Jason Cardew: Yes. I think our general view on the recovery or offset of commodity cost increase is roughly the same. I think it’s roughly half over the next two to three years, this is how I would characterize it today. And really, I think at this stage, we kind of shift more from contractual direct recovery to more of a negotiated recovery and so you sort of have to combine our LTA price down negotiations with all of the claims that we have on our end, which include higher commodity costs, higher wage inflation, the impact of an unstable production environment. And so our offset plan is a combination of recovery from the customer and continuing to generate net positive performance in both business segments, and I think if you look back over the last two years, just sort of step-back and look at the overall math the commodity impact, net of recoveries have been about 200 basis points for the company.
We’ve offset about 100 basis points of that through performance improvements in both segments. So the net effect on margins of those two categories sort of gathers, about 100 basis points. I think if you look at 2023, 2024, 2025, I would expect that we will have fully recovered that 100 basis points over that time period. It’s a little bit slower to start, I think in 2003, because in addition to the commodity issue that we’ve been dealing with and the unstable production environment, now we have sort of additional layer of wage inflation that I would characterize as well above what we’ve historically experienced. That by itself, rise by about an $85 million impact just looking at salary and hourly wage inflation in 2023 compared to 2022. That’s the impact that we see in 2023.
I think if the Fed does its job, central banks do their jobs and inflation comes down a little bit, you’ll see that wage inflation normalize a bit more, if you look at 2024 and 2025 and that will give us a chance to what that net performance really show itself as margin accretion. Now with all that said, we’re still very confident and fully committed to margin expansion in both segments, we see 8% as a reasonable margin target in both Seating and E-Systems in that 2025 time period. And we expect to take a meaningful step-up from the midpoint of the guidance that we just issued for this year to 2024, it may not be directly linear, but it’s going to be pretty close I think as you look out over the next three years.
Rod Lache: Hey, thanks for that. And just to clarify that when you said you expect to recover half of this over the next two to three years. That’s a combination of internal productivity plus external recoveries or is that just the recovery part of it?
Jason Cardew: I would say it’s both, those lines get blurred the longer time goes by here. Its — those are — the raw materials and wage inflation become part of that annual basket of goods that you’re negotiating with your customers. So it’s a little more difficult to delineate between the two baskets.
Rod Lache: All right. Thank you.
Operator: Our next question comes from Mark Delaney from Goldman Sachs. Please go ahead with your question.
Mark Delaney: Yes, good morning and thank you very much for taking the questions. First on the backlog, the three year forward backlog, I believe is now $2.85 billion. I think last year it was $3.3 billion. If I heard correctly in the prepared remarks, you talked about over 20% growth in backlog over the next couple of years. This is maybe you can help us better understand what’s going on with a three year number and how much it’s perhaps changes in overall end market assumptions?
