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ISA joins auto parts salvage business to boost margins

Keywords: Tags  scrap, Industrial Services of America, Brian Donaghy, Pull n Pay, Lisa Gordon

PITTSBURGH — Industrial Services of America Inc. (ISA) is constructing a used auto parts salvage operation adjacent to its shredder as part of its strategy to increase its yield of valuable metals.

ISA Pull n Pay is scheduled for a "soft" opening June 15 and expects to be fully operational by July, president and chief operating officer Brian Donaghy told AMM.

The Louisville, Ky.-based scrap processor announced in March that it would enter the auto salvage business, noting it was unsatisfied with the quality of vehicles it was receiving from auto wreckers.

"Auto wreckers don’t supply good-quality cars anymore. They are stripped down too far by the time we receive them, and the (metallic) recovery is just not there," Donaghy said.

With a self-serve auto parts salvage operation and a shredder at the same address, the company can avoid freight costs as well, he said. "One advantage is (the salvage operation) will be a source of supply for our shredders, and we will able to capture more of the supply. Plus, we won’t have to strip cars down all the way because the eddy system will capture metals in the downstream."

Controlling the quality of vehicles being fed into its shredder will help ISA increase margins as the downstream system is expected to provide a higher yield of nonferrous metal. "We are buying whole cars and will turn the inventory as quickly as we can, predicated on our purchasing power and meeting the shredder’s appetite," Donaghy said.

In addition to the installation of a scale, ISA is building a showroom for customers and a decommissioning facility. ISA has already purchased 1,000 vehicles and expects to have 1,500 vehicles when it ramps up.

"We hope to make it a profit center as soon as possible," Donaghy said.

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