American Recycler Newspaper

Hurricane damaged vehicles swamp auto recyclers
by Brian R. Hook E-mail the author

Wood Fuel Plant

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.

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