As part of its three-pronged effort to improve operating efficiency and profitability, Watsco (Coconut Grove, Fla.) announced that it will close and integrate seven locations in the first half of 2001. These initiatives include retaining valuable customers and key employees of the affected locations.
During 2000, Watsco completed the closure, consolidation and integration of 25 locations to reduce overlap in certain markets, eliminate underperforming locations, simplify the operating structure of certain business units, cut operating costs and reduce inventory levels.
The company's second initiative is to eliminate throughout 2001 a variety of product lines that have unacceptable gross margins and sales growth rates. The elimination of these products, and the reduction of other unproductive SKUs, is expected to enhance long-term operating margins and increase return on capital.
The third initiative is to restructure its manufactured housing segment, which completed a substantial reduction in its workforce and incurred other restructuring costs in response to a 23% decline in business volume during 2000.
"These profit-improvement initiatives are important steps to move our financial performance forward and also have the desired effect of simplifying our business," said Albert H. Nahmad, president and CEO. "We are also thinking beyond the traditional yardstick of margins and growth rates as technology and use of the Internet provide a catalyst toward reducing inefficient bricks-and-mortar while at the same time retaining critical employees and extending more and greater services to our customers."