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Hurricane
Katrina, quickly followed by Hurricane Rita, pounded
the Gulf Coast leaving behind hundreds of thousands
of damaged vehicles from Alabama to Texas.
Companies like publicly held Copart Inc. will process
many of the damaged cars. “We are expecting
a large volume of cars,” said Paul Styer, senior
vice president and general counsel at Copart. The
Fairfield, California-based company provides vehicle
suppliers – primarily insurance companies –
with a full range of services to process and sell
salvage vehicles to licensed dismantlers, rebuilders
and used vehicle dealers.
Styer said the New Orleans facility did not flood
after the levees protecting the city were breached.
He said the facility was not accessible for days.
The nearest facilities open were in Baton Rouge, Louisiana
and Mobile, Alabama.
Styer said Copart has sent extra employees to the
area to help with the expected influx of vehicles.
The company has also brought in trailers to house
some employees who lost their homes. “This is
something that we haven’t had to do in the past.
The displacement of people is the biggest obstacle
to us being able to do our job,” he said.
Copart has contractual relationships with most of
the major insurers that write insurance in the impacted
region, Styer said. He indicated that the insurance
companies would make the decision of what to do with
the damaged vehicles and that many of the autos would
probably be labeled as water-damaged.
Styer said buyers are typically dismantlers or rebuilders.
If the damaged cars are not salvageable, he said the
vehicles are usually purchased for parts or for scrap
metal.
“We predict it is going to be a very heavy volume,”
Styer said. “This has been a unique challenge.
I think what we are doing is trying to do the best
we can under adverse conditions. We’re anxious
to get into those areas where we have not been able
to get in.”
Michael James, president of the consulting firm James
Environmental Management Inc., has several clients
in the New Orleans area. “Those guys went under
water deep enough that their whole livelihood is at
risk,” James said. “It is not just a matter
of the cars, but it is a matter of their whole business.
All of their records and all of their computers systems
are gone.” The Round Rock, Texas-based consulting
firm provides consulting services to the automotive
recycling and equipment salvage industry.
James estimates that 80 percent of his firm’s
work is in the area of auto recycling. He said that
his firm helps recyclers meet environmental and safety
compliance regulations. “We get involved with
the management process and lay the entire process
out in order to best comply with the regulations,
without breaking the bank,” James said.
James said that in most instances, if the insurance
company owns the damaged vehicle, it would end up
in a salvage pool for auto recyclers to bid on. But
he said in some instances, insurance companies have
direct contracts with various recyclers, which would
let the damaged vehicles bypass the salvage pool and
go straight to the recyclers.
James said a bunch of the sheet metal from the vehicles
would be in good shape. He said in some instances,
some of the mechanical parts would also be salvageable.
“I think what won’t be in good shape are
the electronics,” James said. He said that due
to the extensive flooding, Hurricane Katrina was different
from previous year’s hurricanes.
“Just the depth of the water and the length
of time that everything set underwater has had a big
impact,” James said. Because of this, James
said it is important that the vehicles go to auto-recyclers.
He said that the auto-recycling industry always wrestles
with the fact that some flooded vehicles end up back
on the road that should not.
George Eliades, executive vice president of the Automotive
Recyclers Association based in Fairfax, Virginia,
said that people wanting to resell flood-damaged vehicles
have already approached some of his members. He said
that unfortunately his industry is no different than
any other. “There are a certain low percentage
of people that either don’t know how to behave
or try to take advantage of a situation,” Eliades
said.
Eliades said that to protect the reputation of the
industry the flood-damaged cars coming out of New
Orleans should be crushed and destroyed. “Those
cars should not be put back on the road. They should
not be rebuilt. The parts should not be salvaged,”
Eliades said. “Those vehicles should be sent
to the steel mill and burned.”
But Eliades said that this advice is only for the
vehicles coming from New Orleans. He said that in
other regions, where the flooding was not as bad,
the cars are fine. “There may have been water
up to the wheels on some of those cars, but the electrical
systems in those cars are not impacted. Those parts
are good,” he said.
Eliades said he has heard estimates of 100,000 cars
being destroyed by the hurricanes. “I personally
think that it will be more than that. I have no idea
of how many. But I’m sure it is probably six
digits,” he said. But he said that the potential
of some flood-damaged cars hitting the road again
has automotive dismantlers worried.
“We are real concerned about doing the right
thing,” Eliades said. He said that if unreliable
salvage parts enter the market, it not only hurts
the industry, it also hurts the environment. “When
you use a quality recycled part you save on raw materials,
you save on the need to manufacture unnecessary new
products and you save valuable landfill space. And
these products are available for a lot less money
than a new part,” he said. |
