Auto Recycling Opportunity Coming?

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Tim_P's picture
Tim_P
Status: Gold Member (Offline)
Joined: Feb 23 2009
Posts: 298
Auto Recycling Opportunity Coming?

If you believe in the concept of Peak Oil, you cannot escape the conclusion that the bulk of the cars on the road today will be useless in 10 years.  That idea combined with the belief that Peak Oil will result in shortages of almost everything else has started me thinking about the possible business opportunity coming in dismantling cars and trucks.  I'm not talking about the typical junk yard seen today, but more of a small shop that takes in complete cars and produces bulk recycleable materials and possibly repurposed parts.

As energy becomes scarce, finding ways to save energy will become very important.  In the past, I worked as an aircraft sheetmetal mechanic and in every shop I worked, there were bins full of sorted metals that brought a fair bit of money back into the organization.  Is there a potential market in the materials that go into manufacturing the transportation of tomorrow? 

What do you folks think?  Could a business be created that can cleanly disassemble and sort the materials used in today's cars or will the large junk yards that just crush and smelt be the destiny of most cars.

Tim

nickbert's picture
nickbert
Status: Diamond Member (Offline)
Joined: Jan 14 2009
Posts: 1208
Re: Auto Recycling Opportunity Coming?

Tim,

You know I was thinking along the same lines, though in more general terms.  Not just autos but a lot of the other stuff we've been consuming a lot of.... consumer electronics, computers, appliances, materials from vacant or demolished buildings, etc.  Already there are some small businesses that take in old computers/electronics and extract the gold and other valuable materials.  I've been brainstorming through that and some other ideas for creating a small business, and a recycling and repurposing operation like you describe is one of several that shows a lot of future potential.  I'm personally more interested in starting a business involving either smaller-scale renewable energy products (though that faces significant challenges here in Alaska) or non-fossil-fuel motorized transportation (either by producing it or offering as a service), but a recycling/repurposing business requires less economic complexity to thrive and can be done anywhere where there's a lot of discarded junk around.

The potential downsides to this model I see include potential exposure to over-reaching regulation and extra space requirements for storing lots of vehicles.  The regulation drawback is likely to be environmental in nature, where regulation often ends up being more about arbitrary demands than environmental protection.  I don't think that conducting such an operation in a clean manner would be hard, but no matter how clean it is one will likely still be subject to a variety of arbitrary and sometimes completely useless rules/codes saying "you must have this special permit or accreditation that costs $50k+/year" or "you must outfit your site with state-of-the-art oil spill cleanup equipment (instead of a simple hazmat station that'll do the same job at 1/10th the price)" or "your operation can only process/salvage/repurpose X number of cars per month in this area of town".  So finding the right area where regulation is the means to an end (less environmental impact) and not the end itself would be critical.  As for building/site space requirements that might be a big cost consideration right now, but if we can expect a future of extreme over-supply in commercial real estate those extra costs may become quite minimal in a few years.  Overall I'd say both of these downsides are outweighed by the upsides, though, at least if you take care in planning when and where you start such a business.

- Nick

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Auto Recycling Opportunity Coming?

Somehow I can't imagine an arrogant empire sitting on it's hands should all alternatives (progress) fail. I myself see PO being kettled/pushed forward a few years when/if there is an economic collapse.

I do think the idea is good, my gravest concern would be timing.

I too was in the aviation business and I knew FBOs who bought scrapped planes for parts and put a lot of "junk" to use.

Tim_P's picture
Tim_P
Status: Gold Member (Offline)
Joined: Feb 23 2009
Posts: 298
Re: Auto Recycling Opportunity Coming?

The environmental issue would be a big one, but if things were bad enough to make the business profitable, then every ounce of oil, coolant and other fluids would hold some value.  Timing would be important too.  Start to early and you'll fail before the need becomes great enough.  Start to late and you'll have trouble getting the resources needed to make it work.

Storage of large numbers of vehicles could be an issue.  One way around it would be to run the business out of an old grocery store.  You'd have parking for the inventory, covered space to perform the dismantling operation and a shipping area already set up.  There are already a number of empty grocery stores in my area being used for other purposes and I expect that the number will grow as the economy winds down

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