You are Rock Stars.
When I write these monthly columns, I know my audience. I realize you are recyclers who mainly sell parts and steel. But in the past 10 years something truly amazing has happened. You have become some of the savviest business people I know. You are not sitting at the parts counter waiting for the phone to ring. Your facilities are immaculate. You are inventorying everything. You are segmenting your cores for higher sales. You are partnering with other recyclers to sell more. You are maximizing economies of scale at every turn. And you are buying up more facilities or expanding your profile to full-serve, self-serve, and scrap.
What in the world is going on?
In my own life and business so much has changed in the past 30 years. I am not sure I ever envisioned Rhodium heading back toward $10,000 a troy ounce. Today we are 25% away from re-reaching that all-time high. The price of Palladium is up to nearly 1,000% from its all-time lows in 2008.
Even with auto sales trending downward, emission standards world-wide are increasing. This means more precious metal loadings in auto catalyst. Palladium being the dominant metal being used. Rhodium being the best means to treat NOx emissions.
Are Cat Sales Making Your Year? They Should Be.
Maybe I sound a little ignorant when I ask if cat sales are making your year. I know that scrap catalytic converters are not your main product for sale. But when you look at the fact that some of you are producing $10,000 to a $1,000,000 a load that is not chump change anymore. With steel prices down this past year, you can’t afford not to look at the importance of your converter sales.
I will say it until I am blue in the face, assay-based selling with a process, a program, and a partner you can trust (and verify) is the only way to maximize the money you get for your cats with any certainty.
In life there is more than one way to do most things. This is not true with converter recycling. There is a specific amount of precious metals in each converter. There is a cost to recycle it. There is a price for each metal that is sold. You’re either in the real game or you are not. You are either getting treated fairly or you are not.
Flash Boys and The Stock Exchange
I just finished reading Flash Boys by Michael Lewis about how the Big Banks and High Frequency Traders (HFT) made speed the issue with the stock market so they could make billions off of private investors with dark pools and arbitrage (the simultaneous buying and selling of securities, currencies, or commodities in different markets in order to take advantage of differing prices for the same asset). And how a few smart guys and private investors created the Investors Exchange (IEX) to correct the inequalities in the Stock Market.
The Same Thing is Happening in Cat Sales.If you don’t hear anything else that I am saying, hear this. The grading and bidding out of cats is the same thing as telling you that if I have the fastest trading platform, you will make more money trading with me. It is a trick. A false leader. A way to make more money off of you not for you. Behind those scenes the converters still have to be recycled and sold the same way. On assay. Period.
The 4 Ps of Converter Recycling Profitability
In recent articles I have written that you need a Process, a Program, and a Partner you can trust, and you need to learn the Power of Education. A Process. You can sell on assay instead of selling by the piece. You will need to be paid on a sample and assay that are official, accurate, and verifiable. A Program. You need to be able to get money when you need it to run your business. Getting you the most money from your converters shouldn’t mean you have to wait until you have a truckload or can hold out for 3 months to get paid. With most processors, you have payment choices like the ones mentioned above. A Partner. Selling on assay or recovery helps to eliminate that problem because there is a test result that can be considered the basis for the sale. However, even with this method, working with a Partner you can trust cannot be overstated. The Power of Education. We take a complex process and try to make it understandable and easy to use. We know that once you learn about your converters and your yard profile, you will increase your profits, and no one will ever be able to take advantage of you again.
To learn more about selling converters on assay or to read other articles in this series, please email me at firstname.lastname@example.org or call us at 864-834-2003.
Becky Berube serves the recycling community as President of United Catalyst Corporation, Co-Chair of the Automotive Recycling Association’s Events Advisory Committee, and is an ExCom Board Member of the International Precious Metals Institute. She can be reached at 864-834-2003 or by email at email@example.com.