Recycling News

All about recycling and scrap management


Some West Michigan scrap yards find Cash for Clunkers program to be a pain in the wrecks


August, 09 2009

Some West Michigan scrap yards find Cash for Clunkers program to be a pain in the wrecks

"I never saw anything like this," said Mike Ostrander, an account executive with Louis Padnos Iron & Metal Co., the region's biggest metal recycler. "There are a lot of good, working trucks coming in -- even an older Mercedes." 

But they all have one thing in common -- they are gas guzzlers, gulping at least a gallon of petrol for every 18 miles.

A crane clutches a vehicle

Paul L. Newby II | The Grand Rapids PressGotcha: A Padnos crane operator hoists a clunker into the trailer of a semi to be hauled from the Fox Ford parking lot for crushing and recycling at Louis Padnos Iron & Metal Co.


Padnos metal shredders chewed up more than 100 Cash for Clunkers vehicles in the first week of the program.

On Friday, President Barack Obama signed into law a measure allowing another $2 billion for the popular but complex program. That could extend clunker sales to the end of the month, analysts said.

New cars on state roads

In the first bustling week of Cash for Clunkers, Michigan led the charge to trade gas guzzlers for new wheels. Here's the Top 10, based on requested rebates from dealers, in millions:

1. Michigan: $34.4
2. Ohio: $29.3
3. California: $26.4
4. Minnesota: $26.2
5. Texas: $25
6. Illinois: $24.4
7. Pennsylvania: $23.4
8. New York: $21.8
9. Wisconsin: $19.6
10. Florida: $17.2

Source: Automotive News


"People are picturing rust buckets," when they think of clunkers, Ostrander said. "But there are some pretty nice cars."

So far, those vehicles hit the shredder mostly intact. Their engines are seized with a liquid glass infusion at the dealership; other potentially useful parts stay put.

"We're getting the value of the scrap," Ostrander said. "We get the battery, fluids and mercury out, then it goes right to the shredder. We're not parts-ing out anything."

Scrap steel is bringing about $125 a ton these days. Padnos sorts the steel from the car's copper, aluminum and rubber, and ships it out via rail or truck to foundries and steel mills across the Midwest.

"It's remade back into a car," Ostrander said.

Padnos is the biggest, but clearly not the only, area scrap merchant on the Cash for Clunkers list. More than a dozen other local companies are on the scrap dealers' list at, including at least one that is not participating -- the City of Grand Rapids impound lot, where police take abandoned and confiscated vehicles.

"We're not involved in it," a spokeswoman at the impound lot said. "But they put us on the Web site."

Across the board, the dealers of used parts and scrap metal agree on one attribute of the unique program -- confusion.

"In the beginning, they said, 'Yeah, we could get some pickings off of them, but not the drive train,'" said Doug Sherd, manager at Grand Rapids Auto Parts, 1810 Turner Ave. NW.

"That thing changes on a daily basis. There's so much confusion," Sherd said.

Some scrap dealers say they cannot tap the used car parts before the vehicle hits the shredder. Others say just about anything but the engine can be reclaimed and sold.

The Web site said it was OK to cull parts from clunkers, except the engine and drive train.

In Jenison, Grand Valley Auto Parts also is on the approved scrap dealer list but has not been tapped. That may be OK, said office manager Jennifer McDonald.

"The motors are the No. 1 sellers for us, so I don't know if we're as interested in them (with seized engines)," McDonald said.

Businesses that trade in used car parts took an earlier hit, just 18 months ago, Sherd said.

"When the price of scrap was up a year and a half ago, for everybody who had a disabled vehicle in a parking lot or driveway, it went to Padnos and got crushed," Sherd said. "There were a lot of good, usable parts on those vehicles."

Used cars needed, too

In Sparta, Connie's Auto Parts Recyclers owner Gary Potter agreed.

"That took 60 percent of recycled cars out of our market," Potter said. "I didn't crush any last year. I kept all my cars, and I'm getting a lot of calls for parts."

Potter, 60, said he is worried about a shrinking used-car market, a potential side-effect of the Cash for Clunkers hubbub.

"It's taking ($3,000) cars off the market that a lot of people need; there are a lot more of them than need a 2009 model," Potter said. "You strip the poor people of anything to drive. You're just crushing them."

Sherd said he has another worry -- the people who are stretching to buy a new car in this economy.

"I'm afraid these people will jump on this bandwagon for that $4,500 and, next year, they lose their job," Sherd said. "Then, there goes the car."

Few scrap dealers besides Padnos have processed a Cash for Clunkers trade-in, but they see the carcasses lining up at area auto dealers.

Junk 'em

Local scrap operations on the Cash for Clunkers list:
• Louis Padnos Iron & Metal , 2125 Turner Ave. NW, Grand Rapids
• Louis Padnos Iron & Metal, 117 W. 7th Ave., Holland


Hesitant to destroy

With all the recent uncertainty of funding and the snarl of traffic to register purchases online, dealers have been reluctant to finalize Cash for Clunkers sales.

Dealers bear the brunt of risk in the program -- they must store the gas-guzzlers traded in, extend the rebate to the buyer for the new car and, after they get the federal reimbursement, disable the trade-in's engine and send the old car to the shredder within seven days.

Until July 31, a week after the program launched, dealers were ordered to destroy the old cars' engines before they could get their money back. An amendment changed that choreography at about the same time the program appeared to be going broke.

No wonder, then, that dealers are being cautious.

"I haven't gotten a call," Potter said, despite the growing stockpile of beaters at Sparta-area dealerships.

"It's kind of strange. I know the back lots are full of them -- they've got X's on the windows," he said.

"I think the politicians had no clue on what they wrote up and what they passed," Potter said. "They came up with a law and money, but what do we do now?"

At Padnos, Ostrander said he has also seen dealers balk at seizing the engine of a drivable gas-guzzler before the company is reimbursed for it.

Every clunker's motor must be drained of oil, filled with sodium silicate and run until the fluid turns to glass and kills the engine.

"Some dealers are very, very hesitant to put that solution in there until it's firmed up," he said. The latest twist should give dealers some breathing room, but they still have to store the clunkers and get rid of them quickly, once they get paid.

Ostrander is busy just keeping up with the program's shifting terrain.

"We've seen an influx of material, but it's shooting from the hip, on the fly," he said. "It changes daily."

He was shocked with the brevity of the popular, but troubled, federal program's first phase that burned through $1 billion in just one week.

"My concern since day one was the funds," Ostrander said. "But I don't think anybody thought it would be a week."