Question-and-Answer Session
Operator
Thank you. (Operator Instructions). Your first question comes from David Begleiter with Deutsche Bank Securities
David Begleiter - Deutsche Bank Securities
Shane, given the work you have done in comporting resins, what do you think the normalized margins could be in 2010 and 2011? Do we get to a double-digit rate in this business ever?
Shane Fleming
I suspected that double-digit question was coming. That is one I have been dealing with over the last several years. David it is, as you would guess, very, very demand dependent. We got our operating margins up about halfway to that target in the third quarter at lower than historical demand levels, clearly demonstrating an amount of costs that we have taken out of the business. I expect that we will get this business to double-digit margins at some point in time, but not being able to predict future volume I just can’t tell you when.
I think we have a lot of good programs still ongoing, new technologies coming to market that are going to improve our mix, but I think it would be premature for me to try and give you a target right now.
David Begleiter - Deutsche Bank Securities
Shane just on the Composites business, as destocking continues through year end what are you hearing from your customers about next year on a volume pick up for Boeing Airbus?
Shane Fleming
It is a very mixed story. Boeing and Airbus neither one have made any announcements of their intent to decrease their build rates. In fact, if you look at build rates for 2009 they are expected to be higher than 2008; 2010 right now should be similar to 2009 based on the material that is available publicly, but if you look at the activity with the Tier 1 suppliers they are pulling back build rate of parts in the anticipation of future reductions.
So, there are no clear signals out there. We have the Tier 1 guys pulling inventories down with the expectation of rate reductions, but neither Boeing nor Airbus actually announcing that they are planning to do so, so it is very difficult to get any clear signals from the market.
We are trying to obviously stay as close to the market as possible to understand the situation, be conservative in terms of how we are running the operations, make sure that we are ready to take the necessary steps to keep our costs down; but also at the same time we have to keep the powder dry in the event that we do see some restocking take place.
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