Larry Danielle has been involved in the recycling of automobiles since 1969 but probably never more involved than in his current role as owner and president of U-Pull-It, Davie, Fla. (near Fort Lauderdale).
U-Pull-It has been growing in multiple directions since its founding in 1996, including adding more than 30 acres of land, larger annual volumes of salvaged automobiles and additional services, including the processing and shredding of scrap metal.
“The growth has been tremendous,” says Danielle, who also is willing to recount some of the challenges he has faced, the mistakes from which he has learned and the successful techniques he has developed as U-Pull-It has evolved considerably in just 16 years.
Salvage and Scrap
Danielle’s Used Auto Parts was the family business that Danielle helped run from 1969 until 1994. He describes that company as being in the “full-service” auto salvage and parts business, with a focus on late-model cars.
“I could see the consolidation taking place in the late-model sector by companies such as LKQ and also met some people from California who were involved in the self-serve parts concept,” Danielle says. “I saw with LKQ consolidating on the late-model stuff that the ‘pick and pull’ concept was the future of where things were going for entrepreneurs,” he adds.
“I started U-Pull-It with the idea of following the Pick-N-Pull concept that they use in California,” Danielle continues. “I was fortunate to meet Joe Faso, one of the founders of Pick-N-Pull. We’ve become friends, and he was kind of my mentor back then. He guided me in the right direction.” (Pick-N-Pull is now owned by steel and scrap company Schnitzer Steel Industries, Portland, Ore.)
When starting in 1996, Danielle says the self-serve used auto parts format was new to south Florida. “We had to introduce the U-Pull-It concept to Broward County,” he comments. “Our grand opening day we started with 72 customers and we started with 150 cars on seven acres,” he adds. “Traditionally, the big companies have a grand opening on their 20-to-30-acre lots with 3,000 cars.”
The concept turned out to be welcomed by south Floridians, judging by the growth U-Pull-It has enjoyed in the subsequent 16 years.
The most tangible sign of U-Pull-It’s growth is its slow and steady march from seven acres of land to its current 40 acres. “When I stated U-Pull-It on seven acres, there were five other salvage companies on this same street,” recalls Danielle. “I kept buying them up. Up through the 1960s, one woman had owned the 40 acres on this block. Over the years starting in 1969, she had sold off the entire 40 acres in 25 different parcels to probably 15 different people. Ironically, I managed to buy back the entire 40 acres from the 15 individuals.”
Among the people helping Danielle manage the business are his wife, Cathy, whom Danielle refers to as “the brains of the operation” and who overseas administrative and accounting functions; daughter April, who oversees the purchasing office; General Yard Manager Michael Floreno, who is Danielle’s son-in-law; Shredder Managers Sean Higgenbotham and Matt Hayes; Retail Sales Manager Ed Galante; and Director of Export Sales Jean Merus.
U-Pull-It’s customer traffic has blossomed from the 72 people who showed up on opening day to 25,000 to 30,000 people per month.
Now, a steady stream of obsolete automobiles makes its way onto the U-Pull-It lot each day, after which any number of things can happen to this incoming inventory.
As obsolete vehicles are delivered to U-Pull-It, most commonly by tow truck, they enter a receiving area where a decisions are made.
“A vehicle could go into what we call general population, which means it will enter the retail lot,” says Danielle. “Some are designated for export, which means we dismantle them 100 percent and send many parts overseas. And some will go directly to the shredder,” he adds, concluding, “Eventually they all go to the shredder.”
Experience is one key in making the routing decision, as is studying sales and inventory patterns. Danielle characterizes it this way: “On the retail lot, we’ve got a good idea of what sells and what doesn’t. Late model Toyotas and other cars and trucks that everybody drives go to general population. Older, bigger vehicles, like older pickup trucks, go to export. The lowliest go directly to the shredder.”
At the U-Pull-It retail yard, according to Danielle, cars “sit on the ground for 30 days; we rotate that inventory every 30 days.”
Vehicles in all three categories go through a standardized process where U-Pull-It drains the fluids for recycling and takes out the batteries, among other environmental compliance and safety steps. The gasoline drained by U-Pull-It is purified and used to fuel up its own fleet of tow trucks, Danielle says.
Preparing cars for the shredder also involves several steps, including removing high-value nonferrous items, such as aluminum wheels, wiring harnesses and aluminum motors.
This leads to the most recent change for U-Pull-It: its operation of an 80-inch auto shredding plant designed and installed by U.S. Shredder and Castings, Trussville, Ala.
A Major Investment
The auto salvage and auto shredding markets have for decades been one step away from each other, which has led to alliances, vertical integration and, at times, acrimony.
Danielle says U-Pull-It has at times enjoyed good relationships with auto shredder operators in south Florida but also has seen trouble brew on that front.
“A lot of shredder operators are now getting into the ‘you-pull-it’ business to provide their own feedstock,” he notes. “The natural progression of my growth was to gravitate into their business.”
While that national trend provided part of the impetus, so did his own local conditions and experiences, Danielle says. “We started crushing our cars and we had a good relationship with the shredders,” he comments. “I guess it got to the point where we got too big for them. We get the majority of cars in two counties. We began to run into situations where they didn’t want to pay us what we felt was the right price or provide the right level of service to us as a customer. We might have 14 or 15 loads of crushed cars per day to sell them, but they might only want to accept four or five loads, leaving us with the alternative to not crush cars or find other alternatives.”
Investing in the millions of dollars for a shredding plant and downstream system may seem risky, but Danielle says, “Necessity is the mother of invention. When you’re constantly beating your customers down price-wise, they’re going to look elsewhere.”
Danielle says he reached his decision to install a shredder in 2008 and 2009. After researching vendors in that equipment category, he selected U.S. Shredder as the shredding plants supplier and SGM Magnetics, Sarasota, Fla., as the downstream sorting equipment supplier. The entire plant and sorting system is housed indoors.
“I bought the first U.S. Shredder plant built and certainly I heard from skeptics who questioned if I’d done the right thing,” Danielle says. “But Bill Tigner [of U.S. Shredder] runs a really good company, and the fabricator, Boltech, is a phenomenal company. Granted we had some hiccups along the way, but I am nothing but happy with what Bill Tigner has done and with what SGM has done on the downstream side.”
Several miles removed from the U-Pull-It Davie, Fla., property, that company’s owner, Larry Danielle, also runs a concrete crushing and recycling plant.
“I have a dear friend whose family was a pioneer family down here from 1900s; they own a lot of land and had been in the quarrying business,” notes Danielle.
“South Florida has these lakes from holes quarries that been dug and the rock and dirt sold out of it. One of the parcels owned by my friend was a 320-acre lake that is getting filled in,” Danielle continues. “I got involved in that business with him and run a concrete crushing business as a lake fill operation. We’ve filled in about 60 acres of it with the concrete we’ve crushed, and I’ve recycled lot of steel reinforcing bar because of this operation as well.”
The challenges Danielle ran into often related to zoning and permitting. “It took five years to determine that this property is in a conforming use situation [for a shredder], but ultimately we had the right piece of land and the zoning that can be impossible [for other potential shredder operators] to get.”
Danielle credits Rob and Earl Weber of Garden Street Iron & Metal, Fort Myers, Fla., for allowing him to visit and learn from that 2008 shredder installation. “We became good friends, and they really deserve some credit for helping us get where we are by providing advice and encouragement,” Danielle says of the Webers. (For a profile of Garden Street Iron & Metal, see “Built to Last” in the July 2010 issue of Recycling Today.)
Danielle chose a smaller shredding plant model for very intentional reasons, he says. “With a plant like this, you don’t have to shred 30,000 or 50,000 tons per month. I can shred from 5,000 to 10,000 tons per month of my own material (in my case) and I’m perfectly happy.”
A key reason this business model works, says Danielle, is the growth of the containerized ferrous scrap export market. “I thought in the beginning I’d have difficulty selling materials. In reality, I’ve got companies from the other side of the world buying shred from me. By being able to put shred in containers, it’s a lot easier now for me to sell 5,000 tons per month to five different parties than to try to figure out how to sell 30,000 tons in one ship. The scrap goes to small foundries in, say, India. Bigger is not better.”
Danielle sees it as a business model that is changing the industry. “You’re seeing more and more independents like me content to shred what they have and ship to one of six or eight options, often in the export market. You’re getting smaller operations strategically placed. It used to be everyone wanted to put a super-sized shredder in and draw scrap from 300 miles away. You don’t have to do that anymore. I call it boutique shredding. More and more people are gearing toward that, including the shredder makers.”
When he looks back on the hectic 16-year existence of U-Pull-It, Danielle can point to several philosophies that he says have helped the company grow.
“There are a lot of things we’ve done that we didn’t really set out to do,” he says. “We kind of pioneered recycling our own catalytic converters and we developed our own software for inventory control and point-of-sale systems for our retail operations. In my wildest dreams I never thought I’d own an auto shredder.”
Danielle, through a separate company, also operates a concrete recycling plant.
Danielle says, “There is more innovation coming on the scrap side,” possibly including bulk ocean shipping of scrap, a new way to handle auto shredder residue and the likelihood of buying additional shreddable materials.
Danielle is proud of what has been accomplished at U-Pull-it. “We’ve just worked a little harder, I guess. I can’t say enough good things about our loyal and hard-working employees. I’ve also had some help along the way, and not always from where I thought I would get it.”
He’s been part of two companies that have operated “along the same street for 43 years,” notes Danielle, who says he believes the company is well-prepared for the next owner, whoever that may be.
“It’s something we think about occasionally,” Danielle says. “I’m 62 years old, and eventually we do want to retire. What we built here, we’ve built the right way. If you do it the right way, prospective buyers will come along. If the right opportunity comes along, we’ll consider it,” he concludes. “But if not, we’ll keep doing what we’re doing.”
The author is editorial director of Recycling Today and can be contacted at email@example.com.
Nickel pricing, which at times has soared during the past several years, has experienced a downward drift in 2012. Perhaps more troubling for processors and traders of nickel-bearing scrap, however, is that demand for stainless steel scrap from China—the world’s largest metals producer—has been muted because of high levels of nickel pig iron production there.
Several traders and recyclers pointed to these market conditions while presenting at the 2012 Bureau of International Recycling (BIR) World Recycling Convention this spring.
As the second half of 2012 continues, it is uncertain to what extent global economic conditions will provide a boost to a recycling industry sector that, while not lackluster, could use revitalization.
A Slower Sector
At the May 30 meeting of the BIR’s Stainless Steel & Special Alloys Committee in Rome, traders such as Barry Hunter of Hunter Alloys LLC, Boonton, N.J., pointed to both slow scrap flows and slack demand as concerns.
“Flows of scrap into wholesale yards remain slow,” said Hunter, who cited low industrial production and some scrap dealers holding inventory awaiting higher prices. On the scrap demand side, Hunter stated, “Stainless scrap requirements for April mill deliveries were reduced, and May requirements have already indicated a continued reduction in demand.”
Demand from China remains muted. “There continues to be abundant supplies of nickel-bearing pig iron at cost-effective prices” in that nation, said Mark Sellier, who works from the Hong Kong office of OneSteel Recycling.
While Frank Waeckerle of Cronimet’s Germany office said “demand for clean and homogenous scrap out of processing plants is high” in Germany and some neighboring countries, plenty of worrisome news also is coming out of Europe.
“Scrap availability seems to become poorer,” reported Sandro Giuliani of Italy’s Giuliani Metalli. He also cited “a decrease in manufacturing activities” and that “dealers are reluctant to sell the scrap they have stored at higher values.”
Committee chairman Michael Wright, who works in the United Kingdom for ELG Haniel GmbH, reported slower melting schedules in the U.K. and “a fall in stainless steel scrap availability” similar to the conditions spelled out by Hunter and Giuliani.
A Nickel's Worth
The recent story of the price of nickel on the London Metal Exchange (LME) has been one of a downward trend.
From April 2011 to July 2012, the per-metric-ton cash settlement value of nickel on the LME has taken the following path:
As speakers at the BIR session indicated, there seemed to be several supply-and-demand-related reasons for the fall in nickel pricing.
On the supply side, the historically high pricing reflected in the February 2011 LME nickel price helped spur production of the Chinese nickel pig iron mentioned by Sellier as well as boosting mining activity around the world.
Some scaling back of mining activity may be occurring as of mid-2012. A Reuters news item in early July reported that Vancouver-based CaNickel Mining Ltd. is keeping its operations at the Bucko Lake Nickel mine in Manitoba in suspension because of low prices.
Hitting the Century Mark
At the 2012 Bureau of International Recycling (BIR) Stainless Steel & Special Alloys Committee meeting in Rome, guest speaker Pascal Payet-Gaspard of the International Stainless Steel Forum (ISSF), Brussels, referred to the stainless steel industry as “facing many challenges” but having “a bright long-term future.”
Among the challenges cited by Payet-Gaspard was raw materials price volatility, which makes it “extremely difficult for the industry to guarantee a price” to manufacturers trying to budget the cost of finished goods, he noted.
Another challenge is mill overcapacity in the world’s developed economies and potentially in the future in China, where “a lot of provincial governments are pushing for new plants,” he commented.
Providing long-term hope, said Payet-Gaspard, was the increased efficiency of stainless steel producers who have tried new techniques to cope with market volatility. As well, the stainless industry has become very good at recycling what it produces, with only 18 percent of stainless steel being discarded in landfills, according to a Yale University study and ISSF statistics.
In an ISSF video shown by Payet-Gaspard, the narrator notes that in the last 40 years stainless steel production has grown from 3 million metric tons per year to 30 million metric tons per year.
As well, the first patent for stainless steel is just 100 years old, having been obtained in Germany in 1912. After this first century of steady growth for the material, “just imagine what it might make possible in the next 100 years,” according to the ISSF video.
The 2012 BIR World Recycling Convention was May 30-June 1 at the Rome Cavalieri Hotel in Italy.
The site also has been the subject of a provincial engineering review and audit, but in announcing the ongoing suspension of operations, CaNickel also pointed to nickel prices that have fallen in 2012 as a reason to forego resuming operations.
Chinese nickel pig iron, produced from laterite nickel ore, has been supplying stainless steel mills in that nation with considerable feedstock since 2006. “Chinese stainless steel producers use nickel pig iron, to which they will add chromium and other materials, to produce 200- and 300-series stainless steel, which accounts for more than 70 percent of total stainless steel production in China,” says China Steel Australia Ltd. on its website.
While this material has greatly curtailed demand for imported stainless steel scrap in China for the past several years, the reservoir of nickel pig iron may be draining quickly. China Steel Australia Ltd. goes on to say, “With the Chinese Government Steel Industry Restructuring Program, many nickel pig iron producers have been shut down due to poor environmental standards,” and that “Chinese domestic growth demand for nickel and nickel pig iron far exceeds the increase in production of nickel in China over the next few years.”
The company adds that its Linyi nickel pig iron plant “is environmentally certified,” and that “with demand still growing at a rapid rate and supply of nickel pig iron being substantially reduced, demand for nickel pig iron from producers like China Steel is very strong.”
Still Somewhat Demanding
While demand in China for finished stainless steel and mill feedstock may be strong, demand in other parts of the world has been less vigorous.
Finland-based stainless steel producer Outokumpu Oyj says its 2012 first quarter can be characterized by “improvement in profitability [as] a result of higher delivery volumes” but that “a somewhat weaker mix had an adverse effect.”
The company continues, “As a result of the recent decline in the nickel price and a weaker product and geographic mix in the second quarter, Outokumpu’s average base prices for stainless steel in the second quarter are expected to be flat or slightly lower than in the first quarter.”
Spain-based Acerinox Group also enjoyed a profitable first quarter of 2012. In its accompanying comments, the company points to “recovery of the American market [that] has allowed us to maintain our optimism in spite of the weakness of the European market.”
Results from Acerinox’ North American Stainless subsidiary in the U.S. have been encouraging. North American Stainless operates a sizable flat and long products stainless steel mill in Ghent, Ky. As of mid-August, the mill was reporting three-to-eight-week lead times.
“The United States market is in a clear recovery process since the month of November and continues to be the most solid one,” reports Acerinox CEO Bernardo Velázquez in a late April news release. “We had already mentioned that some indicators, such as the sales of trucks or investments in energy plants had improved, but now we can say that practically all sectors—even those related to construction, such as sinks or white goods—are in sound recovery, and the feeling of our customers and sellers is optimistic. This situation is favoring North American Stainless, which is performing even better than the market and reaching a high level of competitiveness,” he adds.
Acerinox’ view of its home European market was far less favorable. “The apparent consumption of the European market has decreased 3 percent with respect to the first quarter of 2011, as per preliminary data from Eurofer,” Velázquez says. “The lack of confidence in the face of the economic and financial situation, in addition to the scarce visibility and the forecast of declining prices due to the fall of alloy extras, has caused [a de-acceleration] of stainless steel consumption.”
The second quarter of 2012 has brought good and bad news, as investors and metals producers interpret the economic data.
A demand index calculated by the International Stainless Steel Forum (ISSF), Brussels, shows an upward trend for finished stainless steel since early 2010. After the index (which uses 2005 as its baseline 100 figure) dipped from approximately 125 down to 115 between mid-2008 and mid-2009, it has been moving upward, reaching the 160s by the start of 2012.
That trend line could explain that even while companies like Outokumpu and Acerinox have concerns about the future of the Eurozone, they can take comfort in being part of a growing industry sector.
Pascal Payet-Gaspard, secretary general of the ISSF, told BIR delegates in Rome (See “Hitting the Century Mark” above, on the right), “despite current difficulties shared by many heavy industries, the stainless steel industry has a bright future” in light of growing applications.
The author is editorial director of Recycling Today and can be contacted at firstname.lastname@example.org.
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When engineers design a highway or road that passes through mountains or steep hills—especially one likely to carry heavy traffic loads—they strive hard to create surfaces that do not rise or fall at too sharp of a grade. The interstate highway standard, for instance, calls for a 6 percent maximum grade.
Commodity traders and recyclers who collect and process secondary commodities may at times wish a similar 6 percent maximum was in place when it comes to pricing volatility, especially when prices are trending downward.
Discerning the angle of the slope for nonferrous scrap pricing in the past 12 months or so may depend in part on the viewpoint of the trader, recycler or scrap consumer involved. Using London Metal Exchange (LME) prime or alloy material prices as a yardstick, however, shows a clear trend of a steady downward drift.
From July 2011 to July 2012, LME cash settlement copper pricing fell from more than $9,600 per metric ton (as a July 2011 monthly average) to $7,590. This 21 percent drop in 12 months can certainly be considered drastic, especially for someone still holding on to (unhedged) material purchased in July 2011.
Likewise, in this same span, the LME aluminum alloy price has fallen by more than 17 percent, and the price of nickel has dropped by 32 percent.
These percentages are nothing to sneeze at, and there is little doubt that budgets, forecasts and profit margins have been knocked askew by the steady downward trend.
Yet, while the downward drift has been relentless, it also has been seen as a relatively welcome scenario compared with alternatives where the appropriate metaphor might be plummeting down a fast rollercoaster or even plunging off a cliff.
Highway engineers certainly have a difficult task keeping the maximum grade at 6 percent when laying a road through a mountain range, but to a great extent they have control over the situation.
Nonferrous traders and recyclers, on the other hand, are at the mercy of a large, global market that can take sharp dives and spikes because of an unexpected data point or a crisis occurring half-a-world away.
As prices of nonferrous metals trended upward during China’s economic growth boom years, a frequent topic of conversation was predicting just how rapidly they might fall when the boom began to lose momentum.
By no means have 2011 and 2012 revealed the full answer to that question, but the grade of descent so far has not met the worst of expectations. Although it is controlled by the invisible hand of the market as opposed to a civil engineer, ideally that angle of descent will remain manageable.
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