Paul Delaney, Chief Operating Officer at Fenix Parts, US-based auto recyclers and parts supplier, tells Auto Recycling World more about the company’s recent acquisitions and his thoughts on consolidations within the auto recycling industry.
Fenix Parts yard buyouts and its criteria
As you may know, it’s not easy to sell a salvage yard, to the extent that owners are ready to retire or explore other challenges. We provide an opportunity to exit the business while continuing to offer opportunities for the employees and the ability to service the customers. It also allows us to expand the customer base that we can service whilst bringing new talent to the Fenix team.
Every situation is different, but we look for a business with either a good market-to-service or a facility capable of processing a large number of vehicles. The only requirement for size is that we can agree with the owners where we think the price is mutually beneficial.
Acquisition integration
The integration process is normally quite smooth. Fenix standard practices don’t generally tend to stray very far from what other companies in the industry use. We try to focus on providing immediate benefits to the employees of the acquired entities. Sometimes that is in the form of an improved benefits package, sometimes from training, and sometimes from pooling resources, whether they be in sales or delivery.
The best part of any integration process is that from each company that joins Fenix, we understand how to modify our business practices to improve the overall company. It’s a recurring theme, but great salvage yards are only possible if you have great people working there. It’s our job to communicate what we do, how we do it and most importantly, why we do things so that we get buy-in from the new employees. We also need to listen so that we don’t stagnate but rather pick up new ideas.
Having all of the locations working in a similar fashion allows us to bring in help from other locations if we have projects, training requirements or to cover in the event of emergencies (like COVID). It also makes it easy for us to promote employees to positions at other locations. When they show up at the new job, they don’t have to re-learn the entire process; they can hit the ground running.
How to ensure excellent customer service
Communication is the key. We have to be willing to listen to our employees. They generally are closest to any problem and have the insight to rectify issues quickly. I’ll say that just about every organization could improve communication, and we are no exception. Our standard communications include a monthly newsletter and periodic calls with the CEO on the state of the business. We also have meetings to review KPIs regionally, and the Regional Vice Presidents and Area Directors spend considerable time on location at each of our facilities.
Being present and having an open-door policy helps keep an open line of communication.
Consolidation within the auto recycling industry
Currently, there are three different companies working to consolidate in the auto recycling industry; it is the biggest wave of consolidation since the attempt by LKQ and GreenLeaf some 20 years ago.
The unique part about the auto recycling industry is that we operate based on product scarcity. More people want used auto parts than there are used auto parts. Combining locations provides a much more extensive inventory from which to service the customer, which is the largest benefit to customers. The employees also benefit from this because even at the largest independent business, there is a ceiling, and you will probably never get to be the owner. At any larger company, you have more options to grow your career, and there isn’t a ceiling. In fact, our CEO started out as a parts puller.
I believe that well-run and independent auto recyclers will continue to thrive. Being a larger company means that you have to make some compromises so that your practices can scale across multiple locations. An independent company has the ability to handle exceptions or specializations better than a large company. In the end, it’s the customer who wins.
Find out more about Fenix Parts at www.fenixparts.com
