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Scrap Car Spotlight 1.6

Scrap Car Spotlight 1.6

We move to our 6th edition of the Scrap Car Spotlight from us here at Cleveland Scrap Cars. We buy scrap cars and offer junk car towing from Mentor to Berea and Garfield Heights to North Olmsted. We offer you a price to buy scrap cars right over the phone and that price includes complimentary junk car towing and removal. This edition interviews Mr. Tom Andrade of Everett Auto which is located in Brockton, MA, a city located 25 miles south of Boston

Q: What are some of the primary functions you handle in managing Everett?

My primary functions are the overall administration of the company. We employ 75 people, so most of my time is spent performing the role of General Manager, the balance of my time is spent performing owners duties.

Q: How did your company venture into the sales of used vehicles? Has the business always done this or perhaps added the department along the way?

We began selling used vehicles in the mid 1980’s. Our lot has grown significantly over the years.  Used cars is our smallest line of business in the overall gross revenue, but accounts for approximately one million dollars in annual sales.

Q: What are some of the changes in the auto recycling industry recently that you have noticed?

I believe the single largest change to our industry has been technology. Technology helps us purchase vehicles, manage and sell our inventory and track our financials.  Technology has expanded our audience of potential customers.  However, technology is also making the vehicles we dismantle more difficult to diagnose and dismantle.  Traditional mechanical part failures can be masked by computer problems.  As technology advances into self driven vehicles it will continue to make our business more difficult.

Q: Is there any marketing initiative(s) that you have used lately that was very successful?

The largest initiative we have undertaken over the last several years has been the additional harvesting of materials from end of life vehicles. We use heavy equipment to extract motors & transmissions, radiators/condensers, and wiring harness from salvage vehicles.  We also harvest wheels, catalytic converters, batteries, oxygen sensors, mercury switches, cores  and all fluids.  Each one of these commodities have value that contribute to our annual bottom line.

Q: I noticed you offer both full-service and self-service components What are some of the positives and negatives comparing these two models?

We have operated as a hybrid yard since the early 1990’s. For many years, peers recommended separating the full service and self service operations.  Recently more and more yards are adopting the hybrid model. The largest positive attribute to a hybrid model is the low cost of goods and operating costs. If you can purchase your self service/scrap vehicles with a scrap positive buying model, your COGS for the self service yard remain very low.  The other major positive are the extra sales that are realized on the full service vehicles after the stock items are removed during dismantling.

The major negative to the model is the higher operating costs for the full service yard. We must staff for hundreds of customers daily which can lead to higher personnel costs.  The other problem is with customer service.  Hybrid yards tend to over-serve the self service customer and unfortunately underserve the traditional full-service customer.  The sales staff must quantify the customer to determine quickly whether they are a self service or full service customer.  This can lead to lower customer service when dealing with a high volume retail operation.

Q: How does Everett track its large inventory of used vehicles and components?

We utilize the Pinnacle Professional yard management system to track all of our inventory – full service vehicles, scrap/self service vehicles and our used car inventory.

Q: I noticed that your website listed the current per ton scrap price as $35 per net ton. Do you recall times when it has fallen this much; what/when do you anticipate a rebound?

The scrap market is at one of its lowest points in history. The scrap pricing has not been this low since 2008 and before that the late 1990’s. The 2008 crash was relatively short-lived in comparison to the current market situation. In 2008 there was a very steep drop in pricing but it did rebound in a few months.

The current market has been in a steady decline for over a year now. The market has recently stabilized and the decreases should be over.  However, the long-term outlook for this market is not good.  Most analysts are predicting market conditions to remain very low for the next 18-24 months. We are experiencing a global “perfect storm” that are creating the current market conditions. Some of the contributing factors are China becoming a net exporter of scrap instead of a net importer, strong US dollar against the Euro, Turkey being in turmoil and on the verge of a war, and a very weak domestic scrap market.  Until several of these factors have been corrected we are in for a long road to recovery in the scrap market.

We certainly appreciate Mr. Andrade’s time and feedback.  A couple of particularly interesting points that were discussed are as follows:

  • Everett has a very diverse business which generates revenue by employing both the self-service and full-service aspects of the used component business, sales of used cars and general scrap processing.
  • His emphasis on “harvesting” the components that have commodity value. It seems that they truly recycle a large percentage of each vehicle’s composition.
  • The explanation of this global “perfect storm” creating the decline in the scrap market revealed a couple factors I was not aware of including, the strength of the US dollar versus the Euro.

We encourage you to visit Everett’s website at http://www.everettsautoparts.com/