Luke Folta, Jefferies
Okay. The compression in spread is that more of – sort of an ongoing competitive dynamic, as opposed to…?
Richard Peach, CFO, SVP
It’s related to the lower price environment. When prices go down this low, it does affect the flow of vehicles, so even though – and you can see that compared to the fourth quarter, our car volumes are slightly down compared to the fourth quarter, so that it’s the impact of the overall lower price environment on cash spreads due to the flows.
Luke Folta, Jefferies
Okay. So it’s kind of similar to what happens in MRB when the offer prices come down, less cars come to the market?
Richard Peach, CFO, SVP
Yes, that’s correct.
Luke Folta, Jefferies
Okay. All right. Then on CapEx – so $40 million looks like the number for this year. I guess what happens at a $40 million CapEx run rate in terms of is that – is $40 million just covering the maintenance? Not covering the maintenance? Does that include a little bit of growth investments in there? I’m just trying to think about what happens internally at that sort of investment level.
Richard Peach, CFO, SVP
Yes. The $40 million is primarily focused on maintenance CapEx and environmental projects and safety-related projects. We are satisfied that at that level that includes our critical needs for maintaining our asset base.
Tamara Lundgren, President, CEO
There’s some small growth projects that are included in there, but the big difference between that level, which was last year’s and this year’s and what you have seen in previous years were the significant shredder activity that – your new CapEx, new growth projects.
Luke Folta, Jefferies
Okay. So conceivably, this is a level of CapEx that could be perpetual, if you want it to be.
Tamara Lundgren, President, CEO
Yes, yes, ex-large growth projects.
Luke Folta, Jefferies
Okay. All right. Then just lastly, just on steel – it’s a little early in the year, but I guess any insight in terms of backlogs and how this year’s construction season might be starting to look?
Tamara Lundgren, President, CEO
Well, the order books from our customers look strong. The non-res construction market in the West Coast continues to strengthen, and the possibility of an infrastructure program looks more and more likely as that’s fundamentally on the short list of best ideas for both parties in Congress in both houses of Congress and the President. So we think that the markets in which we operate on the West Coast for steel demand is quite strong.
Luke Folta, Jefferies
Okay. All right, if I could slip in one more, just on imports. I meant to ask on rebar. You benefited some from the Mexican case. I think you said last quarter maybe some of the other countries are starting to creep in that market, though, just sort of to take their place. Any color on what’s going on with that dynamic would be helpful. Thanks.
Tamara Lundgren, President, CEO
Well, the business on the West Coast, as well as nationally, is always going to be impacted by imports, but what you can see in the volumes and also in their productivity is that the demand on the West Coast non-res is offsetting impact from imports that have always existed and will continue to exist. The productivity initiatives – the productivity culture that has developed and taken hold in the steel manufacturing business is really leading to significantly improved performance. As I mentioned, year-over-year their operating income more than tripled.
Luke Folta, Jefferies
All right. Okay, thank you.
Tamara Lundgren, President, CEO
Thank you.
