Green Parts - Claims Canada Magazine

At a recent Breakfast Summit on Recycled Parts held in Toronto, three key stakeholder groups – recyclers, insurers and repairers – came together to discuss areas of mutual concern and mutual opportunities. The Summit started an inter-industry dialogue that will begin to pay dividends for the stakeholders, and more importantly for the motoring public and the environment.


Total-loss vehicle claims are a lose-lose situation for everybody involved. They can result in higher claims payouts for the insurer and lost business for the collision repair industry. And it has been shown time and time again that policyholder satisfaction declines when their car is totaled. As these totals continue to rise at an alarming rate, it’s in everyone’s best interest to reverse the trend. Now, more than ever, recycled parts can have a greater role to play in saving a vehicle, and getting it repaired.

Re-using quality vehicle parts is also the ultimate environmental choice. No other product on earth is recycled more than an automobile. Not only does it keep a flood of dangerous toxins from being released into our ground, air and water, it prevents unnecessary use of valuable landfill. Re-using parts also reduces the need for new products to be manufactured and that saves energy and resources and reduces harmful emissions that result from the manufacturing process.

By incorporating more recycled parts into your repair plans, you’ll support a recycling industry that reclaims over 12 million vehicles across North America annually. It’s incumbent on every industry to be responsible stewards of the earth, ensuring a sustainable future for all of us.

But putting a greater focus on recycled parts is more than simply being a good corporate citizen or meeting KPI targets. It’s a smart business decision. By significantly reducing the cost of parts, we should all see a drop in the number of write-offs and non-repaired vehicles.

‘Like, Kind, Quality’ Assurance
One clear advantage of using recycled parts over aftermarket parts is the perfect fit. It is unmatched because you’re getting the original OEM parts made specifically for the year, make and model of that vehicle. That means the original specifications and the right performance.

Today’s reputable auto recyclers ensure there are no unpleasant surprises when you’re ordering recycled parts and do their best to make the process easy and efficient.

During dismantling, every part is inspected and only those that meet strict guidelines and tolerances are offered for resale. Mechanical parts are tested to ensure they’re in proper working condition.

When each component is dismantled for re-use, it is assigned an industry-wide interchange number that identifies which vehicle, model and type it fits. The part is then tagged with a bar code or inventory number, and then entered into a computerized inventory management system. With the click of a mouse, recyclers know what they have in stock and where it's warehoused so they can locate it in seconds. A sophisticated parts locator network connects the inventory data of hundreds of auto recyclers across the country, so if your local recycler doesn’t have the part you need, they will know where to get it.

Body panels and mechanical parts are carefully graded, using a standard set of codes that tells you the condition of the part in detail, including the mileage of the vehicle it came from and a description of any minor damage that might be present. These standards, developed by the Automotive Recyclers Association (ARA) have been adopted on an international scale and are built in to the inventory systems of all recyclers. Standard cut line diagrams and inclusions in part assemblies help clarify what you are getting when you order. You’ll know exactly what to expect before it arrives at the shop so there are no delays in getting the repair out the door.

As an industry, recyclers are working toward greater detail and uniformity in descriptive language and the addition of 3D imaging in their inventory databases as well as improvements to online ordering tools to make procuring recycled parts as easy as other alternatives going forward.

Auto recyclers also play a key role in the responsible disposition of salvaged vehicles, which in turn creates the inventory of parts to make available to insurers and repairers – a full circle of service that is beneficial to all.

Use Your Local Recycler As A Valuable Resource
While it’s relatively easy to source parts online, the adjusters who have had the most success using more recycled parts have typically forged strategic relationships with a few key parts advisors at their best local recyclers. Not only do these people make it simple, fast and painless to source and order the exact recycled part that’s right for any vehicle; they lend their knowledge and expertise as a broader resource. With a quick phone call, they can go far beyond merely filling an order for parts, and provide advice on all of the collateral parts you might need to go with it to complete your repair plan, many you might not have considered. Using recycled trim kits, door assemblies, radiators, mechanical parts, glass, window motors, light assemblies etc. can often make the difference between a viable repair and a total loss.


The Greening of the Consumer 

In days gone by, many consumers would be reluctant to use “salvage” parts in their repairs. In order to address the issue, the Automotive Recyclers of Canada (ARC) and their various provincial associations embarked on a significant consumer-focused marketing campaign to re-brand used parts as “Recycled Green Parts”, clearly communicating both the environmental and economic benefits to the general public. In addition, ARC has been instrumental in encouraging, and now mandating, the use of the National Code of Practice for Auto Recyclers, developed with Environment Canada.

This increased brand awareness and dramatic improvement in environmental operations, combined with a fundamental societal shift in “green” consumer behavior has made the use of “Green Parts” not only palatable to most, but desirable. These days, not only do people appreciate being offered a greener alternative in everything they purchase... they expect it. And when they’re rewarded with lower costs and fewer total losses, the payback in customer loyalty can be astounding.

You can find a certified auto recycler near you by accessing the Member roster on the ARC web site at www.autorecyclers.ca.

by Steven Fletcher, Managing Director of the Automotive Recyclers of Canada (ARC)

Ontario Automotive Recyclers Push for Standards

The Ontario Automotive Recyclers Association (OARA) is asking Ontario's political parties to endorse an industry led initiative to establish an environmental management system for end-of-life vehicles (ELV) in Ontario.

The ELV industry standard (ELV-IS) for environmental management has been developed by OARA in collaboration with the Canadian Vehicle Manufacturers' Association (CVMA) and is designed to bring common environmental standards to the ELV recycling sector, while ensuring that automotive consumers do not face the burden of any new recycling fees.

Key Canadian environmental non-government and automotive consumer organizations have endorsed the environmental standards based approach.

This environmental management system will be a North American first for standardizing automotive recycling operations. Two out of 3 ELV generated in Ontario annually are not managed to any environmental standard whatsoever - the system will ensure the safe and responsible environmental management of approximately 550,000 ELV that require environmental decommissioning in Ontario each year.

The objective of ELV industry standard is to:

- Protect Ontario lands and waterways from discharges of hazardous and toxic substances;
- Reduce scrapyard fires;
- Increase reuse and recycling of automobile components and materials, drive continuous improvement in vehicle recycling while avoiding unnecessary economic impacts to auto recycling businesses;
- Create green jobs in the automotive recycling sector - a potential for over 1,500 incremental jobs in auto-parts reuse and recycling;
- Reduce fraudulent swapping of Vehicle Identification Numbers (VIN) by properly retiring them once a vehicle is recycled;
- Support vehicle manufacturers by ensuring access to a regulated system for ELV recycling where manufacturers choose to establish their own vehicle retirement programs; and
- Avoid consumer eco-fees on automobiles

The proposed environmental management system will require all businesses engaged in the recycling of ELVs in Ontario to be licensed and as a condition of licensing to adhere to a common vehicle decommissioning standard prior to any vehicle being recycled for its parts or metal value.

Building on Environment Canada's voluntary National Code of Practice for Automotive Recyclers developed for the National Vehicle Scrappage Program ("Retire Your Ride"), the new recycler's environmental performance standard will require automobile recyclers to safely remove and recycle environmentally sensitive substances such as fuel, engine oil, brake and transmission fluid, antifreeze, air conditioning refrigerants, and heavy metals such as lead and mercury.

The environmental management system will be managed by a not for profit End-of-Life Vehicle Industry Standards Council that will be governed by a multi-stakeholder board and will ensure that necessary oversight.

The Council will not have any authority or ability to levy fees or charges on automotive consumers or vehicle manufacturers. Rather, the Council's environmental standards oversight activities will be funded through licensing of automotive recyclers. A condition of licensing will be that anyone wishing to drop off an ELV to a licensed recycler will be able to do so free of charge.

Implementation of the new environmental management system requires the Ontario Government to amend Ontario's Environmental Protection Act and the Safety and Consumers Statute Administration Act to facilitate the creation of the environmental management system oversight body.

"Ontario's automobile recyclers welcome the opportunity to work with Ontario's auto manufacturing sector in developing the proposal", stated OARA Executive Director Steve Fletcher.

"Ontario's auto recycling industry already reuses or recycles up to 85% of your typical end-of-life vehicle but a lot of that recycling is not done to any specific environmental management standard. This often results in "cutting corners" resulting in poor environmental management practices. If implemented, the proposed environmental management system will ensure a common decommissioning standard for the substances of greatest environmental concern in your car. That's good for our industry and for Ontario's environment," notes Fletcher.

Ontario Minister of Economic Development and Trade, Sandra Pupatello, observed, "Improving and protecting our environment while creating jobs is a top priority for the McGuinty government and I am encouraged to see our automotive industry moving forward with this industry-led initiative."

"This is an important initiative for all automakers", states CVMA President Mark Nantais. "Government support in establishing this system to oversee a common recycling standard for managing vehicles is something we currently do not have. It will ensure that any vehicle retired in Ontario will be recycled in the most environmentally responsible manner possible," adding, "Automobiles are already one of, if not, the most recyclable complex consumer products on the market. Working with the well-established recycling industry to ensure that ELVs are properly decommissioned and recycled brings a higher level of confidence in environment protection."

"We envision a common environmental standard and a self-sustaining means to oversee that standard as the only way to both ensure improved environmental performance and economic growth in auto recycling in Canada" says, Wally Dingman, Chair of the Automotive Recyclers of Canada, adding, "For me, this is all about seeing more cars processed in a way that results in both better environmental outcomes and more jobs and investment in the almost two thousand auto recyclers operating across Canada."

BODYSHOPBIZ.COM 2011-08-11

The End-Of-Life Cycle: Achieving a sustainable automotive industry, starting with end of life

By Susan Sawyer-Beaulieu and Edwin K. L. Tam

Susan Sawyer-Beaulieu, PhD, a post doctorate fellow at the University of Windsor, recently presented results from her research at the 2010 International Round Table on Auto Recycling. Sawyer-Beaulieu has taken a scientific approach to learning how dismantling and shredding facilities manage end-of-life vehicles (ELVs). She is using life-cycle assessment methods to identify the efficiencies and inefficiencies of the ELV dismantling and shredding process. This will allow the auto recycling industry to benchmark the environmental contributions dismantlers make in the overall vehicle end-of-life recycling process. Here are some of her findings:

An estimated 14 million vehicles are retired from the road annually in the US and Canada, representing 20 million metric tonnes of mixed materials—metals, plastics, rubber, textiles, paper, wood, glass, ceramics, etc. (for an average “equivalent passenger vehicle” weight of 1455 kg). In Canada and the US, an estimated 14.4 million metric tonnes of metals are recovered from ELVs and recycled annually. These estimates, however, are largely based on recycled metals statistics derived from the scrap metals industry and average vehicle statistics published in literature. In addition, they do not account for parts and materials recovered by dismantlers and directed for reuse, remanufacturing and recycling independently of what is directed for shredding and metals recovery.

With the collaboration of several dismantlers and one shredding facility, we performed case studies, collected data and analyzed it to establish the mass flow of parts and materials through these facilities. The dismantling data were from both full-service and self-service operations. The parts and material mass fl ows were established as a percentage of the mass of high-salvage and low-salvage ELVs (HSELVs and LSELVs) processed by the participating dismantlers. What was the outcome?As much as 11.6 per cent of the ELVs’ weight entering the dismantling process are recovered and directed for either reuse, remanufacturing or recycling, including the recovered fl uids. The remaining 88.4 per cent of the weight is the leftover ELV hulks and “scrapped-out” parts that are directed for shredding and metals recovery. As much as 5.7 per cent of the ELVs (both LSELVs and HSELVs) were parts recovered and directed for reuse—4.9 per cent of the weight was from HSELVs and 0.8 per cent weight was from LSELVs.

Parts recovered for reuse included 151 part types from HSELVs and 598 part types from LSELVs. The reusable parts from LSELVs are based on parts sales through a self-service “UPIC” facility. Reusable HSELV parts recovery represented 36.9 per cent of the weight of the HSELVs processed. Reusable LSELV parts recovery was 0.93 per cent of the weight of the LSELVs processed.

Core parts recovered from HSELVs and sold for remanufacturing were only 0.1 per cent of the weight of the ELVs processed and consisted of six part types: starters, steering pumps, steering gears, calipers, alternators and A/C compressors. These are parts commonly collected and sold for remanufacturing, but are not all-inclusive. Recycled parts—tires, batteries, catalytic converters and mercury switches—amounted to almost four per cent of the weight of the ELVs processed. Tires represented a little more than half of the recycled parts.

Recovered fluids amounted to approximately 1.9 per cent weight processed ELVs’ weight—1.4 per cent directed for reuse (oils/lubricants) and 0.5 per cent that are recycled (antifreeze, windshield washer fluid, gasoline).

The estimated parts and materials recovery of almost 12 per cent by weight is based on data principally from one dismantler, supplemented with data from the other participating dismantlers to fi ll in data gaps. It is also based on a ratio of one HSELV processed for every seven to eight LSELVs or for every tonne of HSELVs processed approximately 6.5 tonnes of LSELVs are processed.

This ratio of HSELVs to LSELVs will vary from dismantler to dismantler, and consequently influence dismantling recoveries dismantler to dismantler. For dismantlers that process only HSELVs, parts and/or materials recoveries for reuse, remanufacture and “pre-shredder” recycling may be greater per tonne ELVs processed compared to this case. In contrast, for facilities that principally process LSELVs, parts and materials recoveries for reuse, remanufacture and “pre-shredder” recycling will likely be less than what was found in this case study; more materials will be directed for shredding and metals recovery.

Dismantling recoveries will also be influenced by the types and ages of vehicles processed, and local and/or regional parts demands and markets. For example, the re-manufacturable parts recovery established in this case study scenario, i.e. 0.1 per cent by weight of ELVs processed, is a relatively low value. The part types and part quantities that may be sold for remanufacturing will be driven by regional market demands, the availability and locality of parts re-manufacturers and the specifi c parts types the re-manufacturers’ process.

The participating dismantler indicated that the recovery of re-manufacturable core parts was a relatively low-volume business for them, principally because of the lack of locally available parts re-manufacturers to make core part recovery justifiable. Even though this case study scenario is based on data principally from one dismantler, it is a representative benchmark of dismantled parts and materials recoveries. We do not know, however, if these recoveries are high, low, or average compared to the amount of dismantled parts recovered on average from the entire North American “ELV fleet.”

According to the 3R principles—Reduce, Reuse, Recycle—reuse is preferable to recycling. Why is reuse preferable? Under what circumstances and by how much? These questions have been a challenge for auto recyclers to answer. Life-cycle assessment methods can help provide answers. Even though recovery and recycling operations recover materials, they are not free of environmental impacts or burdens. They consume resources and produce emissions. Instead of a more traditional comparisons of these burdens against regulatory compliance limits or guidelines, or relative to economic performance (e.g., cost benefit analysis), a life-cycle analysis can provide a more complete accounting of the materials and resource inputs and outputs for the dismantling and shredding process.

This articled appeared in the January 2011 issue of Canadian Auto Recyclers magazine.

CCIF and Automotive Recyclers of Canada Breakfast Summit on Recycled Parts

Meeting Report

Purpose
To define and establish consensus on the issues that matter to all parties concerning the use of recycled parts in collision repair and to establish a plan for addressing them.

Presentations
Presenters and panellists: Victor Pasnyk of Allstate Insurance, Larry Jefferies of CARSTAR Automotive, Philippe Fugère of Lecavalier Auto Parts and Dominic Vetere of Dom’s Auto Parts.

Key points from panel discussion and presentations:

An Insurer’s Perspective - Victor Pasnyk
Current View:
1.2M vehicles are scrapped in Canada annually, potentially providing a healthy supply of salvage.
Very competitive market between aftermarket and recycled parts. OE parts are sometimes competitive with the alternatives, but data doesn’t show the reason for OE parts choice.
Recyclers play a role in repair cycle time, so availability and speed of delivery are important.
Currently these factors vary across the country, for example with challenges in Eastern Canada and Alberta in terms of availability, while supply and quality seems good in Ontario and Quebec.
Important to educate vehicle owners on the reasons for using recycled parts. Choice of language and consistent messaging also important. Recyclers need to take ownership of this initiative.
Estimating systems and specialized software are helpful tools, but many repairers still feel the need to call to the recycler to verify quality and availability.
Accuracy very important, particularly the year. For example if the repair vehicle is 2003, the recycled part cannot be older.

Barriers to Greater Use of Recycled Parts:
Convincing the vehicle owner – all stakeholders must play a role in this.
Accuracy of parts descriptions – standards exist, but there is still room for greater clarity and detail, e.g. standards regarding “included parts” with front clips or door assemblies.
The added cost of unexpected “clean up” times

Opportunities:
Recycled parts counter staff need to be engaged, asking the right questions and assisting the appraiser to identify other alternative parts opportunities.
Information providers keep improving access to recycled parts inventory, e.g. national live inventory, 360° imaging.
Total loss numbers continue to rise, but this undesirable trend should motivate consideration of more economical, quality alternative parts utilization in order to render more vehicles repairable.

A Collision Repairer’s Perspective - Larry Jefferies
Current View:
Recycled parts usage has increased slightly in recent years to 11-13% of total parts value.
Repairer consolidation creating opportunities for more structured relationships with parts suppliers.
Recyclers able to demonstrate “best in class” qualities more likely to succeed with consolidators.
Key Performance Indicators (KPIs) are being used by insurers to measure and monitor the performance of their repairers in terms of severity (total cost), repair/replace times, cycle time (e.g. time from arrival of damaged vehicle in shop to delivery).
Vehicle complexity increasing and making parts selling more difficult. Need for recycler training.
Too much reliance on telephone to discuss quality, parts included, price etc. Highly inefficient.

Barriers to Greater Use of Recycled Parts:
Lack of certainty on quality, price and consistency. Why buy a recycled part if alternatives provide greater certainty for the same price?
Why buy a recycled part if the dollar or percentage margin is less than that for an alternative part?
Repairers want to repair more vehicles, but opportunities are decreasing as total losses rise.

Opportunities:
Address the pricing model. Repairers need same gross profit margins on recycled parts as aftermarket and OE parts.
Important to have efficient communications tools available and to adapt to market trends in parts procurement for OE and Aftermarket parts. Work in harmony with the technology providers. Repairers and insurers should address ease-of-doing business issue between all parties.
Live on-line recycled parts availability with 360° views would encourage greater use.
Demonstrate to repairers that recycler staff are educated/qualified in understanding their needs.
The parts that can reduce total losses (air bags) need to be addressed with insurers and a solution found. Find a solution to their key issue of liability.
Recycler customer service to become more professional in customer handling, clarity of communication and consistency in using established grading and standardized descriptions.
Switch from “wrecking yard” terminology and image to “recycler” and “green” would be a positive step in changing attitudes.

A Recycler’s Perspective - Philippe Fugère and Dominic Vetere
Current View
· Quality Parts: Standards and standardized descriptions exist. Must use them.
· Pricing based on supply and demand plus history.
· Availability – used to be local, but now global. Large quantity of salvage being shipped out of province and country, resulting in quality parts shortages.
· Cycle times: No back orders – If you see it, we have it.
· Airbags – systems exists – BC & QC recent developments. Working towards incorporating recycled OEM air bags into the repair process will lower vehicle total losses considerably.

Barriers to Greater Use of Recycled Parts:
Recyclers’ image - i.e. junk yard, barking dog etc.

Opportunities
Become more professional in customer service / ask the right questions / become one-stop shop.
Appropriate packaging to reduce damage.
Stakeholders to develop better understanding of each other.

Group Discussion
In the open forum that followed the presentations and panel discussion, there was consensus on the issues raised as barriers and opportunities:
· Profitability – repairer need for adequate margin, plus efficient procurement process.
· Recycler Training and Engagement:
- Customer responsiveness / understanding repairer needs and insurer demands.
- Technical issues, vehicle technology, repair technology – Engage I-CAR.
- Consistent application of existing grading standards. Understand meaning of “insurance grade”
· Education of vehicle owner on “Green Parts” OE recycled parts.
· Potential recycled airbag accreditation – reduce total losses and repair costs.
· Learn from experience and different salvage/recycled parts use models across the provinces and around the world.
· Use IT to make parts availability, visibility and quality consistent enough to eliminate need for telephone calls. 360° views, live inventory.
· Consider ways to increase the flow of available salvage vehicles to the Canadian and local markets.

Conclusion
One outcome of this meeting was clarity on the key issues and agreement between the principal stakeholders, i.e. insurer, collision repairer, recycler, on the maintaining the momentum to address them in a collaborative way. Therefore, it was agreed that a Recycled Parts task force would be established to develop an action plan designed to overcome the barriers and to exploit the opportunities identified and agreed at this meeting.

The following people volunteered to join the task force which will be co-ordinated by Mike Bryan of CCIF and Steve Fletcher of ARC. Once the task force has defined its initial goals and action plan, it will communicate these and its progress to all stakeholder groups through CCIF, ARC and the trade press.

Recycled Parts Task Force:
Insurers:
Victor Pasnyk, Allstate Insurance
Joe Carvallo, Economical Insurance
John Sankey, Intact Insurance

Collision Repairers:
Larry Jefferies, CARSTAR Automotive
Terrance Bradimore, C.K. Collision Centres
Mike Kaplaniak, Fix Auto

Recyclers
Philippe Fugère, Lecavalier Auto Parts
Dominic Vetere, Dom’s Auto Parts
Benjy Katz, LKQ Dominion Auto Recycling
Michael Carcone, Carcone’s Auto Recycling
Mike Maio, Boston Auto Wreckers

Service Providers
Kirk Monger, Hollander, a Solera Company
Diane Chaine, Progi-Pac
Tim Malone, Mitchell
Michel Caron, Audatex
Roger Schroder, Car-Part.com

Sponsor Thanks
We would like to thank the sponsors of this meeting for their support. It is much appreciated:

Abrams Towing
Car-Part .com
Hollander, a Solera Company
Impact Auto Auctions
LKQ Corporation
Marsh Canada
Wholesale Auto Parts Warehouses

July 5, 2011

Automotive Recyclers of Canada To Roll Out Final Phase of Nationwide Certification Process

At a recent meeting in Banff, the Automotive Recyclers of Canada (ARC) backed up their commitment to having all of its members certified to the National Code of Practice for Auto Recyclers with the funding to complete all of the remaining audits across the country. “For years, a national certification program has been a dream of the association. We have always pushed our provincial associations and their members to follow best environmental practices in every aspect of their operations, but up until now there has never been a way to accurately and objectively measure both the facilities and the processes everyone used.” said Steve Fletcher, Executive Director of ARC.

The National Code of Practice for Auto Recyclers was developed by ARC for Environment Canada to support the national “Retire Your Ride” program. It includes stringent compliance requirements for a recycling operation to properly and legally process a vehicle. ARC and their member associations retained an independent auditor to physically visit all of the recyclers who were participating in the program to evaluate their business against the standardized protocol. Any potential shortcomings were rectified and confirmed by the auditor before a recycler was deemed certified. Only certified recyclers were permitted to participate in the national scrappage program.

“As successful as the Retire Your Ride certification process was, we recognized that there were still some gaps in the national coverage.” stated Fletcher. “Now we’re putting our money where our mouth is to get the rest of the recyclers certified so we can finally state with absolute confidence that all of our members do things the right way”. Going forward, any recycler who wants to join a provincial association will first need to complete the certification audit as a condition of membership.

Every vehicle that a Certified Recycler handles goes through a methodical process to maximize reclamation and minimize environmental impact. Good reusable parts, batteries, mercury switches, oils, fluids, coolants, gasoline, and refrigerants are all removed and properly managed before the remaining hulk is sent for metal recycling.

The next step, says Fletcher is to push the government for legislation that will make it mandatory for anyone handling end of life vehicles to be certified. “With certification, people know that a recycler has been thoroughly checked out by a third-party auditor. They know they’re dealing with one of the good guys. But I’ve seen some of the nightmares out there. There are guys who buy cars just to crush them and sell them for scrap metal. They let toxic fluids and heavy metals just escape into the soil and groundwater. They don’t recycle any usable parts and don’t care about the environmental damage they’re doing. I can tell you there is a real need for legislation to make sure everyone handles vehicles responsibly and properly.”