So, I know that you would like a nice number that you could plug into your equation, and so would I, but I can’t give you that. I can just tell you it’s going to get better, at least I believe it’s going to get better.
George Melas: Okay. And then, that is really driven by, A, your design capability? And two, sort of — that you sort of becoming a one-stop shop for really being able to not just do component, but a whole box, a whole product, right? And it’s interesting because you’re talking about patching some delay in the artwork, in the packaging, because it means that you’re going to put your product in that packaging and then it goes directly to the retailer. So, it’s a finished product.
Craig Gates: Yes.
George Melas: So, those are two of the key capabilities that you have in queue sort of the real advantages that you have in the marketplace system?
Craig Gates: Yes. And to give you an example, one of our pieces of business, new piece of business is probably the perfect embodiment of the overall macroeconomic process that we’re watching and that we predicted and that we’re enjoying. So probably, I’m going to just give you this for an example and I apologize, this is going to take — I’ll time it, but I can do it in less than two minutes. So, 30 years ago, a guy invented a new product that required a pretty complex manufacturing process, all kinds of welding and vacuum forming and hydro forming. And 20 years ago, that product moved to a town in China and a number of his competitors also copied him, and then moved their product to a town in China. So, that town in China became the world’s preeminent location of manufacturing that type of product.
And then, as time went by, in the last two or three years, that company and their competitors realized that in order to really service the market here, they needed to have a lot less than 12 weeks uncertain ship time over the ocean and a slight increase in price was more than offset by the increase in business and margin they could make by having a much quicker turn. And so, they chose us to bring that manufacturing back to Mexico. So, it left the West Coast of the States, went to a town in China, and now it’s come back to our factory in Mexico. So, we are, in fact, reverse engineering the Chinese who reverse engineered the guy . And I just find that to be an amazingly big circle of whatever you want to call it that’s going on right now. But that is exactly what’s going on in many different industries.
In some cases, our customers have lost the knowledge and ability to manufacture. In other cases, they’ve lost not only that, they’ve lost the ability to design and manufacture. So, as we talked about the re-industrialization of the U.S. and the industrialization of Mexico, that’s the perfect example. And that was a minute — two minutes and 10 seconds, so I just overshot that.
George Melas: I think nobody was keeping track, Craig, but that’s great. Okay. Let me push you a little bit more on margins. What are the margins goal that you would like in, let’s say, fiscal ’24? What is it from a gross margin perspective — because they’ve fluctuated, and I think we were always trying to gunning for 9% or slightly above 9%, but we fall in short. What would be your goal?
Craig Gates: I don’t know, George. I keep telling you, I’m not going to give you a number for your equation because I can’t. I hope it’s better than that. From what — if I look forward from what I’m seeing, if nothing goes wrong, it should be better than that. But something always goes wrong.
George Melas: Okay. And then, from a growth perspective, how much growth is too much growth? How much growth would be very difficult to manage? Is 20% growth sort of a good number? I mean, 20% is a lot.
Craig Gates: Well, if you take the Midwestern site as an entity, which they used to be, they are going to manage 65% plus growth in the next half a year. And I don’t see that there’s going to be any significant problems within the operations in doing that. There may be problems with getting parts, but in terms of managing it, I don’t see an issue.
George Melas: Okay.
Craig Gates: There are — every piece of business is different. Some of it is highly IQ point intensive to bring in. Some of it is just a simple slam dunk moving a PCB assembly from our competitor to us. So, all those factors go into my answer of, I don’t know, but certainly a lot more than what we’ve done in the past is possible.
George Melas: Okay. Great. Okay. Thanks for those very precise guidelines.
Craig Gates: Yes. 9.276%, so just plug that in there, we’ll be good.
George Melas: Exactly. Thank you very much.
Craig Gates: Okay. Bye.
Brett Larsen: Thanks, George.
Operator: Our next question comes from Bill Dezellem with Tieton Capital. Please go ahead.
Bill Dezellem: Thank you. So, you had mentioned that the outdoor power equipment company had awarded you another $11 million piece of business. Given that you have — they presumably awarded that before you had actually produced any of the current program for them, what led them to, to want to give you more business before you had done any?
Craig Gates: Well, we’ve been interacting with them for over a year now. We’ve had people in their factory and they’ve had people in our factory for over a year. We’ve been in the design process for over nine months. We started quoting on this new piece of business while we were still trying to get the current design done. But in fact, it wasn’t awarded to us until just last week. So, it wasn’t really awarded until they saw the first chunk of first chunk of product go off the back door.
Bill Dezellem: Congratulations. Okay. That does help. And then, let’s talk a little bit about Vietnam. You had mentioned that customers or prospective customers can now go and tour the factory. What does the prognosis look like for filling that factory?
Craig Gates: It looks very hopeful to the point that we have looked at, land availability close to the factory.
Bill Dezellem: And since I have not been to that factory, what does the availability of land facilities and labor look like in that near area? Is it as convenient as Juarez where literally everything is contiguous?
Craig Gates: So far, yes.
