|
Scraping by on scrap
Oct 15, 2008 (Erie Times-News - McClatchy-Tribune Information Services via COMTEX) --
People can become attached to their junk -- whether it's grandpa's anvil, the rusted hulk of an old car or the assorted pieces that a shade-tree mechanic collects along the way.
But Kevin Estes, a 42-year-old log dealer from Centerville, has a tried-and-true method for convincing people to part with their junk.
It's called cash, and for much of this year it's been flowing freely in the scrap industry as buyers and processors have scrambled to feed the world's growing hunger for steel.
That market, which has slowed in recent weeks, produced record prices for steel and other metals. The price of cold rolled steel, which jumped from $686 per ton in June 2007 to $1,144 in June this year, is one example.
For Ashtabula-based AIM Recycling & Demolition, February turned out to be a perfect time to open a new facility in the West Mead Industrial Park near Meadville.
Tom Hayden, sales and account manager at AIM, said he expected growth to be gradual.
Instead, company employees found themselves scrambling to keep up with what sometimes seemed to be a never-ending procession of cars and trucks waiting to unload.
Estes rediscovered his old love of scrapping early this year when the price of timber went south and the price of scrap soared.
"I was just getting it (metal) wherever I could find it," Estes said. "I was going to farmers and cleaning up areas wherever I could find them. The last job I had, the guy had the stuff for over 30 years."
Estes said he tries to make about 30 percent above what he pays. Paying generously, he said, is the one way to ensure his phone keeps ringing.
"The last batch, I paid him like $1,200. When I was done, I went back, and I gave him a couple hundred more."
With the serious scrap dealers like Estes, beer- and pop-can collectors, and local tool shops that sell steel turnings and wire, AIM has generated revenues this year of between $5 million and $7 million, while jumping from five to 18 employees.
The money that flowed for months from high scrap prices did more than help clean up some junk piles and put money into the pockets of Estes and others like him.
Bob Keil, operations manager at AIM in Meadville, said he was able to buy a $35,000 X-ray gun used to instantly analyze metal. This ensures customers they're being treated fairly.
Keil said the company also installed equipment to drain oil and other liquids.
"We wanted to do things right," Hayden said.
For scrap buyers, doing things right means being mindful of what they buy and don't buy.
Jeremy Lincoln, vice president of purchasing at Lincoln Metal Processing in Erie, said even when prices were at their highest, the family business steered clear of suspicious people.
That meant not buying storm-sewer grates, grave markers or Pennsylvania Department of Transportation signs.
"We are shaking the pawnshop image. That is not what we do," he said. "We have paid by check for more than 15 years, and we take ID on everyone who sells to us. We lose a little bit of business over it, but that's fine."
As it turned out, there was plenty of legitimate scrap to buy -- mountains, it seemed, of old washing machines, lawn tractors, aluminum siding and worn-out car batteries.
Lincoln, whose family also owns Meadville Metals in Meadville, said he wondered if there could be an end to it all.
"We used to scratch our heads and wonder where it was coming from," he said. "If you could have been here on any given day, we at times have had them lined up down the street."
The lines, however, are shorter these days, and the scrap boom seems to have cooled. Prices have fallen by an average of 30 percent from their peak earlier this year, according to Lincoln's estimate.
A stronger dollar, weaker foreign demand and a tighter credit market for commercial construction are being blamed for the decline, according to an article published Tuesday in Crain's Chicago Business.
At AIM, Hayden said he welcomes the lull and predicts it will end after Jan. 1, when steel mills will have melted their backlog of scrap.
The slowdown, he said, has given the facility a chance to sort out its inventory and get ready for the next rush.
"We are not going to make as much money, but this is going to give us an opportunity to get organized," he said.
Lincoln said he's not worried. He's been through this before.
"If you have been at it long enough, there is really not gloom and doom," he said. "Everyone got spoiled on high prices. Now that there is more of a glut of scrap material, it's really back to being a buyer's market."
Estes, who has returned to the logging business until scrap prices improve, says it's not just the money that kept him loading and unloading his truck all summer.
"It makes everything look good," he said. "I had a lot of wives thank me."
But in the end, money makes the scrap business go around, and he can't offer as much these days.
"People just don't like to get rid of stuff," he said. "But if you can go in and offer them a couple thousand dollars, it makes them think."
To see more of the Erie Times-News, or to subscribe to the newspaper, go to
http://www.GoErie.com. Copyright (c) 2008, Erie Times-News, Pa. Distributed by
McClatchy-Tribune Information Services. For reprints, email
tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax
to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave.,
Suite 303, Glenview, IL 60025, USA.
[ Back To TMCnet.com's Homepage ]
|
INDUSTRIES
Activate Email 
INDUSTRIES
Find Solutions for Enterprises, SMBs & Service Providers at the INTERNET TELEPHONY Conference and EXPO West, September 1-3, 2009. Los Angeles, CA.
