Question-and-Answer Session
Operator
Gentlemen, thank you. (Operator Instructions). We will take our first question from Patrick Archambault from Goldman Sachs.
Patrick Archambault - Goldman Sachs
Hi, good morning.
Chip McClure
Good morning Patrick.
Patrick Archambault - Goldman Sachs
Yes. I think you touched on it in slide 24, but can you give us a sense of what declines you would start to need in Europe before really you start to see margins start to compress there. It sounds like the capacity constraints have made; it is such that at least the first, the drop off in the first few units might actually be positive for margins. Would you just give us a little color as to what the sensitivity might be on that on the downside?
Chip McClure
Sure. That is a good question Patrick. As you know, a year ago we really struggled with some that, there was a lot of premium cost. So as we look at that even with what is factored in there right now. I think it will actually put it into more of a reasonable phase as far as trying to reduce the premium cost, and as we have indicated we have been putting additional capacity in place.
So as we look at the volume productions that are actually in our plans and what Jay laid out for both the balance of this year and going forward into 2009. I think that clearly should help us, unless there is a significant drop off, and again you have got two different markets there, you have got Western Europe and you have got Eastern Europe. Western Europe, I think is where a lot of softness is being seen.
We continue as do our customers see strong growth in the Eastern European part of it. So as we see it right now I think, as you indicated right up front that with the softness as we see it in Western Europe will actually help reduce premium cost both for the balance of this year and more importantly going into 2009.
Jay Craig
I think Patrick the only thing I would also add is that, to meet some of the additional capacity requirements that we are asked to by our customers we have not added additional facilities or significant additional headcount. So that if the volumes come in slightly lower than people anticipate it should not require a lot of significant restructuring costs.
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