The thing you have to remember is LQMT is set up for low volume production in house in RSM. The have split their production model. Higher prodution parts will be outsourced to large contract manufactures (which they have none of at this time other than Visser technically). Finally, if a company is so inclined they than purchase Engel machines themselves and produce the product themselves while paying royalty fees to LQMT. The recent contract with Miltner Adams clearly falls into the low volume production category seeing as only 500 units are to be made which should be able to be churned out in less than a day given a part production rate of 3-5 minutes.
When it comes down to it this contract probably won't even make LQMT any revenue though: Think about it. Milter Adams is making roughly 500 knives and selling them for $260 a pop, which is $130,000 in revenue for Miltner. Let's say that their COGS is $90,000 which gives them about a 30% profit. I highly doubt that $90000 of revenue for LQMT will cover the costs associated with the production of the knives.
Basically, this contract is probably going to be another loss when it comes down to it on the income statement, but I guess you can say it is a good thing they landed a contract...500 knives amounts to pennies. Let me know when a crontract comes out with something more like 50,000 units.
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