Two rules for squeezing profits out of our auto shred: know you markets and when to say when

Apr 01, 2010 | 05:35 AM | Paul Schaffer

Sensor sorting technology for scrap, having matured over the past five years, can create ever-more-subtle types of nonferrous scrap. But just how far does one need to sort? Well, that depends.

Globalized manufacturing has limited such technological sophistication to niche assignments in advanced countries' scrap industries, according to Adam Gesing, principal at Gesing Consultants Inc., Tecumseh, Ontario.

"It's not always the case, but the problem is when the Chinese are in the market you can't compete," Gesing said. "It's a totally economic choice, but it's a biased economic choice. If you were a shredder, why would you sort if you could sell the mixed material for more money than you could sell the products for in the North American market? The prices for sorted material by parent metal in North America and in Europe were less than what the Chinese and the Indians were paying for zorba." Zorba is the unsorted nonferrous goulash that gets past shredder magnets.

But China's hand-sort strategy might have begun losing some of its advantage. "While we are decreasing wages here to meet China, the Chinese wages are rising to meet ours," Gesing said. "Eventually the Chinese will replace the hand sorters on the docks in Guangzhou (the capital of China's southern coastal province of Guangdong) with particle sorters" that use sensor technologies.....