David Gitlin : Well, we look at the IRA, still kind of going through final comments. We see that getting fully implemented towards the middle of the year, but the opportunity there is very significant. You have the 25C tax credits, which can provide a homeowner up to $3,200, really looking at $2,000 for a heat pump. And what was really significant there was — they made that in the current drafting, especially in the key parts in the South, that’s eligible for the two stage heat pumps, which means that it really provides a meaningful incentive for a customer not only to shift from cooling only to heat pumps, but also to a two stage heat pump, which could be significant. It used to be that 30% of our split sales for heat pump, we’re now at 35%.
We’re seeing our growth rates continue to start with And you’re seeing the same 30% — 35% in North America, 30% for commercial heat pumps in Europe. So we think that the Inflation Reduction Act will be meaningful, both in residential, but also for commercial. They doubled in that 179D they doubled the commercial building tax credit up to $2.50 to $5 per square foot for energy efficiency systems. So we think that will be meaningful as well. And then there’s a whole significant amount of incentives as you get into Europe. Europe effectively dodged the bullet because of the warm winter that it had this past winter, but the supplies are not going to be what they need as they head into the winter of 2023. And that’s going to drive significant demand for heat pumps in both residential, which is a space that’s very attractive that we’re looking to continue to penetrate.
And commercial heat pumps, we’re number one in Europe.
Operator: And our next question coming from the line of Brett Linzey with Mizuho Group. Your line is now open.
Brett Linzey: Good morning, all. Let me come back to the Refrigeration segment. I appreciate all the sales detail there. I was hoping you might be able to put a finer point on the profitability of that weaker container and commercial refrigeration. I imagine that profit profile is much lower. But any way to frame that or provide some context would be great?
Patrick Goris : The container business is a really attractive business within refrigeration. Our enormous installed base also enables us to go after significant aftermarket given the 1 million-plus units that are out there that we’re trying to connect and drive aftermarket revenue. Commercial refrigeration today has lower operating margins, and so they’re below 10%. They’re probably close to 5% in to 10%. But we’ve taken out a lot of costs. And so as we focus on productivity irrespective of volume growth, once volume starts to turn, we expect there to be attractive incremental in commercial refrigeration. So underlying profitability from an operating margin significantly lower than the overall average of the segment. But once volumes kick back in, given the work that we have done, we would expect to see attractive incrementals there.
Brett Linzey : Got it. Thanks. And then just shifting over to the gross productivity. You noted the $300 million. Patrick, you said $50 million to offset Toshiba. What are the balance of those investment priorities? And then are those signed and sealed for 2023? Or is there an opportunity to flex those up and down as needed?
