Key Tronic Corporation (NASDAQ:KTCC) Q2 2023 Earnings Call Transcript

Bill Dezellem: And what level of expansion are you currently considering?

Craig Gates: We’re not currently considering anything. We’re just beginning to think it would be wise to have a good understanding of what’s close and how fast it’s going to get gobbled up by other folks.

Bill Dezellem: And then, what about the labor factor, Craig? What…

Craig Gates: Labor still looks good in the region we’re in. Some of the other regions are getting tighter, but where we’re at looks very good so far.

Bill Dezellem: Okay. That’s helpful. Thanks. And then, speaking of labor…

Craig Gates: Hey, Bill, speaking of labor, maybe we’re going to the same place. In the last two months, we’ve hired 1,000 people in Juarez.

Bill Dezellem: And how does that compare to a normal amount of hiring that you would do? Because presumably some of those people are replacing those who have left and just the whole great resignation concept, but talk to us about that.

Craig Gates: I’d say the normal number over that period would be maybe a couple of hundred.

Bill Dezellem: And that period was what again?

Craig Gates: Couple of months.

Bill Dezellem: I thought you said. So, normal run rate of 100 people a month, you’d be hiring and now you’re hiring 500.

Craig Gates: Yes.

Bill Dezellem: That might — okay. So, that might start to answer my next question, which is wage pressure in Mexico accelerating, decelerating or kind of what’s your view of what’s happening there?

Craig Gates: Well, it feels to us as if the wage pressure is flattening out.

Bill Dezellem: And what do you attribute that to?

Craig Gates: Too many factors to mention.

Bill Dezellem: Okay. And are you a bit surprised that as you’re trying to hire five times as many people as you normally would in a period of time that you’re sensing the labor pressures or wage pressures are mitigating? I mean that sounds pretty positive.

Craig Gates: Well, I’m kind of enthralled with the whole demographic situation across the globe. And if you spend some time looking at that Mexico and the States are basically uniquely positioned compared to the rest of the world, and the fact that we aren’t about to age ourselves into oblivion. And so, I would expect that even though they may raise prices by law in Mexico, the availability of generally younger people who are looking to start their professional life continues to be good in Mexico and in the States compared to the rest of the world.

Bill Dezellem: Right. Yes. Okay. Well, thank you. Appreciate it, and look forward to seeing the coming quarters growth. Thank you.

Craig Gates: Yes.

Brett Larsen: Thanks, Bill.