Savvy Trades and Investments

[CPTMatt]

GLGI - Heard back from the CFO

He said that it takes about 20 employees to run an injection molding machine 24/7. I'm guessing they have 4 shifts w/ 5 people on a machine. To me this seems awfully high, what could five people possibly be doing while the machine is doing the injection molding? Something I don't understand about their process obviously.

Beyond that he said they have a mix of 60% FT and 40% contract production labor and experience high turnover which is particularly acute when adding a bunch of new heads as is currently the case.

So with five new machines & 20 per that means they nearly doubled their production workforce. Add on top that the cost of recruitment, training, and higher turnover and voila that's the lions share of the increase in COGS.

The other thing he mentioned was that they made a business decision to ramp volume at lower margins with the pallet leasing customer(s) with the expectation that the volume will provide nice leverage to the bottom line once the labor issues stabilize.