Andrew Wall: Yes. Most of our contracts are on the power side, in particular, or a year to 2 years, maybe 2 is probably a better average, before they’re renewed. But we — again, we’ve gone back and looked at all of our contracts and engaged customers and the — there are some but not a significant proportion that doesn’t have some kind of provision that’s been built into it.
Robert Barger: Got it. And just more holistically, if you step back and look at your whole business model, where — what would you have to change to become more flexible? Or how can you adapt to changing input costs on a more real-time basis?
Warren Veltman: I think what you just talked about, Steve, is a primary way to do that. And when you look — as we said, the flexibility that we have to do it more timely has not been an issue for us on the Power Solutions side. But on the Mobile Solutions side, where we have contracts and if you think about our contracts running typically 5 to maybe on the outside 7 years, the average life is maybe — left is like 2 to 3 years, right, which is too long when you see the inflation that we’ve had over the past period of time. So building in some sort of mechanism going forward into our contracts is a key to do that. And historically, on the material side, we would take a certain amount of material risk in our contracts. And today, we’re taking 0 material risk because the material is the first thing that started moving on us.
And we were — we’ve been chasing that for a year, 1.5 years because it resets in some cases, every 6 months or resets at the beginning or the end of the quarter. But the next quarter, if you’re still in an inflationary environment, you’re still behind, right? So we’ve seen that over the last year. So having the reset times be more frequent than semiannual, maybe quarterly or maybe retroactive resets are the types of things that we’re looking at with customers. And I would say on the material side, customers have been pretty compromising on the material piece of it, especially in situations and you know the business well, where we have a directed source from our customers, where we only have one person we can go to, it’s very difficult for them to argue that they’re not going to take that.
But the non-material piece of it for us has been the area where I’m sure you’ve talked to other automotive supply companies. We have good relationships with our customers, but let’s face it. This has been a combative period okay, that Andrew and his team and our management team have struggled through with our customers, and we’ve had numerous instances where we’ve had to either stop shipments or something like that in order to finally conclude on getting some of the cost increases that we need on the nonmaterial side. So I think the efforts that we’ve accomplished so far in January have been solid. We’d like to see some additional closures here on pricing over the next couple of months. And then we need to monitor inflation as we go forward.
And as we’ve negotiated the pricing as of January 1, we’ve been trying to position ourselves with our customers. Look, if we’re still seeing this type of inflation through the summer months, we’re going to be back at you guys this summer because it’s not something that we can continue to absorb.
Robert Barger: Right. So as you think about your pricing actions and the challenges on those launch programs and the costs incurred with that and how you expect volume in Mobile to roll out this year, is it fair to think that you can get back to the 2021 level in terms of segment margin versus the 2.5% that you put up in 2022? Like is that a bridge too far? Should we be thinking in the middle somewhere? How just — what do you think — what do you have line of sight to?
