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Tuesday, December 11, 2012

Thursday, September 06, 2012

A World of Opportunities and Challenges

by Michael E. Wilson, ARA CEO in Recycling Today Magazine

As chief executive officer and part of the leadership of the Automotive Recyclers Association (ARA), it is an honor to assist our organization in its mission to be a vibrant international association that represents the interests of all of our worldwide members. In the past four years, I have been fortunate to visit such countries as Australia, Canada, Great Britain, Hungary, Malaysia, Switzerland and Mexico and to converse with leaders in the recycling community about the important global developments occurring in automotive recycling sector.

Established in 1943, the ARA represents an industry dedicated to the efficient removal and reuse of “green” automotive parts and the proper recycling of inoperable motor vehicles. ARA represents more than 4,500 auto recycling facilities in the United States and 14 other countries around the world. ARA members continue to provide consumers with quality, low-cost alternatives for vehicle replacement parts while preserving our environment for a “greener” tomorrow.

With the development of emerging countries around the world, the importance of and opportunities for the automotive recycling industry are growing exponentially. According to the auto industry researcher Ward’s, the global car population topped 1 billion in 2010. Stephen Lacey at Climate Progress cites a report from the International Transport Forum that estimates a global vehicle fleet of 2.5 billion in 2050.

The international market—that is the supply and demand for salvage cars throughout the world—presents opportunities that know few boundaries. However, this also presents significant challenges to ensure that untrained and unscrupulous individuals do not handle these vehicles improperly.

International Markets
In previous generations, buying salvage cars in the U.S. was managed more closely. A salvage dealer had to be physically present at the vehicle auction with a bid card in hand, and the bidding was against other licensed buyers in the region for the purpose of buying vehicles to supply area salvage yards. Since bidders were only able to bid on the vehicles being auctioned at that single location, it was most economical for bidders to be local or regional competitors.

Those parameters have disappeared. Today with the Internet, a salvage dealer can attend auctions anywhere, anytime—another opportunity that brings with it huge challenges, however, because virtually everyone else in the world can now compete against buyers of all types, regulated and nonregulated. The professional automotive recycler is competing for the same salvage vehicles with others who have a much different business model.

Complicating this already piecemeal approach is that the largest salvage auction pools also have set up departments to solicit and accommodate international bidders by providing brokerage and export services.

The Internet also, of course, has allowed for online interactive shopping sites, such as eBay, Craigslist and others. The convenience and supply of parts/vehicles offered through sites such as eBay is tempered by the fact that product warranties and regulated buyers/sellers are not guaranteed, at times leaving the consumer with a potentially unsafe part of questionable value.

ARA is working with eBay and others to ensure that vehicles and auto parts that are being sold have been appropriately registered in a federal database—another opportunity being pursued that evolved from a challenge.

We all know that the international market is big business. Profit is a strong motivator for companies that facilitate the sale of salvage-branded vehicles, whether the auto auctions or private companies buy directly from insurance companies, banks and dealers specifically for exporting.

High Demand
In the U.S, fleet operators and insurance companies incur more than 5 million “total loss” vehicles each year because of accidents and thefts. Salvage auctions remarketed more than 60 percent of the more than 5 million “total loss” vehicles in 2007. The growth in “total loss” declarations by insurance companies in the U.S. reflects vehicles equipped with costly options (air bags, xenon headlights and electronics) that push repair costs above the wholesale value of the vehicle.

According to estimated calculations based on public records provided by the larger auction companies, about 1 million of the 3.5 million cars salvaged each year, however, are exported outside of the United States. American salvage vehicles are usually very appealing because they tend to be between six and 10 years old. In many countries, this is considered a new car, and newer model, rebuilt salvaged vehicles can fetch quite a sum, especially those considered luxury models.

The fact that a vehicle’s salvage title branding does not stay with a car that is exported from the United States also is appealing to international buyers. Once a salvage vehicle enters another country, the U.S. title brands are not relevant, and the repair of such vehicles is rarely subject to inspection.

Further complicating the issue is that not all countries have the high repair standards that the United States has adopted, which provides buyers from less-regulated countries other opportunities for revenue on salvaged cars apart from parts. In most countries around the world, it is legal to repair such vehicles and inexpensive to do so in light of low labor costs. Once repaired, they sell the cars and, even factoring in the export fees and the inflated cost to purchase the salvage, repairers still make a profit.

Add to this the fact that the U.S. dollar has softened in recent years because our Federal Reserve has kept interest rates artificially low and we have had a slower-than-expected recovery in our jobs market. As a result, the U.S. salvage market is attracting a wider range of international buyers who can get more for their money than they can at home. That uptick in interest has strengthened salvage values.

Indeed, there are opportunities for profits to be made on American salvage cars internationally, but foreign governments should be concerned for the safety of the salvaged car consumer as well. It is this type of challenge that leads to a global opportunity to establish a worldwide standard, and one need only to look to what the ARA has already developed as a basis for action.

Certification Programs 
ARA, since its beginning, has adopted standards of practice for its members. These measures, which include best management practices for safety, environment and quality for recycled parts, provide recycling businesses with the ability to effectively compete in the marketplace while focusing on sustainability. These standards can affect the life of a motor vehicle; and, conversely, the absence of standards subjects the recycler, consumer and the environment to unfair, improper and even dangerous consequences.

Specifically, the Certified Automotive Recycling (CAR) Program was established in 1994 and produced a set of general business practices as well as environmental and safety standards that recyclers must follow. Another standard that the ARA offers is its Gold Seal Program, which is endorsed by the Automotive Service Association, the largest trade association representing the collision repair industry. This program was established to help maintain and enforce reputable, quality business practices throughout the automotive recycling industry. Gold Seal customer service goals are based on the highest professional and ethical business practices established and adhered to by “Best in Class” automotive recyclers.

Green Marketing 
ARA also is stepping up our efforts to help enhance the public’s perception of the industry by developing a wide range of marketing tools to brand the automotive recycling industry as a professional organization selling green, economical and safe recycled parts.

The new marketing initiatives will enable ARA member companies to link to the consumer information website,, and will provide access to professionally produced radio spots, online ads, print ads and video commercials—all fully customizable for each automotive recycler to brand its facility. Furthermore, this member marketing package will include the use of the newly trademarked “Green Recycled Parts®” logo on all automotive recycling facility materials.

The consumer information site,, noted above will help to explain the automotive recycling industry to consumers, offering educational information and connecting consumers with our members, who sell quality recycled automotive parts. We want to educate consumers about all the good that we do.

We know these ever increasing numbers of vehicles on the streets and highways around the globe will at some point face end-of-life processing decisions. It is important that standards—demanding specific environmental and economical behaviors—be adopted worldwide so that the automotive recycling industry can ensure that recycled auto parts are indeed safe and retain their utmost value. It is only when this happens that the automotive recycling industry can take its rightful place among the most successful businesses across the globe.

The author is CEO of the Automotive Recyclers Association, Manassas, Va. He can be contacted at

Wednesday, August 29, 2012

Vehicle recycling: There's money in scrap cars

Recycling and reusing turns garbage into gold

Every year in Canada, some 1.2 million vehicles reach the end of their useful lives.

Some have been crashed or damaged beyond repair, while others are simply old and worn out, or not worth repairing anymore. In the past, these cars and trucks were mostly just considered scrap. Today, they’re a valuable commodity that’s ripe for recycling.

So what's possible?
There is value in their metal, of course, but recyclers will also be going after their fluids, batteries, tires and parts, whether for reuse or refurbishment, or to ensure that their disposal is as environmentally friendly as possible.

“On an average vehicle, you’ll get 75 per cent recycled as metal,” says Steve Fletcher, managing director of the Automotive Recyclers of Canada. “Once you factor in the parts we’ve taken out, up to 83 per cent of the vehicle can be recycled.”

Once a vehicle comes into the recycler’s facility, the first thing is to determine if any parts can be directly reused. These include engines and transmissions, as well as smaller parts such as alternators, mirrors, and headlight and taillight assemblies, and even body panels if they’re still in good shape. Once they’re off, it’s time to “depollute” the vehicle, as Fletcher says.

That means removing all the fluids, which can total between 20 and 40 litres. Gasoline generally stays at the yard, where it fuels the vehicles needed to run the recycler’s operation.

Any gas that’s too stale for use is mixed in with the used oil collected from cars, which is sold to recyclers for six to eight cents a litre. Any of this oil that can’t be reprocessed into a new product is burned in furnaces for asphalt manufacture and other industries.

Antifreeze and windshield washer fluid is also reused whenever possible, and any that can’t is sent for waste treatment and disposal, along with waste transmission and brake fluid.

The battery is worth four to five dollars as a core for refurbishment. Hazardous materials must be removed for proper disposal, including lead wheel weights, and on some vehicles, a mercury switch.

These switches used the dangerous metallic element to determine the hood’s position, turning on the under-hood light when activated. They were phased out by 2003, but many older cars still contain them, and they must be sent for decommission.

Freon in the air conditioning system also presents a problem, as it needs to be recovered using special equipment that prevents any from escaping into the air when the a/c is being drained. “It’s reused on-site, or it’s sold to someone who’s licensed to handle it for reuse,” Fletcher says. “Otherwise, we have to pay $500 a cylinder for it to be chemically treated (for safe disposal).”

End of life in your neighbourhood
All provinces have tire stewardship programs in force, and like end-of-life cars, worn tires have become a valuable commodity, recycled into a wide variety of new products such as roofing, flooring, playground surfaces, livestock mats and car parts.

Most jurisdictions are actively diverting them from use as tire-derived fuel, where they’re burned to power cement factories, a more common use in the past. Auto recyclers also remove and sell valuable metals in the car, such as copper from the radiator, or aluminum from the wheels or engine.

What’s left is known as the “hulk”—the body, and if they weren’t good enough to be reused, the seats, dash and windows. The hulk is flattened in a giant press, mainly to make it easier to ship to its final destination.

That’s the shredder, which pulverizes it into pieces about the size of your fist. The metal is separated using magnets or compressed air. “What’s remaining is called shredder residue,” Fletcher says. “It’s comingled plastic foam, carpet and glass, things that are fairly inert.”

This goes to a landfill, where it may perform one final function: spread over garbage, it helps to reduce odours and pest infestation.

Worst case scenario?
Of course, all of that is ideally what will happen to your old vehicle. In reality, there’s “no real licensing system virtually anywhere in Canada, and nobody knows who’s processing vehicles,” Fletcher says. “Poor recyclers will just flatten (the car), letting the fluid and Freon contaminate the shredder residue (and) polluting the air and water.”

So why go to all the trouble?

The bottom line is that it’s worth it. “Just looking at the metal, you should probably see $500 to $600 for a flattened hulk,” Fletcher says, adding that getting the vehicle to that point takes about $100 in time, effort and reasonable overhead.

“If you recycle a ton of electronics, you might get $200, but it’s $800 to do it. They all have negative value when you throw in proper handling, but a car has positive value.

"It’s an asset, and recyclers are good at figuring out how to extract value all along the chain.”

Autos by Jil McIntosh

Monday, August 20, 2012

Inside CAREC: The professional auto recycler's new code of practice

The Automotive Recyclers of Canada (ARC) have developed a new checklist for Canadian auto recyclers. CAREC, the Canadian Auto Recyclers’ Environmental Code, sets a national standard for environmental safety and best practice, says Managing Director of ARC Steve Fletcher.

The code was developed in the wake of the vehicle-recycling program, Retire Your Ride. Inspired by the National Code of Practice for Automotive Recyclers (CoP). CAREC expanded the scope of the Code to include all end-of-life vehicles—not solely models 1995 and older—and elaborated on incentives for participating recyclers.

The purpose of CAREC is twofold, Fletcher says. The first is as a guide for Canadian recyclers to better understand the industry’s laws and regulations.

The 33-page document summarizes everything from Federal and Provincial legislation to a breakdown of the proper handling of hazardous materials.

“Many of the rules and regulations and acts aren’t written with us in mind, they’re written for people in the automotive service sector or just general businesses. But CAREC takes the laws and acts and puts them into plain language for recyclers,” he said, adding that the code is structured to parallel how a car moves through recyclers’ facilities. “It becomes an operational guide for the recycler to be proactive in what they’re doing.”

The second component of CAREC involves a series of third-party audits, where every participating facility has to score 75 percent or higher in order to retain both provincial and national memberships. The auditors, currently hired by ARC, use CAREC as a rubric.

“CAREC helps to educate the recycler on what the auditor is looking for – what’s the minimum practice, what’s best practice – and it allows them to do the checklist themselves,” said Fletcher. “The philosophy behind it is that there’s a continual improvement, you’re never a perfect recycler, you always have something to work on… there’s always a better way to do it, a faster way to do it, a cheaper way to do it.

“We’re finding now that people are executing their pollution prevention plans and they’re saying ‘When can I get audited again because I want to make sure I’m going in the right direction and I want to do some more things.’ So it’s really continual improvement.”

For the time being, ARC will continue to develop CAREC by consulting with various provincial associations as to “what is reasonable, what is cost effective and what will continue to drive good behaviour,” said Fletcher. “We think it’s going to be an every-three-year audit, but no firm decisions have been made.”

CAREC was first developed by both ARC and Summerhill Impact, the producers of Retire Your Ride. However, ARC has since taken over the rights and oversight to the project.

What has been determined, according to Fletcher, is that CAREC is around to stay. He says they doubt it will be replaced. Ideally, they want it to continue to grow.   

“An ideal end to it is that government recognizes it as the standard and begins to implement it in regulation. Right now only ARC members are CAREC audited, so we’re 420 out of a 1,000 recyclers out there. And like any business, we need a level playing field,” he said.

By Caitlin Choi, Collision Repair Magazine

Friday, July 20, 2012

Groups target rules for auto recycling

Auto makers and recyclers are pushing provincial governments to adopt tough new recycling rules for vehicles that they say will lead to improved recycling rates, less environmental damage and even reduce auto-related crimes.

Industry groups admit they are acting out of pure self-interest: They fear that if they don’t propose their own recycling regime, that governments will impose one on them that is dysfunctional, expensive and disruptive.

“We want to avoid programs that are costly, inefficient, that have great administrative burden with less environmental impact,” said Mark Nantais, president of the Canadian Vehicle Manufacturers’ Association, which represents U.S.-based auto makers, one of a trio of industry associations behind the proposal. “We shouldn’t be forced into an arrangement that hasn’t been shown to work. We believe we have a better approach.” (The Association of International Automobile Manufacturers of Canada has also joined in the effort.)

Their concern isn’t without reason: Ontario’s recycling regimes for hazardous household waste and electronics have been derided by industry and municipalities alike as boondoggles. Meanwhile, provincial environment ministers have proposed adding similar “extended producer responsibility” programs to include mercury switches, oil filters and other car parts. Under such plans, manufacturers would be be responsible for bearing the costs of a product through to its demise.

That alarmed both auto makers and recyclers. Manufacturers worried that a collection of piecemeal programs would be expensive and unwieldy, forcing them to buy wrecks off the open market and pass on hundreds of dollars of extra costs to consumers, as some European countries have done. Recyclers worried that auto makers will move onto their turf.

At issue is the fact that the recycling industry is unregulated. While about 420 recyclers belong to industry group Automotive Recyclers of Canada (ARC) – one of the plan’s proponents – and comply by common environmental standards, about two-thirds of the 1.2 million vehicles that come off the road each year are handled by operators who don’t.

“My competition used to be eight to 10 other recyclers in the area,” said Wally Dingman, co-owner of Caughill Auto Wreckers Ltd., a 65-year-old car recycling firm in Niagara-on-the-Lake, Ont. “We’ve always done proper fluid drainage and things you should be doing. Now [due to high scrap metal prices] we have body shops, tow truck operators, and guys with a truck with no overhead, no liability insurance, who don’t pay into workers’ compensation and aren’t doing any of the environmental [work] I do. We’re put at a competitive disadvantage.”

As a result, many recyclers haphazardly strip or crush vehicles, releasing hazardous materials into the environment, and don’t resell as much of the vehicle’s parts as they could, they say. Since vehicles aren’t tracked by governments to the very end, unscrupulous wreckers can lift their identifying plates and sell them to illicit buyers to give new identities to stolen cars. “Anybody can act as an auto recycler, whether or not they know what they’re doing, and that often leads to the lowest common denominator,” said Steve Fletcher, ARC’s managing director.

Under the industry proposal, all auto recyclers in a province would need to be licensed, operate to strict environmental standards and report vehicle information numbers as vehicles are scrapped. They would be overseen by an independent body composed of industry, consumer and other government-appointed representatives mandated by the province to enforce the rules. The costs would be borne by recyclers, not taxpayers or buyers, and lead to recycling rates of up to 83 per cent of the vehicles’ weight from about 76 per cent now. The added revenues from recycling more of the vehicle would help to offset the costs of the program, forgoing the need to pass on extra fees to customers, the proponents say.

Their hope is to convince Ontario to adopt its proposal, setting the precedent for others to follow. So far, Ontario’s Environment Minister, Jim Bradley has shown initial support, establishing a working group to study the plan over the summer. “It’s always good when you see an industry that identifies the challenge out there and wants to find a solution to it,” he said.

Sean Silcoff, Kim Mackrael, The Globe and Mail