David Willetts : With regards to the plants, particularly the North American plants. Here’s what I would say. The line that has been a source of consternation is running consistently at volumes. There are still scrap rate issues that we’re muscling through. They were close to but not at plan for scrap rates. But the reality is that’s not a material driver. It’s just an opportunity. So I would say I would still say we’re very much in the first inning and maybe baseball is a wrong — maybe we’re in the first quarter, right? What I’d say is we have taken many stabilization actions. We replaced select personnel — we’ve gotten discipline on gauge R&R items on most of our indicators and indicators of line performance. We’re not done there yet, but we are at the point where the plant is performing — the plants are performing, not wonderfully, but they’re performing consistently.
I’d say the next phase, still very much in the first quarter is now we need to make consistent improvements upward. The good news is that OEE and OEE always has its issues, but it’s a general measure of efficiency. We’ve seen to sustain — I believe it’s a three-month 5 percentage point increase in in Oceola. It’s not entirely where we’d like it to be, but we’re seeing small step function improvements. My experience in plants is rarely do you get a big bang unless it’s a scheduling opportunity when you have a plant with multiple issues with labor, with machine reliability with scheduling you get it in 2 to 5 percentage point step functions. So I’d say we’re still in the first quarter, but we’re not at Square 1, to mix my analogies here. We are making steady, reliable progress.
I can say that one factor that we always worry about is power interruption and weather. And certainly, for first quarter, there have been blips of weather-related issues. But not something that gives us concern for the overall trajectory for first quarter.
Bruce Monrad : Okay. Good. And I’m sorry, OEE stands for?
David Willetts : It’s basically Equipment Efficiency. Overall Equipment Efficiency.
Bruce Monrad : And then in terms of how management is budgeting for ’23, do you do it off? Do they do it off of of a 4Q and say, okay, Oceola is back up and running and let’s go after that and budget some improvements? Do you do it off of last year? Last year, 1Q was pretty good, but obviously, it was down. So how are they going about budgeting, would be a question if you can answer that?
David Willetts : So I mean, budgeting is always — it’s not so much a sciences mark. But effectively, we’ve asked management and they’ve delivered us a year-over-year improvement plan that is based on multiple factors. Some of which are plant improvements, some of which are sourcing, some of which are costs, some of which are you focused on rearranging the mix so we get a richer mix across all of the continents. When we take a look at how do we budget, we don’t take an average for of 2022, for example. We look at exit run rates and compare that versus the plans that have actually been fully executed and the plans that are to be executed. So I think that’s a little bit convoluted, but the short version is we don’t just take an average.
We look fairly scientifically at what is the plant supposed to do? Or what is the initiatives supposed to do? Where do we exit the year so that we’re not letting management sandbag, right? But the caution is we wanted a highly achievable budget in 2023 that showed meaningful growth, but that had a 75% to 85% confident factor and risks and opportunities announced. So that’s a long-winded answer to the question you asked.
Bruce Monrad : It does. Very much appreciated. Great. Again, congratulations. I know you had some FX headwinds in the quarter. So you’ve got other things there, but I appreciate the chance to ask the question. Thank you.
