Like every segment of Canadian society, the auto recycling sector has been affected by the Covid-19 pandemic. Steve Fletcher, Managing Director of Automotive Recyclers of Canada (ARC), discusses how auto recyclers have managed throughout this period and how by working together will survive this pandemic.
Like every sector that is “essential” in the traditional sense of the word (ie required to exist for our society to continue to function, after all, every old vehicle needs a proper burial), auto recyclers have responded to ensure their survival.
When the various levels of government declared a state of emergency, auto recycling was either declared essential, or we could infer from the products and services we provide and to whom, that we were essential.
Most auto recyclers stayed open and scrambled to figure out how to continue to deliver while keeping staff and customers safe. Through our regional association – the Automotive Recyclers Association of Atlantic Canada (ARAAC), our national association – the Automotive Recyclers of Canada (ARC) and our international association – the Automotive Recyclers Association (ARA), plenty of information, best practices and interpretation bulletins were available.
Many also relied upon their peer network to discuss any and all aspects of running the business. Our core business is selling used auto parts. Many of our wholesale customers (mechanical and collision repairers) slowed down, as accidents and miles driven plummeted. Fortunately, the retail and online portions of many auto recyclers exploded as do-it-yourselfers had the time to make repairs and the need to keep costs down but keep their vehicle moving. Many repairers now understand the power of short supply chains too, supporting local businesses that can provide local and fast service.
A hidden side of auto recycling is the sourcing of inventory (ie total loss and older vehicles) to buy to break up into parts and materials to sell. Auto recyclers have developed sophisticated networks to source vehicles and one of the most lucrative can be salvage auctions where insurers market their total loss vehicles. Again with a drop in miles driven and accidents, the supply of vehicles at these salvage pools have dropped.
Normally that would mean a drop in prices, but with supply dropping but demand staying the same or even increasing – prices have remained high. Insurers also have maintained high expectations of returns from the auctions and that has led to an unprecedented number of “If Bids” – a completely unproductive situation where the high bidder doesn’t win the car – they win a call the next day demanding more money or the vehicle will be re-auctioned. A lot of unnecessary lost time for auto recyclers, and something ARC has formed a national task force to address.
On the operational side, most auto recyclers have a lot of space, so physical distancing hasn’t been too much of an issue. But productivity is down and the cost of PPE is up, so margins continue to thin.
ARAAC had to cancel its annual convention, which was to be in Halifax in June with both the Canadian Association of Recycling Industries and the ARC Board of Directors Annual Meeting.
This loss of face time with Members and the overall industry is difficult to replace. But like many others, we are trying to figure out how to interact digitally. Fortunately, we have strong associations to help guide us, and keen suppliers who are gaining valuable experience delivering information. ARC has also developed a Covid-19 Relief Fund for Members and their employees to provide financial and moral support for the industry.
Through the initial generosity of Car-Part.com, $1000 grants are available. While that may not solve a lot of financial problems, it is rewarding to know that for auto recyclers – we are all in this together.
Auto recycling will survive this pandemic, and those that do will come back stronger and more united than ever. It’s what we do.
This article was first published at www.sandbox.autoatlantic.com