These steps include plant accommodations and reconfigurations to maintain social distancing mask availability to all employees deep cleaning quarantining individuals with positive tests or potential exposure to the virus for 14 days and restricting access to facilities among others.
The stability afforded by the replacement component in residential and commercial water heater and boiler demand which we estimate at 85% of the U.S. unit volume puts us in a position of strength as we navigate through this pandemic.
We estimate replacement demand is 40% to 50% in China.
While we are in a position of strength similar to 2008 and 2009 time frame we expect to see lower demand for the majority of our products and have been proactive in managing costs.
A. O. Smith is in a solid financial position with positive cash flow and a strong balance sheet.
We have reprioritized and reduced our capital spend plans for 2020 by approximately 20%.
Through April we have completed $200 million of dividends out of China and we have repatriated $125 million to the U.S. As of April 30 2020 we had approximately $850 million in liquidity consisting of cash cash equivalents marketable securities and borrowing capacity on our credit facility which remains in place throughout 2020 and 2021 expiring in December 2021.
We have achieved a 20% headcount reduction compared with December 2018 and we will continue to assess the need for additional workforce reduction.
We are targeting 1000 net store closures this year in China along with further cuts in advertising and other costs.
Total savings are expected to total $55 million an increase of $10 million from our estimate in January of which $30 million was achieved in 2019.
Our leverage ratio is 17.5% gross debt to total capital at the end of March was significantly below the 60% maximum dictated by our credit and various long-term facilities.
First quarter 2020 sales of $637 million declined 15% compared with the first quarter of 2019.
The decline in sales was largely due to a 56% decline in China local currency sales driven by the COVID-19 pandemic.
As a result of lower sales in China first quarter 2020 net earnings of $52 million and earnings per share of $0.32 declined significantly compared to the same period in 2019.
Sales in our North America segment of $533 million increased 2% compared with the first quarter of 2019.
Incremental sales of $16 million from the Water-Right acquisition purchased in April 2019 organic growth of 17% in North America water treatment products and higher water heater volumes drove sales higher.
Rest of the World segment sales of $110 million declined 53% with the same quarter in 2019.
China sales declined 56% in local currency related to weak consumer demand driven by the pandemic.
On slide eight North America segment earnings of $127 million were 10% higher than segment earnings in the same quarter in 2019.
As a result first quarter 2020 segment margin of 23.9% improved from 22.2% achieved in the same period last year.
Rest of the World loss of $42 million declined significantly compared with 2019 first quarter segment earnings of $12 million.
As a result of these factors the segment margin was negative with compared with 5.3% in the same quarter in 2019.
Our corporate expenses of $15 million and interest expense of $2 million were essentially flat as last year.
Our effective tax rate of 23.6% in the first quarter of 2020 was higher than the 20% tax rate in the first quarter of 2019 primarily due to geographical differences in pre-tax income.
Cash provided by operations of $54 million during the first quarter of 2020 was higher than $22 million in the same period of 2019 as a result of lower investment in working capital including timing of certain volume incentive payments which was partially offset by lower earnings compared with the year ago period.
We had cash balances totaling $552 million and our net cash position was $209 million at the end of March.
During the first quarter of 2020 we repurchased approximately 1.4 million shares of common stock for a total of $57 million.
Commercial average order rates in April were down 30% to 35%.
50% of our sales volume occurred before the Chinese New Year shutdown on January 24.
And as a result we continue to suspend our 2020 full year guidance.
We believe replacement demand for water heaters and boilers in the U.S. is approximately 85%.
In 2006 through 2009 which captured the Great Recession peak to trough industry shipments of residential water heater volumes declined 18%.
The decline was primarily driven by a $1.5 million decline in new homes constructed.
At 1.3 million new homes in 2019 we do not anticipate the new home construction impact will be as great as the Great Recession.
In North America we have previously experienced in weathering through difficult economic conditions most recently in the 2008 recession.
However with the massive and abrupt impact to jobs and end markets like restaurants hotels and hospitals it is difficult to predict this current state of shelter-at-home and state-by-state closures will play out similarly to the 2008 recession.
We estimate replacement demand represents approximately 85% of U.S. water heater and boiler volumes.

Summary:
A. O. Smith is in a solid financial position with positive cash flow and a strong balance sheet.
First quarter 2020 sales of $637 million declined 15% compared with the first quarter of 2019.
As a result of lower sales in China first quarter 2020 net earnings of $52 million and earnings per share of $0.32 declined significantly compared to the same period in 2019.
Our corporate expenses of $15 million and interest expense of $2 million were essentially flat as last year.
And as a result we continue to suspend our 2020 full year guidance.