Concept paper:
Parts Salvage Center
By: Ronald F. Smith, P.E
DESCRIPTION OF THE PROJECT
The Parts Salvage Industry
The demand for new, rebuilt and used spare parts
is universal. In a developed market, the demand for parts is satisfied
through an industrial base which manufactures, rebuilds and salvages
parts. The salvage industry involves four major segments:
The "Scrap Cycle" dictates that all iron
and steel equipment, vehicles, etc. Eventually become scrap through
accident, normal wear, and obsolescence. Scrap flows through the
various segments of the salvage industry to mills and foundries,
leaving re-useable and rebuildable parts and materials along the
way. In this manner iron and steel scrap is recycled perpetually,
conserving energy and natural resources.
The concept involves the collection, processing,
distribution, and sale of vehicle parts, heavy equipment parts,
and miscellaneous machinery and equipment parts. By-products of
the parts salvage operation include scrap iron and steel, rubber,
glass, lead and oil. Markets for the salvage center operations
include:
Salvage Contracts
Contracts for Parts
The Parts Salvage Center Concept
Distribution of Parts
Negotiating contracts with assembly plants for specified
volumes of salvaged parts.
Future Market for Scrap
The method of approach involves the establishment of a hub facility capable of distributing parts from a network of satellite processing facilities which will be added in phases. The design is such that the hub facility is viable as a stand alone facility.
The center has the capability of employing as many as 75 people. Scrap will be delivered primarily by tow trucks and flatbed vehicles;
however drive in and walk in traffic is anticipated in the design.
The scrap is processed through the salvage center office, unloaded,
sorted and transferred to one of five areas.
Four of these areas contain work stations where parts
are stripped. Small parts are then transferred to the warehouse
for eventual distribution and sale. A portion of the material
which enters the facility will be designated for rebuild operations,
as this capacity is developed. The center includes a retail store
to market parts directly to consumers, as well as shipping facilities
for distribution to other markets.
The economic viability of the parts salvage center
is based on equipment appraisal and standard cost accounting principles.
The facility purchases materials at a price which will allow a
reasonable profit after costs. As a frame of reference, if the
parts of a vehicle are sold separately they are generally worth
from two to four times the fair market value of the assembled vehicle.
The implementation of the proposed project involves
the following phases
The project may be scaled up or down depending on
local market needs. Cash flow projects will be prepared when the
scale of the specific operation is determined. The parts center
concept is economically viable at small-scale levels.