Lawrence De Maria: Okay. So we should know really annualize those and think that’s going to have a big impact [Multiple Speakers]
Jeffrey Powell: Well, what’s going on is, if you look at the cost, the production cost of paper company, especially in the Northwest relative to the cost in other parts of the country and in particular, Southeast, there is a significant difference in their cost. We’re talking in some cases hundreds of tonnes — hundreds of dollars, $200, $300 a tonne difference in production cost. And so, when they — when you see an announcement in these mills, it’s often — if it’s a very old inefficient mill or more likely it’s just in a very high-cost area and they’ve got the ability to move that production down into a low-cost area. And so, what you really need to look at is kind of what the total output is of paper products in the country, because if it’s just transitioning from one region to the next we operate in every mill.
And so we’re likely not to see a big impact from that. If you see tonnage dropping down, now that’s a different issue. I mean, for instance, I think packaging boxes this year are down about 7.3% over last year. So we felt that. Obviously, our bookings has slowed down in that area because of that. But when it’s just shifting from a higher cost area to a lower cost area, that has less of an impact on us, because we’re just — as they pick up volume in another mill we will benefit in that.
Lawrence De Maria: Well, first, at that point, should we expect either further shutdowns in other areas, or — and how much do you have a view on tonnage next year as it relates to the specific end market?
Jeffrey Powell: If you look at what the companies that have announced already in the third quarter, I would say the general tone is slightly optimistic that things will — are improving a little bit, not in a significant way because I think there’s still less visibility, but I would — just if you look at the color that they’re giving on their earnings calls, they’re hoping they saw a little slight pickup in the third quarter in some cases and they’re hoping that there’ll be some continued improvement into next year, but I think it’s still they’ll caution that it’s — as I said earlier, it’s still uncertain times, visibility is not great, but they are, I would say, slightly positive that things are going to strengthen a little bit.
Lawrence De Maria: Okay, thank you very much. Appreciate it.
Jeffrey Powell: Yes.
Operator: One moment for our next question. Our next question comes from Aditya Madan with DA Davidson. Your line is open.
Aditya Madan: Hi, good morning, Jeff, Mike, and thanks for taking my questions. Actually, I have a follow-up to that question. So we’ve seen the North American containerboard sector work through big destocking challenges and volumes seem to be on a better trajectory. But we’ve also seen curtailment announcements and we are part of a strong market. So how are you seeing those different elements impact parts and consumables demand versus the capital equipment appetite and whether you think that potential inflection in the market could represent inflection for your activity levels with that customer base?
Jeffrey Powell: Well, you’re right that there has been two kind of trends or phenomenon happening this year. One is, of course, a slowdown in industrial production. But also there has been a destocking effort going on both with our customers and their customers. When there’s uncertain times and the Fed is trying to talk down the economy, everybody tends to destock and try to conserve capital. So there has been some of that. That can go on forever. Our experience in the past says that that happens for a number of quarters. And then as visibility starts to get a little clearer, they — you’ll start to see that destocking stop and then obviously it ultimately reverses and they start to build inventory. And there is a little bit of that going on.
