OCTOBER 2009

ON TOPIC


Engine disabling raises questions

—Herb Lieberman

The auto recycling industry has raised concerns about the proscribed method required to disable the engines of vehicles that are being turned in as part of the federal government’s Cash for Clunkers program.

To learn more about the situation facing the industry, American Recycler queried Herb Lieberman, a former Auto Recyclers Association (ARA) president, who is currently LKQ Corporation’s corporate industry liason.

The Cash for Clunkers legislation requires that the engines of vehicles that qualify for the program must be disabled. What method do they require for the disabling of the engines and has this negatively impacted the recovery of parts for resale or those set aside for scrap?

Lieberman: Per the C4C regulations, the dealer is required to disable the engine by draining the engine oil and adding a chemical which renders the engine inoperable. During this procedure many other internal parts of the engine are compromised and of no use except for metals recycling.

This negatively affects the resale of those parts for both direct reuse or for rebuilding or remanufacturing purposes. Some of those parts such as the engine block and cylinder head are prohibited by the C4C law to be made available for any use except for metals recycling.

Was the auto recycling industry consulted prior to the writing of the regulations in the legislation as to how they would impact auto recycling operations in terms of processing vehicles and financial issues?

Lieberman: The Automotive Recyclers Association was very involved in both the legislative and rule making process. For sure it did not get all that it felt was in the best interest of the C4C program, the consumers or the motor vehicle recycling industry but many of its suggestion were incorporated in the act.

It was through ARA’s efforts that all parts of the “clunkers” could be made available for reuse, rebuilding or remanufacturing except for those specific items contained in the legislation.

What are the positive and negative effects of the cash for clunkers program in regards to the auto recycling industry?

Lieberman: The positive effects for the automotive recycling industry are quite simply if the program were able to keep people working in other industries and in some way help the economy and the consumers then the recyclers would benefit indirectly by doing its part. On the negative side it took away potential customers for parts to keep the “clunkers” in safe drivable condition. Many of those “clunker” owners were our customers. We also saw this as a temporary “fix” to spur car sales, which it did, and only time will tell if its effects will have long-term positive results.

What changes would the auto recycling industry recommend in order to remove the problems associated with the regulations?

Lieberman: I cannot speak for what changes the motor vehicle recycling industry would seek to mitigate the negatives. But as a recycler myself for over 50 years, I am a believer in the market place establishing its own goals and programs to deal with sales promotion as well as industrial, ecological and consumer benefit.

As I understand it, this is just what is happening in Canada at the moment with GM implementing their own C4C programs in concert with the recycling industry.

The cash for clunkers program in Germany did not require that engines be disabled and that they could be disassembled for parts. What are the advantages of the German program and would it be possible for the federal government to adopt those measures?

Lieberman: You are correct that in Germany the engines did not have to be taken out of the stream of commerce. ARA advocated for the same consideration in the United States program, but it was not accepted.

I believe this will have long-term negative effects on the consumer that can least afford it to have to opt for more expensive repairs because these parts will not be available.