Still, we like to pay an occasional kicking-the-tires visit to businesses, particularly the smaller ones that never make much of a news splash but in essence are the economic cervical, thoracic and lumbar spine of this nation's existence.
The commodities world as nearly everyone knows has been dark and gray for some time. A recent WSJ story, "Scrap-metal Sector Is The Latest Victim of Commodities Bust," tells part of the tale.
PITTSBURGH—Cars are piling up at junkyards across the U.S., as the commodities bust that has already bruised mining and metals companies from Ohio to Australia ripples through another sector: scrap.
As prices for steel, iron ore and other commodities have dropped because of a demand slowdown and oversupply in China, prices for scrap metal have also collapsed.
That is leading junkyard operators to stockpile cars instead of shredding them, stalling the auto-recycling industry and the chain of largely small businesses that make up the U.S. scrap sector, which is a linchpin of the U.S. industrial economy and an $105 billion-a-year business.
That is leading junkyard operators to stockpile cars instead of shredding them, stalling the auto-recycling industry and the chain of largely small businesses that make up the U.S. scrap sector, which is a linchpin of the U.S. industrial economy and an $105 billion-a-year business.
,Brad Barnette runs Integrity Metal Inc., a Santa Ana, California scrap metal business he founded in 1996 after a few years of collecting when he decided to hook an old trailer to his used truck and collect scrap metal. A retired Fire Captain, he was active and well-known in the area partly for his volunteer work with a local community boxing club for kids, TKO Boxing.
That was then. Twelve years later he was running a multi-million dollar firm with 20 full-time employees. Before 2009 despite the usual ups and downs and things first started turning dark and gray, his initial impression was it's just another business bump in the road. Like a dripping faucet at night, however, that starts out soft only later to sound like a sledge hammer pounding metal, he didn't see the severity of the downturn coming.
What we know now is he was not alone. By the end of 2015 business was so slow he'd cut his full-
time staff nearly in half and was considering further cuts to keep the firm afloat. As the above chart clearly shows, the price per ton between mid-2010 and late last year dropped dramatically.
Around the same time he decided to convert some of his unused building space into a boxing gym to possibly generate some income from non-metal activities. After all, the space was there, not being used and he loved boxing. Though it's still too early to tell, the gym, Train With Integrity, is off to a decent start. It's a place "Where real men scrap," he offers, with a chuckle.
"In the U.S.," the Journal notes, "scrap has come to underpin almost every sector of heavy industry, because the U.S. began churning out massive numbers of cars, refrigerators and other steel goods decades before any other country."
Some might think scrap is just that--scrap. But they'd be very wrong. According to the WSJ: Scrap—largely the product of recycled consumer goods—is a rare commodity segment where the U.S. is still the world’s dominant player and biggest exporter.
We asked Barnette if he sees any light at the end of the current tunnel?
"It's been a real fight," he said. "And I'm not saying that as a pun. Competition and service have always been our thing. We thrive on it. But I think we're turning the corner now though I know a lot
of my competitors won't be around to see it."
What we know now is he was not alone. By the end of 2015 business was so slow he'd cut his full-
time staff nearly in half and was considering further cuts to keep the firm afloat. As the above chart clearly shows, the price per ton between mid-2010 and late last year dropped dramatically.
Around the same time he decided to convert some of his unused building space into a boxing gym to possibly generate some income from non-metal activities. After all, the space was there, not being used and he loved boxing. Though it's still too early to tell, the gym, Train With Integrity, is off to a decent start. It's a place "Where real men scrap," he offers, with a chuckle.
"In the U.S.," the Journal notes, "scrap has come to underpin almost every sector of heavy industry, because the U.S. began churning out massive numbers of cars, refrigerators and other steel goods decades before any other country."
Some might think scrap is just that--scrap. But they'd be very wrong. According to the WSJ: Scrap—largely the product of recycled consumer goods—is a rare commodity segment where the U.S. is still the world’s dominant player and biggest exporter.
More than 60% of steel in the U.S. is made from scrap, compared with only 7% in China. The U.S.’s biggest steelmaker, Charlotte-based Nucor Corp., and many of its rivals, use scrap as their main raw material.
Steel production in the U.S. was down 11% last year to 78.9 million tons, meaning steel mills bought that much less scrap. That slowdown is dampening demand for junked cars, the biggest reliable source of scrap metal.We asked Barnette if he sees any light at the end of the current tunnel?
"It's been a real fight," he said. "And I'm not saying that as a pun. Competition and service have always been our thing. We thrive on it. But I think we're turning the corner now though I know a lot
of my competitors won't be around to see it."
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