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September 2007

Auto recyclers supported by ARA
by Irwin Rapoport Write the Author

While the Automobile Recycling Association has approximately 1,000 direct members, through its affiliate chapters and state associations, it represents about 3,000 of the nation’s more than 6,000 registered auto recyclers.

ARA’s task is not an easy one, with the auto recycling industry being the subject of serious regulation and legislation, particularly environmental regulations.

The industry is divided into two camps – the self-service sector, which typically buys cars that are nine years old or older and sells their parts to the public. The full-service sector buys newer vehicles, with the majority of parts sold on a wholesale basis, mainly to body shops, repair facilities and insurance companies.

“For the self-service sector,” says ARA president Gary Beagell and owner of Binghamton, New York-based Gary’s U-Pull It, “the number of cars that it handles increased in recent years as the price of scrap metal has risen. It has made more cars come out of the woodwork. Normally the number of cars processed pretty much follows the number of cars sold.”

When a car enters the recycling process, the first step is to drain the various fluids.

“We have to maintain our environmental standards and most of the ARA members have systems that do that quite well,” says Beagell. “After the fluids are removed, the vehicle is set on stands so that the self-serve customers are able to remove parts from them.

Non-ferrous metal parts which are normally removed for scrap – batteries, aluminum wheels, catalytic converters and radiators, are sold to scrap metal dealers.”

The steel and remaining elements are then sent to automobile shredder operations for processing.

The ARA is a member of the Vehicle Recycling Partnership, which advocates design changes to improve recyclability and fluid removal. A few years back, the VRP created the Vehicle Recycling Disassembly Center (VRDC). Ken Schram, an ARA member, worked at the VRDC for nearly three years, contributing to studies on improving design for recycling.

Sandy Blalock, the ARA’s first vice president, stresses that her main concern is the removal of fluids while dismantling.

“It’s very difficult when you are talking about environmental practices to remove all of the fluids from a vehicle,” she says. “They are up in all kinds of places and difficult to get out. If they would design drain plugs for the engines, transmissions, axles, fuel tanks and all other parts to be on the bottom or more accessible, it would certainly help the efficiencies of our companies and cut down on a lot of time that we spend on draining and fewer environmental issues to deal with.”

Through its nationally and internationally recognized CAR program – Certified Automobile Recycler, the ARA has developed Internet-based educational programs that ensure that its members thoroughly understand their responsibilities.

Environmental standards are based on the federal and state regulations, with some states having stronger legislation than the EPA regulations.

“Six years ago, in partnership with the EPA under a grant, the ARA started a web-based Compliance Assistance program (E-Car Center) to let automotive recyclers throughout the country know what they needed to do for specific regulations, whether it is waste oil or other items on a substantial list,” says Beagell. “It would be difficult for a small business owner to know all the requirements. It has been very helpful, is quite comprehensive and it is written in very basic language so that they don’t have to look up regulatory language and statutes.”

Purchasing equipment is a major expense for auto recycler facilities.

“As an association,” says Blalock, “we maintain a close relationship with most of our vendors unique to our industry. They usually offer incentive programs specifically during our trade shows.”

She also notes that the industry “gets very little in the way of tax breaks. Nor are there any programs in place to assist us in the work that we do. We are an industry that has taken on a challenge that is unique and totally unfunded.

“I do a lot of legislative work in New Mexico and nationally and when legislators find out there is absolutely no funding available for our industry,” she adds, “they are quite amazed that we have survived without such funding. It’s very tough to work in an environment where there is always very stringent regulation in play. We have always been a target industry, even though we have been dealing with chemicals, mercury switches and other products that are put in cars that we become responsible for.”

While some firms are doing better than others in terms of profitability, Beagell notes that is partially due to business practices.

“It has become a lot more technical in recent years and it’s harder to do well,” he says. “In the self-service business, now that scrap prices have leveled off, our cost of purchasing vehicles has gone up, so we are basically back at the same margins as we were before the scrap market hikes.”

“My facility deals with high-end vehicles,” says Blalock. “The cost of buying these vehicles at auction has so escalated in the last 10 years that it is more difficult to be profitable. There used to be an industry standard you wanted to net three times what you paid for the vehicle. That was in the day of $100 cars. Today, many of us in this segment of the industry are paying thousands of dollars for cars.