And we’re also looking at flat consolidation opportunities as well as a free up labor so we can transfer it to other locations. So it’s demanding a lot of time and a lot of attention. It’s not an issue that’s going away. At the same time, with that labor, you’re also seeing an increase in costs associated with employing that labor that’s going to be sticky and be here that we’re going to have to find a way to offset as we go forward or pass through.
Winnie Dong: Thank you. That’s very helpful. And I guess in related terms, I was wondering if you can maybe break down the last bucket in the EBITDA walk. Obviously, inflation from labor is a headwind, as you said. But what are the other breakdown in buckets that you’re hoping to generate whether it’s from recoveries from customers or some of the plant efficiencies that you’re planning to generate?
Christopher May: Yes. And Winnie, I think you’re assuming to a year-over-year walk on the $35 million of performance improvement in what and what inflation is embedded in there?
Winnie Dong: Yes. What are the different buckets are embedded in that performance?
Christopher May: Yes. So as we think about inflation stepping into 2024, we will have labor inflation as everyone will. And we do have other inflation embedded from some of our purchase components. But through some of our core plant productivity initiatives, we’re offsetting much of that labor inflation, that would be our expectation, same with anything from the supply base or have commercial arrangements with our customers to mitigate that. But far less in scope than we experienced in 2022 and 2023. I think that answers your question.
Winnie Dong: Yeah. Got it. Thank you so much for the color.
Operator: Our next question comes from Joe Spak from UBS. Please go ahead with your question.
Joseph Spak: Thanks. Good morning, everyone.
Christopher May: Good morning, Joe.
Joseph Spak: Maybe just a couple more on the backlog. David, you sort of mentioned this air pocket which makes sense because people are figuring out what to do with EVs and delaying it, but then they’re also extending some ICE program. So I think like last year, you talked about a $1.5 billion quoting funnel. Is there any sort of update on that activity?
David Dauch: Joe, as I was saying earlier, we still have about $1.5 billion of new and incremental quoting opportunity today, heavily weighted towards electrification. But as the customers are sorting out that LRPP, it may adjust the timing of some of what we’re porting out as far as the launch cadence of that. But also, as I mentioned, it may be — those launches will most likely be later in the decade versus mid-decade. That’s really what we see right now, yes.
Joseph Spak: Okay. And then, Chris, I had answered to — when you’re answering John’s question before about the attrition in the outer years, you talked about that continual sort of plan for $100 million to $200 million. I guess conceptually, why if your customers are extending programs, why wouldn’t it be at a lower level if they’re extending some of the current programs are on?
Christopher May: Yes. So I mean the — great question, $100 million to $200 million, I mean, we have tens of hundreds of different programs we have through our entire global franchise of sales. Some are smaller engine programs or transmission programs or driveline programs. Occasionally, they’ll cease production of a vehicle, like, for example, you saw Stellantis cease production of the Jeep Cherokee last year. So those are types of things that will fall into the attrition bucket. If they’re extending programs, you have a chance to mitigate some of that attrition is higher, right? So that maybe they’ll continue engine production on certain size engines for an extended period of time, which bodes very well to our component business. So it is a little bit of a mix of a lot of factors. But you do have vehicle nameplates that, from time to time, or sub-transmissions or sub engines that simply cease production and replace with something else.
David Dauch: Joe, I think it just goes back to one of the OEMs going to do with their long-range product plans. But as Chris indicated, they’ve already made some decisions to cancel certain programs or stop manufacturing programs. We’re going to feel that spike or that impact periodically. But historically, we’re going to be in that $100 million to $150 million in normal attrition. And then when you get into some of the higher years, you give me $200 million, $200 million plus, right? But it’s been pretty consistent in that $100 million to $200 million range, and we’ve been able to offset that. Obviously, with this air pocket that I’m talking about hopefully, some of the extensions of these programs that we’re starting to see will cover up some of the attrition that’s there.
But the big thing for us is to make sure that we can demonstrate incremental and profitable growth going forward. And most of that, that we’re working on right now is electrification base, which is going to be the latter part of the decade. So that’s that air pocket that we talked about between now and then, but it can be filled with incremental volume as the production ramps up and the desire ramps up and inventory gets to desired levels.
Christopher May: Yes. So just like big picture, generally speaking, I guess, to your underlying thesis, if products are extended, that’s generally good for us.
Joseph Spak: Okay. Thanks for the color.
Christopher May: Thanks, Joe.
Operator: Ladies and gentlemen, our final question will come from Tom Narayan from RBC. Please go ahead with your question.
Tom Narayan: Hi guys. Thanks for talking the question. So there was a large European OEM who was saying that they expected in 2024, they would have to make meaningful concessions to the suppliers because of cutting production on EVs. They just have to make those agreements whole. Just curious if this is something you guys anticipate there’s some choppiness of orders moving around that the contracts you guys have with the are OEM customers such that they would have to compensate you guys if they’re shutting down particular EV schedules, et cetera?
