The Cash for Clunkers program has
hit the next gear. Congress has
approved spending an additional $2
billion dollars on the Obama
administrationīs automotive stimulus
idea because itīs proved to be more
popular than anyone expected.
And the program has been a boon
to automotive scrap and recycling
businesses. It just could have been
more.
The now famous program of course
offers to pay consumers between
$3,500 and $4,500 if they trade in
their old gas guzzling cars in for
more fuel efficient newer models.
The idea is to get people to buy
more cars and at the same time get
them driving cars that are better
for the environment.
The government is requiring auto
dealers to destroy the clunker
engines before the vehicles are
shipped off for recycling. Program
administrators want to make sure the
poor fuel economy vehicles never
make it back onto the roads.
An understandable goal. But itīs
too bad auto salvage yards and parts
recyclers havenīt shared at least
part of that responsibility. As a
result, a lot of parts will be
scrapped rather than recycled, and a
recycling business opportunity will
be lost.
The engine represents up to 35%
of an auto recyclerīs revenue. With
that income gone, many recyclers are
saying itīs not worth it, and the
car goes directly to a scrap
shredder.
On the other hand, the clunkers
program has provided a modest blip
for scrap companies. The more
resourceful ones, like Schnitzer and
OmniSource, have reached out to auto
dealers so they are the companies
that receive the clunkers and get
the scrap revenue. While officials
arenīt calling it a windfall,
estimates are that the program will
generate 1.5 million tons of scrap.
And with scrap markets suffering
badly, any influx of business is a
help.
Some grouse that Cash for
Clunkers creates sales that would
have happened anyway. I think
getting people to spend money now
and also be more environmental isnīt
a bad thing.
But the Obama administration
could have given the recycling
industry a chance to make the
project even greener than it is, and
maybe stimulate business even more.
Allan Gerlat
is editor of Waste News. Past
installments of this column are
collected in
the Inbox
archive.
