NEW YORK Schnitzer Steel Industries Inc. has set up its first self-service auto parts recycling facility in Rhode Island after acquiring an existing business this past week.
Richard Peach, the Portland, Ore.-based companys chief financial officer, told AMM that Schnitzer acquired Cumberland, R.I.-based Bills Auto Parts under its Pick-N-Pull business division.
Although the acquisition cost was not disclosed, AMM understands it was below $1 million.
Pick-N-Pulls first foray into Rhode Island follows Schnitzers increased focus on the state, where it operates two scrap facilities in Providence and Johnston.
The company has strategically targeted expansions in its auto parts business near existing scrap recycling facilities, adding 11 Pick-N-Pull locations over the past six months to its previous 51 locations.
One of our main strategies has been increasing the amount of synergy between our auto parts and metals recycling businesses, Peach said. What we did in our fiscal second quarter was purchase a couple of auto parts businesses in Massachusetts which were close to our recycling facility in Everett, Mass. This time we are buying one in Rhode Island since we already have an export facility in Providence and Johnston. So this continues our strategy.
Schnitzer chief executive officer Tamara Lundgren announced the acquisition during an earnings conference call June 27.
Subsequent to the (fiscal) third quarter, auto parts business (APB) invested in a new store in Rhode Island, establishing our first Pick-N-Pull store in that state. This new location is near our metals recycling operations, which will expand APBs presence in our core northeastern market and strengthen our regional supply chain, she said. Since 2009, weve grown the number of our APB locations by over 50 percent and we intend to continue to actively grow this business. In aggregate, these investments will enable us to further penetrate core markets for our auto parts business, leverage existing operational resources, and enhance scrap flows to our metals recycling business.
Lundgren said organic growth and contributions from the 10 new locations it started during its fiscal second quarter resulted in an 8-percent increase in vehicle purchases.
The Rhode Island Pick-N-Pull acquisition increases its combined regional presence to 16 facilities.
During the conference call, Peach said that in the fiscal year to date Schnitzer has invested $47 million in a combination of new auto parts business locations and the acquisition of noncontrolling interests in a Canadian subsidiary. For fiscal 2013 as a whole, we anticipate cap-ex spending of up to $100 million, of which approximately 40 percent is related to completion of major projects in Canada and Puerto Rico. Consequently, we expect a significant reduction in capital expenditure in fiscal 2014.
The company is investing in new technology at its facility in Puerto Rico to boost nonferrous metal recovery and secure better yields and margins from scrap flows.