Andres Lopez: Yes, when we compare volumes just to the second part, volume trends, we compare with other Glass suppliers, I think our performance is quite similar. The difference comes from the market in which we operate. So all companies are not exactly in the same market, therefore, they won’t have the same total number. But when we disaggregate that to the extent we can, we identified similar trends for OI as the market in general is having.
John Haudrich: Yes, so on the first point, George, as far as what to expect in 2024 to 2023, and I think we laid out the major drivers pretty well there. Volume should be up of goods operating cost improvement. Although, the wild cards that we just can’t really call right now is included in the comments is what will the inflection point be on volumes and how will that be, is the low end or the high end of that range? And it does impact the earnings potential of the current year as well as the negotiations of price in Europe, which haven’t even begun yet. And so, it is hard to make a call on those. A couple things I would say is, I think the second half of the year was going to be definitely stronger than the first half of the year and probably show a pretty good run rate in the business, as we clearly go past that inflection point.
And another thing I would say is, we are taking as painful as is right now, we are taking a pretty big hit on the operating leverage of the company with lower sales and production volume. But it also means that we got very good operating leverage to recovery. We are probably kind of be over 300 some odd million dollars impact and lower sales and production volume this year. So as that recovers, that is a pretty good operating leverage. On the upside, it is just the timing that is particularly difficult to be able to call right now.
Operator: Our next question goes to Mike Roxland of Truist Securities.
Mike Roxland: Just wanted to follow-up on George’s questions regarding the MEI acceleration. It sounds like a lot of this is either plant optimization and or pure cost takeout, as you said with respect to plants. So, can you just help us frame the different buckets that you are targeting for the MEI acceleration and can you let us know if there are any costs associated as you accelerate MEI?
John Haudrich: Yes. I would say that there is probably four buckets there. One is on the commercial side, we have, what we have are called our pro initiatives price, revenue optimization, and in particular in today’s environment, those can be valuable. It is making sure that you are compliant with contracts. It is your, that you are doing value-based pricing and that you are getting things really down to the nub and specifically on an account by account basis that tends to provide benefits. Andres alluded to two areas too. One is accelerated automation activities. And that one does have some additional costs. It is embedded into CapEx. We probably will scale up labor automation, you know, palletizers, those types of projects to be able to take labor costs out, which is, we all know right now are quite elevated.
The fourth one is on plant productivity, speed, efficiency, things like that. We have made really great strides over the last year on those particular categories, and we continue to think that there is legs in that. And then the last one would be on the OpEx side, on the organization element and maybe a fifth then is particularly what are we doing in North America? Where we are looking at a pretty wholesome set of activities. It is, you know, It is the price realization on our contracts that have been renegotiated in the last year. It is, again, very focused performance going on in that business. We have seen very good operating improvement across a lot of the base that is allowing us to close higher cost capacity and move that volume into higher, more efficient, you know, highly more efficient, more profitable facilities that all has a very good EBIT boost to it when you do that too.
So while there is some one-time restructuring costs associated with that, those are usually, you know, paybacks of nine to 12-months or something like that. So, you know, those are the kind of the different pieces.
Andres Lopez: Something to compliment that, everything we are doing on the restructuring side for the North America market will be followed by a strategically deploying Magma to access high margin fragmented business. And this is already starting with the Greenfield in Kentucky, which is serving exactly that high margin business, growing segments.
Mike Roxland: Got it. Thank you for that. Just one quick follow-up would be, just in terms of the weakness in volumes and economic downturn that you are taking in the Americas, can you comment on how Canada and Colombia are currently operating and then realizing that you are pushing out the CapEx and deferring Brazil, Peru, do you feel that it, those deferrals put you at a disadvantage when, if and when volumes return? Thanks very much.
Andres Lopez: Yes. So Colombia is doing quite well. We made a large investment, for expansion for profit our growth, earlier in the year we faced the same volume slowdown that we are facing in other markets. It was quite pronounced, but it, it already reverted a hundred percent to growth. And at this point in time we are growing, either high single digits or low double digits. So It is pretty healthy. And with that then, that operation is in full utilization. It is operating really well. We are very happy with the investment that we made. The situation in Canada that is to serve localization of global brands, which is a trend that is taking place around the world. So that has secure volume, It is been completed and It is now in operation and It is doing well too.
