Auto graveyards hit paydirt
By jeffrey t. lavery
Gone are the days of the mom ‘n pop auto parts yards, where rusted hulks stretched for acres and wrecks could be found in the same spot years later.
Now, corporate giants buy the best yards they can find and turn them into well-oiled machines that rapidly process only the choicest scrap autos to salvage. Late model vehicles with highly-sought replacement parts represent the bulk of business for Greenleaf New England in Leominster and Webster-based LKQ Route 16 Auto Parts, local firms bought by industry powers Greenleaf and LKQ Corp."These bigger companies are always looking for quality recycling properties," says George Eliades, executive vice president of the Automotive Recyclers Association.
Rush to market
In 2005, steel recycling hit a record rate of 75.7 percent, notes the Steel Recycling Institute. Values for uncrushed bodies reached $135 a ton in May, up from $85 a ton in December. The price of steel could drop tomorrow because of volatile world markets, but experts say the increased demand for steel in China makes owning a salvage yard a safe bet for steady revenues.
The process from twisted wreckage to cash is short and sweet. Savable parts are stripped and stocked, and the cannibalized car, or hulk, gets sent to a steel recycler. From there, the hulk goes through a shredder where materials like glass are separated from the valuable metals.
These days, the amount of time a vehicle spends in the yard has decreased in an effort to move any useless inventory and take advantage of the steel prices, says Bruce Nalewajk, operations manager at LKQ Route 16 Auto Parts.
"Values are up, so we’re paying attention to what we’re scrapping," says Nalewajk. "Scrap steel is high, so we’ve emptied our yard of all the old carcasses that were hanging around."
However, anticipating just what the market will do is for naught, say some recycling gurus. Greenleaf’s Northeast division regional vice president Angus Harris notes that he held off on selling hulks in December because of an anticipated uptick in steel prices in January. When the price boost didn’t materialize, the firm was forced to sell in a down market. Harris says that even with the current rise in values, selling a car purely for scrap doesn’t make sense.
"If I have a couple good doors or other pieces on the car, I’m going to get way more money selling those parts than selling that whole vehicle," says Harris. "There’s not enough money in the hulk to change your business decisions."
Currently, Greenleaf is in the throws of becoming the latest Schnitzer Steel Industries franchise. The Oregon-based steel specialist acquired Greenleaf late last year and consists of divisions dealing in pick ‘n pull parts yards, steel recycling and steel manufacturing. Regardless of ownership, though, salvage yards remain a hot commodity, notes Bill Heenan, president of the Steel Recycling Institute.
Says Heenan: "I’d be flabbergasted if you could find a salvage dealer that hasn’t benefited from the tremendous increase of metals value over the last four years."
Jeffrey T. Lavery can be reached at jlavery@wbjournal.com
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