Steve Downing: Yes, thanks, Mark. What I would say is on the recovery side, we have been working really hard on that over the last 18 months and the team has done an amazing job of positioning us well with OEMs to negotiate most of those deals. There is still some residuals that will happen in Q4 and beyond, but we’re probably 80% of the way through that with our customers and that’s why we now are talking about the focus, which we had always known would be wave 2 of our work and improving margins, was going to be focused on internal cost and supplier costs. So our focus there has been like to Neil’s point isn’t just, purely economics all the time, it’s also engineering our way into more cost efficient solutions and so the team, has been already actively working in the space.
The next 18 months though is going to become a lot more effort and focus on redesigns and on making sure that we have the right product partners from a supplier standpoint and cost efficient solutions. So it is going to become more difficult in the second year of going after it because this isn’t just a negotiation piece, this is going to be a lot of engineering work that’s required in order to accomplish these improvements.
Mark Delaney: Okay, got it. And maybe you could also talk a little bit more on what you’re seeing by key region in terms of the production schedules particularly Internationally in areas like Europe and China, one of the other 2 tier ones talked about seeing potential macroeconomic impact on European and China’s schedules and, you know, especially as you guys have a 24 target out there, we better understand what the trajectory and the production schedules may be as you look at those key regions?
Steve Downing: Yes. I think for sure, if you look at Europe, I mean, it’s historically, it’s tended to trend, pretty similarly with North American market in terms of macroeconomic issues and so I wouldn’t see any real change in Europe versus what we’re seeing already in North America, and that’s really affected mostly by interest rate currently. So what’s the over underlying economic condition of the country in the region where you’re participating and then what is the lasting impact of cost of money and how does that impact a consumer’s buying habits and so I think those will be the biggest factors, both in North America and Europe. China is a little different, there has been extreme amount of volatility in that marketplace.
I mean, we’ve done well through that, but we also understand that there’s a lot of pressure on the OEMs right now. There’s some concerns around profitability with those OEMs and so that’s one of the things that we look at and pay a lot of attention to is what is the financial stability of the customer base as well and I think our biggest concern there would be in the China market, not in the rest of the world.
Mark Delaney: Thank you.
Operator: Our next question comes from the line of James Picariello of BNP Paribas. Your line is open.
James Picariello: Hi. Good morning, guys. Just wondering if you could speak to the rising or the still increasing raw material costs. That was called out as a headwind for us in the quarter. In particular on Chip semi’s pricing, what the backdrop looks like there as we think about next year, And then my, my follow-up question would be to Neil, my apologies, I had to join the call late and, and I just caught the tail end of the redesign effort. If we could just elaborate a little bit on that, I might have a follow-up to the redesign topic as well.
Steve Downing: Yes. So on the chip pricing, that’s really something that we had already negotiated stuff that happened towards the end of the first quarter, really in the second quarter. So we didn’t see the full brunt of that headwind really into the third quarter. So it was something that was we had briefly talked about it last quarter, but it kind of offset some of the other positive things that we had going on. So I think that was just a little bit of the noise on the bill material side, but it’s really it’s not nearly as much as what we had already prune but kind of offsetting some of the positive things that we saw really, balancing through the third quarter.
Neil Boehm: Yeah and we still are seeing a couple suppliers that are still asking for some increases. So part of my prepared comments was around looking at products and components and finding alternate solutions or design strategies, as the next phase. So as we get into Q4 here and into 2024, we’re in the process of identifying that product and the components that we need to focus on in order to help remove cost out of the build material, especially as Steve had mentioned a little bit ago, especially on some of the higher content like Full Display Mirror where you have a lot more technology. Those are the areas that took a lot more financial burden with the cost increases over the last 2 years.
James Picariello: Got it. That’s helpful. But can that, can the redesign effort, could that potentially lead to additional our D&E and just, you know, resource investment on behalf of you guys to really take that to the finish line, or is that strategy and the investments that are needed pretty well contained?
Neil Boehm: Yes, absolutely. I mean, there’s definitely a step up in terms of the R requirements in order to achieve those. It is contained inside of our guidance and really what we are talking about is a redirection and as we move into 2024, the growth in both the top line, but also in the engineering base of the business, a good portion of that’s going to be focused on redesign efforts.
James Picariello: Got it. Okay. Thank you.
Operator: Our next question comes from the line of Ryan Brinkman from JP Morgan. Your line is open.
Ryan Brinkman: Thanks for taking my questions. I see you’re essentially reiterating the full year out look despite the headwind from UAW strikes. So are you able to quantify impact to date from the strikes? What is maybe embedded in the updated guide for the full year and then for the guide to remain unchanged versus the time of 2Q earnings, something had to track better, right, by an equivalent amount to offset the strike headwind. So what would you say track better or did you maybe contemplate some strike impact or how should we think about this factor?
Steve Downing: Well, I’d say we’ll start with Q3, it was a very modest impact in Q3. If you look at the plants that were impacted and the portions of OEMs, very modest impact to us. As we have moved through Q3, our Q4 started, basically, we were running sub of one million dollar a week impact obviously with the latest announcements over the last few days, including some of the GM plant shutdowns, those are plants that are more impactful to us. So we have gotten to the range where we could be talking about, if things didn’t change from where they’re at right now, $2 million or $2.5 million a week in lost revenue, is about what we would be facing and so as we move forward, obviously, depending on the breadth and scope of the shutdowns, will determine how much and how long will ultimately drive what the total impact is to the company and so, we do believe we are well inside of that range with the guidance that we gave.
