and consumables stand at the threshold of an unprecedented period of success. The post-recession boom of the metalworking and manufacturing industries has driven demand in the power tool markets. In Europe, where economic conditions remained sluggish, especially in Germany, a decline in consumer tool sales was partially offset by some improvement in sales of professional tools.
The consumer business continued to be negatively affected by excess retail inventory of opening-price-point power tools imported from Asia, while the professional business continued to benefit from the successful transition to the DEWALT brand throughout Europe.
Lets take the example of the Black and Decker Company. According to their senior management staff "In light of the effects of weak economic conditions on our profitability, we have been taking a number of measures during the year to cut costs. Through a general hiring freeze and attrition, as well as consolidation in the Hardware and Home Improvement group, we have achieved a 4% reduction in total headcount since the end of 2000. We also are generating positive results from a company-wide program to reduce and improve the effectiveness of indirect spending, and we are carefully monitoring the amount and timing of discretionary expenses. Challenging economic conditions have become even more difficult, however, and prospects of economic recovery more distant since the tragic events that occurred in September. Therefore, we are intensifying our focus on structural cost reductions that will improve profitability despite sluggish sales. We continue to project that our year-end inventory level will be at or below $800 million due to improved supply chain management and lower production levels. We are on track to reduce capital spending for 2001 by at least $35 million compared to.......
