Question-and-Answer Session
Operator
(Operator Instructions). We will take our first question from John Franzreb with Sidoti & Company.
John Franzreb - Sidoti & Company
Good morning, Dale.
Dale Barnhart
Good morning, John, how are you doing?
John Franzreb - Sidoti & Company
Good. I want to start a little bit on the auto business, what percentage of your consolidated revenues is auto sales now running at?
Dale Barnhart
54%.
John Franzreb - Sidoti & Company
54%, and the margin you recorded in the quarter, and I have looked back, and there was some close margins in 2004, but it was extremely low, is that all absorption issues, or is there something else going on there?
Dale Barnhart
Principally driven by the automotive business and it is absorption, through the first half John, we were able to maintain our contribution margins and gross margins by actions the business took to take cost out. The volume decline got to the point in the third quarter, where our fixed cost was starting to have an impact in the automotive and also raw material increases in Europe.
John Franzreb - Sidoti & Company
Is there anything going on in pricing in that segment?
Dale Barnhart
Contractually, we usually have year-over-year price down agreements with the OEMs and your opportunity to change pricing comes when you have new products and new platforms coming out, so you reestablish the price for given products.
John Franzreb - Sidoti & Company
Are you getting any intelligence on next year, or what that is going to look like?
Dale Barnhart
I think your intelligence and everybody's intelligence in this call is probably as good as ours. We track CSM data, which is widely used by the automotive industry, which not only gives you historical data, but tries to forecast production based on what the automotive manufacturers input to their model.
For this year, we have been discounting that every quarter, and even with the discount, we have been coming up short. So, '08 has surprisingly declined at such a rapid rate that even with discounting our own discounting, we have not been able to anticipate what is going on.
The one right news I did here last week coming in Friday was that Ford had increased the production of their F-150 pickup trucks and actually called a couple of thousand employees back to one of their Michigan operations.
Your guess is as good as mine. Have we yet hit bottom yet? I do not know, but we have been very cautious about trading in the fourth quarter and as we go into Q1 '09.
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