Question-and-Answer Session
Operator
Thank you. (Operator instructions). And our first question is from the line of Kevin Maczka with BB&T Capital Markets. Please go ahead.
Kevin Maczka – BB&T Capital Markets
Good morning, everyone.
Pat McHale
Good morning, Kevin.
Kevin Maczka – BB&T Capital Markets
Pat, I guess first on the gross margin, some of the items there that helped you in the quarter, things like raw materials pricing and the cost reductions, can you maybe touch a little more on that, give a little more detail on how much raw material helped, what kind of magnitude of pricing increases you saw, for example?
Jim Graner
Kevin, this is Jim. I will try to respond to your question. As you know, we have stated before, our pricing target for this year is three percentage points. We are realizing that. So that's probably the biggest contributor to the margin. Second in line is the factory performance. Factories have taken a lot of cost out of their fixed burden, and specifically, the Lube factory has made significant progress in improving their efficiencies from where they were this time last year. So that's a big contributor.
On the product cost side, we are seeing about a one percentage point favorable from material costs. Again, that's in comparison to the bubble in commodities we were seeing at the end of last year, and some favorable numbers this year. As well on the product cost side, both the Contractor and the Lubrication factories have made significant progress on certain products to lower those costs, coming both from engineering perspective and from a factory operation perspective.
On the smaller end of the scale, we are also seeing some improvement from discontinued products, specifically in the Industrial and the Lubrication segments. And lastly, as Pat mentioned, we are seeing some improvement in the Industrial side from a shift to more parts as factories are getting back to producing things. So a long list, but hopefully that helps, Kevin.
Kevin Maczka – BB&T Capital Markets
Yes Jim, it does. And then on the materials side, so with most metals and commodities in general moving higher now, do you expect that one point benefit to go away in Q4, or should that still be favorable for you in Q4 and then maybe less favorable in the first half next year?
Jim Graner
I would say the latter. We will still have a favorable comparison in Q4. It takes a while for those price increases to move through our channel, and while the commodities are up, they are not up anywhere near where they were a year ago. So still some favorable impacts going forward.
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