That’s exciting. Regarding Industrial Fabrications. We’re seeing more demand in material handling, more customers are coming to us for increased material handling and some infrastructure bids. With regard to Industrial Solutions, that’s power generation, that’s global. We’ve seen – or the market has seen more utility scale combined cycle plants to be put up around the world, which is very good for us. So our content in that is increasing and the market is increasing for Industrial Solutions. Plus we’re starting to tap into the solar market in terms of inverter skids, which we provide out of that space. And even wind repowering, we provide internals for the adapter projects we do from that division. So a lot of our diverse markets are up and wind is stable, which is why I said the growth that we have, Justin, is going to be in those non-wind markets.
If wind picks up sooner than we think, that would be a benefit.
Justin Clare: Okay. Got it. Thanks for the call.
Eric Blashford: Thank you.
Operator: Our next question comes from Donovan Schafer with Northland Capital Markets. Please proceed with your question.
Donovan Schafer: Hi, guys. I have a question, kind of a follow-up to Justin’s question about the oil and gas segment. I know you said that you expect it to be pretty flat in 2024. And I’m curious because kind of like how much of that is being driven by – I know there’s been a bit of a downtick in CapEx spending by the upstream oil and gas, the drillers. At the same time, I think if I’m going off the EIA information, the rig count peaked just a little over a year ago and then kind of has trended down.
Eric Blashford: Correct.
Donovan Schafer: But the volume of production is kind of still like a record high level.
Eric Blashford: That’s correct.
Donovan Schafer: And a lot of cases – yes. So the talk about a lot of that is being driven by efficiency gains. And so is there some sort of secular element here? I’m going to kind of separate the two things out, where is there a change in either like the completion – and I actually don’t know the answer, I haven’t followed this too closely, like have they – are they pumping less when they’re doing completions in a way? Or I know they’ve gone to longer laterals, but that doesn’t affect your gearings in the pressure pumping equipment. So has there been a change just from like a design or an approach standpoint that puts less wear and tear and lowers the demand on that gearing?
Eric Blashford: So there’s a couple of dynamics. These – you mentioned the uncomplete – or completions. There’s this concept called DUCs or drilled but uncompleted wells. Those – it’s almost like a bank account that they’re already drilled. And as they want to start pumping, the oil companies can tap that without having to drill new wells. And we participate mostly in gearing in the new wells. So that’s one dynamic. As they get more efficient and they bring these uncompleted wells online, they’re going to eventually need to drill more. So that’s why I’m saying I think this is a temporary level. Oil and gas tends to have – be very cyclical. And when it’s down, it’s down maybe 18 months and then it picks back up again. With regard to the efficiency of the wells and drilling – the strength that we’ve seen over the last couple of years is because our customers through – Brad Foote have designed more powerful, stronger rigs, gearboxes.
And so the horsepower of those is increasing and the efficiency of those is increasing. Now as they – as CapEx is toked off, what’s happening is they’ll eventually start to wear out these rigs, and so we’ll start to see repairs increase, which we are seeing, some spare parts increase, which we’re seeing. And eventually, they’ll have to replace full gearboxes and that’s when we’ll see the lion’s share of the revenue come back in that particular market.
Donovan Schafer: So that seems like – it’s actually my mistake. And I had thought you did gearboxes for the pressure pumping trucks that do the fracking, but actually, it’s more on the rigs themselves. Is that correct?
Eric Blashford: You’re correct in that it’s the fracking. It’s the fracking.
Donovan Schafer: It’s is the fracking. Okay. Okay. And then another question. So you mentioned the inverter skids, which is something – I was at Intersolar in January and came across companies doing some similar types of activities. And it seemed like there was an uptick in that activity for domestic manufacturers being driven in part by the desire to meet domestic content requirements in the U.S. Is that something having an impact shifting towards more activity there versus, say, before the Inflation Reduction Act, before the domestic content stuff? Or is that something you were doing before, and it’s just steady?
Eric Blashford: So Don, I think this – I think what you’re saying is having a desired impact because our customers want to have more domestic content, whether or not they’re trying to meet a certain percentage. I think they want continuity of supply chain and a person that’s willing to – a supplier willing to work with them to help design and optimize their design. And that’s what we’re offering to our customers because we’re local and they’re local and we can collaborate on designs to make it very efficient and quick to deploy in the field.
Donovan Schafer: Okay. Okay. And then my last question, this is – this could be – I mean I kind of pride myself perhaps too much and sometimes asking questions or trying to find things that could be material and could be overlooked, but the risk of that is sometimes it ends up being a totally irrelevant question. So this one is on – in the wind market, balsa wood is used in a lot of the wind blades. I can’t remember which portion, but it’s significant, it can matter. There are substitutes and alternatives to balsa wood. So I know there are some, I think, petrochemical-derived sort of foams or compounds or something that can be used instead. But with balsa wood specifically, Ecuador becomes like the major choke point because it produces more than 90% of balsa wood globally.
