Concept paper:

Parts Salvage Center
By: Ronald F. Smith, P.E


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 Parts Salvage Center Concept

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:

Operation of the Parts Salvage Center

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.

Economic Viability of the Operation

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.

Project Implementation

The implementation of the proposed project involves the following phases

Capital and Operating Costs

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.

Copyright 1996 Ronald F. Smith, P.E. All rights reserved. No part of this work may be reproduced in any form without written permission from the publisher.

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