Auto recycling plant divides, conquers

Recycling: A car reclamation venture in an enterprise zone in East Baltimore has grown into a model supplier of recycled automobile parts. Car reclamation divides, conquers

June 03, 1999|By Kristine Henry | Kristine Henry,SUN STAFF

Ford Motor Co. made quite a splash in April when it announced that it was entering the $11 billion used-parts industry by purchasing a Florida business that dismantles cars and resells the parts. But a Baltimore company has been quietly plugging along with a similar venture for the past three years.

Comprehensive Automotive Reclamation Service of MD Inc. -- CARS -- started up in March 1996 in an enterprise zone in East Baltimore with about 10 employees. Today it has 87 workers, all of whom receive health and dental benefits, and there are plans to open a second plant in Hartford, Conn., by the end of the year.

The 220,000-square-foot shop's claim to fame is that it operates indoors like an assembly line in reverse.

Once the fluids have been drained, the cars move down a metal track much like those found in manufacturing plants. After a car has been stripped of most parts, a huge vise flips it upside down so workers can further dismantle it at waist level instead of standing with their arms above their heads all day.

Once everything usable has been removed -- parts, plastics, carpeting, -- the empty shell is crushed into a square bale and sold to a steel mill.

The usable parts are given UPC bar codes, which are entered into the computer. That's why it takes a CARS salesman about one minute to state that the shop has exactly 2,252 hubcaps and 4,295 car doors in stock. The computer can instantly report if a specific part is available, its exact location in the shop and its condition.

The efficient process means that at least 95 percent of the car is recycled -- vs. the industry standard of about 75 percent, according to Donald R. Seitz, president and chief executive officer of CARS.

The company also uses the drained gasoline to help produce its electricity, and by winter it will start using the excess oil for heat.

"There are enormous landfill and environmental issues, and we are not waiting for the government to drive the regulations," said Seitz, adding that 13 million cars nationwide come off the road ever year.

"They never let us down -- the parts are delivered when they're supposed to be delivered," said Donna Conway, owner of Carty's at Caves auto shop in Owings Mills, which gets more than 90 percent of its used parts from CARS. "At a lot of salvage yards, if you order a trunk lid, it comes in rusted and damaged and you say, `Why did you bother making the trip?' We don't have that problem with CARS."

CARS is a wholesale business, although the general public may buy parts through the company's Web site at www.carsofmd.com. Seitz said he expects CARS to have more than $10 million in revenue next year.

It's not just auto shops that have an interest in CARS' business. Insurance companies are also happy to see high-technology salvagers because it means there are more used parts on the market. Fifty percent of a person's insurance premium goes toward the cost of repairs, said David Snyder, assistant general counsel for the American Insurance Association in Washington.

"The availability of quality replacement parts is fundamental to insurers' effort to hold down the cost of premiums, and the fact that these companies exist and are providing quality parts is an important component of cost-saving efforts," Snyder said. "Having alternate sources available for particular parts establishes competition and provides not only an alternate place to get a part cheaper, but it helps restrain the cost of new parts produced by the automaker."

Bill Mayer, assistant vice president for claims at Chevy Chase-based GEICO, visited CARS last week and said it was like nothing he'd seen before.

"I was very impressed with the facility and the way they take the cars apart; I don't know of any other facility that dismantles the way they do," he said. "You can go to a lot of salvage yards and a lot of them let people unbolt whatever they want and bring it up to the counter and pay for it. The better ones keep track of inventory, but they still don't do the total recycling that CARS does.

"It looked like they had the right idea -- from a green point of view it's better to recycle than for the cars to sit in the junkyards you see across the country and rust away."

The company was started with help from a General Motors Corp. loan, and GM in turn buys steel from CARS at a discount.

"We like their idea and we were fairly confident that their people had a good plan and if something needed changing they're pretty entrepreneurial and could fix what doesn't work on the fly," said Dave Andres, GM's purchasing director of commodities in Warren, Mich.

Andres and CARS wouldn't disclose the loan amount, other than to say it was between $1 million and $5 million.

The state Department of Economic Development also gave $156,000 for CARS to train workers and reached an agreement with Mercantile Safe Deposit & Trust Co. to guarantee 80 percent of a $750,000 start-up loan to CARS. A bank official said last week that the company is in compliance with the loan.

The shop dismantles about 20 cars per day but could do 80 at full production. There is just one shift of workers, but a second is expected to be added by the end of the year, Seitz said. He expects the company to go public in two to three years.

"With Ford in the industry now it significantly adds legitimacy to what used parts have to offer," he said, adding that the extra competition won't hurt. "The demand for used auto parts far exceeds supply."

Pub Date: 6/03/99

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