Philip Schlom: Hey, John.
Tom Ferguson: Good morning.
John Braatz: Tom, going back to the Precoat, you mentioned that a couple of facilities took on some, I guess, lower margin business. And I guess as you look forward, how do you balance that against maybe some weakness in general market activity. How do you balance maybe taking maybe additional lower margin business versus saying no and risking maybe a little bit more deleveraging of the cost side of the equation?
Tom Ferguson: Yeah, I think that’s — we’re spending a lot of time with the Precoat team, which was actually really enjoyable because it’s so similar to our galvanizing business. But yeah, we’re focused on profitable growth. And so — but they’ve got great indicators in terms of how they’re running their paint efficiencies, productivity, line feet per hour per day, all that kind of per minute. So there’s a balancing act, but I think we want to defend our market share. We are focused on what things are more profitable than others. We have made some leadership team, some leadership changes in a couple of those plants already. And we anticipate that, that’s going to start to drive better performance, better consistency. And because right now, it’s hard to say for sure that certain business isn’t all that profitable when you’ve got some underperforming operational issues.
So dealing with that and the team has been dealing with that. So it’s not like they’ve been sitting there. But those plants are also in markets where labor is even more constrained. And while I’m not going to give any specifics on which plants those are, they are in more labor constrained market. So we’re having to pay more to get the folks we need, which we’re willing to do because labor is still a relatively small piece of our overall cost structure in precoat. So — but yeah, we want to defend share overall, take care of our customers and then carefully balance the fixed cost absorption in those plants as well as against the overall. So that’s a mouthful that I just gave you, but I can tell you, it’s a daily, weekly review that the Precoat team does on this.
So they’re looking at this every single day.
John Braatz: Okay.
Tom Ferguson: And moving business between plants, if they’re finding they’re not serving their customers. So sometimes it’s where we’ve been taking some expense to move it to the right places where we can service the customer the best.
John Braatz: Yeah. Okay. Secondly, on the galvanizing metal coating operation, you talked about zinc costs being relatively high. But natural gas costs have come down sharply here in the last 90 days. How much of an impact might that have on the margins of the business?
Tom Ferguson: Well, it’s actually a significant spend, it’s fairly de minimis in terms of the overall margin impact. And also because of the way our commitments flow with the utilities, we won’t be seeing some of that until we get into next year anyways.
John Braatz: Okay. All right. Thank you very much.
Tom Ferguson: All right. Thanks.
