Craig Gates : No, that’s not true. It’s a mix. Part of the revelation is on this is that as we were being forced by the wage rates and the peso, as we’re being forced to raise prices across the board on customers, we realized that the low service customers were going to bolt. And as we struggled to figure out how we could keep those customers in the face of these wage and peso problems, that was part of our revelation on, okay, wait a minute, we’re in a different market now.
George Melas: Got it. Okay. Super interesting. I had one more question, obviously, But in a way, if we go back two years ago, this would have come to you guys a little bit as a surprise Well, I guess it was for upon you, as you said, partly by the wage rates in the peso and then accelerated by the demand of some the people who were operating in China?
Craig Gates : It actually goes back four years to the beginning of COVID and the gradual and accelerating and to the answer every single procurement agent we spoke with to the question of where should I be? The answer was China. And as COVID, and Trump, and China, and states, and tariffs, and supply chain, and all of that is added together, and I’m not sure the general public knows this, but it used to be a 100% in-fashion call, if you got a bunch of OEM, CEOs together five years ago, it would be almost embarrassing for them to say they were building anywhere, but China. They would be asked, what are you thinking? Their Board would be asking them, what are you thinking, why are you not in China? That has changed dramatically now as a result of all those economic and political and physical events that have happened in the last four years, so that the market we are operating in is dramatically different than the one we were in five years ago, four years ago.
And that’s why we were doing what we were doing five years ago, and that’s why we’re changing what we’re doing now.
George Melas: Okay. Great. And then maybe a couple of more questions. From a gross margin perspective, is — and I think the idea is to try to get back to a 9% gross margin or maybe even higher is that still a possibility? Or does that sort of new strategy actually impair that?
Craig Gates: I think it’s still a possibility. I don’t think the strategy impairs it. And I think the ability to build more faster with less people — is a help rather than a hindrance to that
George Melas: Okay. Great. Craig, thank you very much for everything, for your time, for your answers. And you’re not going away, so I’m happy about that and Brett and Tony, best of luck with everything. We’ll have many more presentations.
Craig Gates: Thanks, George. It’s been good, knowing you.
George Melas: Thank you.
Craig Gates: Yes.
Operator: Thank you. Your next question comes from the line of Bill Dezellem with Tieton Capital. Please go ahead.
Q – Bill Dezellem: I actually have a follow-up relative to something that I believe, Craig, you said in one of your remarks that by structuring are to be lower cost, you’re opening yourselves up to a much larger market. Number one, did I hear that correctly? And then secondarily, by — by default, also structuring the US maybe to be more of that high touch in a more maybe a more obvious way, and I know it’s been that all along, but maybe a more obvious way, is that in any way expanding your potential market?
Craig Gates: I don’t think it changes to the US-based facilities are any more obvious than they have been in the past. They were structured to be high service at a price the changes to war has that flow through and result in bids and quoting being lower than what they used to be is a change that results in a bigger available market to us.
Q – Bill Dezellem: Do you have a quantification on that?
Craig Gates: No.
Q – Bill Dezellem: And then one additional question, please. You mentioned you have 80 quotes today. How does that compare to what we would have seen over the course of the last couple of years?
Craig Gates: It’s much higher.
Q – Bill Dezellem: By a factor of 2% or 5% or 5%.
Craig Gates: Oh, no, it’s probably a factor of — there are times where we had quotes maybe 20 or 30 in the funnel.
Q – Bill Dezellem: This is at least at least double, if not quadruple, maybe what you were accustomed to running at before.
Craig Gates: Yes.
Q – Bill Dezellem: Great. Well, congratulations, and I look forward to a few more of those at the up to $20 million mark.
Craig Gates: Us, too.
Q – Bill Dezellem: Enjoy your retirement.
Craig Gates: Thanks.
Operator: This concludes today’s question-and-answer session. I will now turn the call back to Craig Gates for any additional or closing remarks.
Craig Gates: Okay. Thank you, everyone, for participating in today’s conference call. I’ll speak for Brett and Tony you and I say they look forward to speaking with you next quarter. Adios.
Operator: This concludes today’s call. Thank you for your participation. You may now disconnect.
