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Scrapyard spotlight: Junkers are jettisoned and cash registers jingle

 

August, 10 2009

Scrapyard spotlight: Junkers are jettisoned and cash registers jingle

The scrapyard of Holland’s Louis Padnos Iron & Metal Co., memories of family road trips, that time someone forgot to tightly fasten a drink lid and the not-so-new car smells are all demolished into a hot metal heap.
Some sit suspended in the air on a lift, ready to have their hazardous fluids drained. Another dots the blue sky as a crane snatches it violently into the air, amid a symphony of shattering glass, and deposits it into a trailer. Other clunker carcasses lay jam-piled on top of one another, sharing a close moment before heading to the shredder.

The company has received about 200 clunkers between its Holland and Grand Rapids locations and expects to receive around 1,000 total, said President Jeff Padnos.
But don’t blame him for squeezing the life out of your old ride, he’s just doing his part.

 

 

A crane clutches a vehicle

Jon Schultz/Holland Sentinel A crane clutches a vehicle to deposit it into a dumpster for further processing at Louis Padnos Iron & Metal Co. in Holland.

Through the program, people can trade in their “clunker” for a new, more energy-efficent model and receive up to a $4,500 rebate.

 

The dealers get the fuel-efficient cars on the road, and the scrap industry ensures the trade-ins never see the streets again, which is mandated by the program.

New car buyers flooded auto showrooms across the country and nearly exhausted the $1 billion allotted for the program in its first week.

Some clunkers first make a pit stop at a scrap parts dealer, such as LKQ in Holland, where parts will be salvaged — except for the engine and drive train.

Dealers are responsible for destroying the engine before the car leaves their lot, and in order to receive funds for the rebates, the government must be notified of the vehicle’s ultimate destruction.

“There are some dealers that just don’t want to have a complication down the road,” Padnos said. “And they know that we get it shredded right away.”

To handle the program’s initial surge, the scrap company took its industrial crane to a dealership and load a truck with trade-ins, Padnos said. Now, it receives most of their clunkers from individual tow trucks.

Louis Padnos Iron & Metal can service the entire western half of the state, Padnos said.

But the program is not necessarily giving the scrap business the same shot in the arm that car dealerships are receiving, Padnos said.

For the first half of this year, Louis Padnos Iron & Metal has processed less than half the tons of material it did during the same period in 2008.

“None of us are operating anywhere near our capacity,” he said. “All of us have got the capacity to do a lot more than what we’re doing, especially since the volume of the whole business level is just down so much from a year ago.”

In general, the scrap business is down in volume, and this will give it a boost, but “not that big” of one, Padnos said.

“It’s good business for us,” he said. “It isn’t make or break for us.”

The scrap company pays the dealer a special flat-rate per car, versus the usual pay per pound.
The processed scrap metal gets sold to either a foundry, where it can be melted into cast parts, or a mill where it is melted into steel.

“Steel mills are showing some signs of life of needing scrap, so it isn’t in danger of flooding the market,” Padnos said.

It’s rare that the scrap industry ever receives attention, let alone as much as the American auto manufacturers.

So when they get their time to shine, they want to make the most of it.

At least that’s how Padnos views the stimulus program.

“Day after day, it’s like main headlines of the Wall Street Journal, the New York Times it’ll be front page, so it isn’t that often that something we’re involved with has that amount of attention,” said Padnos, whose Holland-based family company has operated more than 100 years. “So we want to make sure that we’re doing our part.”

 

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