Turn Scrap Into Gold
For today’s tire dealer, take-offs and scrap tires can be a unique profit center and produce bottom line money on multiple levels.
And one national company is working to help dealers not only make more money, but make a positive environmental statement, as well.
If the two sound divergent, they aren’t. In fact, the two work hand-in-hand for both a dealer’s and the environment’s best interests.
“Most dealers have realized that take-offs and scrap tires can be a profit center,” said Richard Gust, executive vice president for Lakin General, one of the nation’s largest and certainly best known ®“ tire recyclers.
What used to be a pain to deal with can become tidy bottom line dollars for your business.
Dealers have caught on to the easy profit aspect of take-offs and scrap tires, said Gust. Many have called on tire collectors either recyclers or “casing jockeys” ®“ to come to their locations and haul off the unwanted by-product of their new tire sales. The dealers pay the collectors about 50 cents a tire, on average, according to Gust, while charging the consumer $1 to $2 per tire as a ®disposal fee® ®“ a cost to the consumer in addition to any required state or local tax or fee.
Simple math shows these dealers are taking in an additional 50 cents to $1.50 per new tire they sell, and over the course of a year, that can add up.
Less Obvious Ways to Profit
But there are other ways often intangible ®“ by which dealers can earn profit dollars from take-offs and scrap tires, Gust noted.
Dealers who do utilize proper and professional means to dispose of their take-offs should be promoting that fact to their customers, Gust suggested. “I don’t think they’re really fully leveraging their use of a reputable recycler as a sales point with consumers. And there’s some potential for that. It should conjure up some good feeling in the customer’s mind that the dealer is reputable and cares about the environment.”
Customers who have a positive experience with your dealership are bound to tell their friends, creating pools of potential customers. And in many communities and among many groups of consumers, environmental issues are important.
Another intangible is also probably the most obvious eliminating piles of scrap tires from around your location. “The dealer with a clean-cut operation, he’s the one who sells that image and he probably sells for more because of that,” said Gust. ®There’s no question that there is a certain intangible perception and aesthetic value to making sure you run a clean shop.®
Finally, some recyclers like Lakin ®“ allow dealers to earmark their take-offs and scraps for specific recycled products. Civic-minded dealers could hold a special event for an extended period of time during which all their take-offs would be converted into a community-beneficial product ®“ like playground cushion material. Dealers would, of course, have to work with local officials and the recycler to coordinate the program, but the goodwill will go miles towards building a favorable image.
“You don’t necessarily have to discount tire prices. Just tell your customers if you buy tires between these dates, all the take-offs will be converted into playground cushion material for the local park,” said Gust.
Keeping Dealers in Compliance
Another intangible you can earn by properly dealing with take-offs and scraps lies not in additional income, but in avoiding unnecessary fines.
“In many areas there are legislative and regulatory requirements regarding the storage and disposal of tires,” explained Gust. ®And when dealers work with someone who is reputable and provides service on a timely basis, it takes a lot of those concerns off their minds.
“There are state enforcement people going around to stores right now checking dealers’ bills of lading and making sure they’re proper, and checking to see if they are meeting storage requirements,” he said. ®Our program makes sure dealers are in compliance. It’s hard to measure intangibles, but if there was a fine involved in non-compliance then clearly there’s a distinct benefit.®
Keeping dealer operations in compliance with the myriad of state and local regulations is just one of the key services Lakin provides its dealer customers.
The Chicago-based firm has been involved in tire recycling since 1919. And it doesn’t just collect take-offs and scraps; Lakin also produces a variety of important products from them.
It all starts at the dealer level, where Lakin uses its own truck fleet and rail transport to collect tires and take them to one of its processing centers. From there, each tire is sorted based on its recyclability.
Bias ply tires, for example, are made into various die cut parts like tail pipe hangers, snow thrower blades, conveyor rollers, bushing and corn husking rollers.
Others are processed into tire shreds for civil engineering projects, tire derived fuel for cement plants, power plants and paper mills, or into crumb rubber feed stock that can be included into a wide range of rubber-based consumer and civil products. Those tires that still have life in them are sold as retreadable casings.
Of the estimated 260 million scrap tires generated in the U.S. annually, Lakin processes over 30 million, according to the company. Working in conjunction with a number of recycling companies across the U.S., Lakin has a network in place that assures proper management of every tire it collects, said Gust.
Avoiding the Pitfalls
There are pitfalls dealers need to consider in how they deal with take-offs and who they use to collect them. And these can lead to profit-draining problems.
Using disreputable collectors leads to a major pitfall the potential liability attached to selling or giving away scrap tires, or selling them as used tires.
“The thing that’s important is the legitimacy of what that collector is doing with the tire. The dealer who thinks he’s getting by because he’s paying a lower fee should start asking questions about where his scrap tires are going,” said Gust. Most end up illegally dumped, he noted, and that could come back to financially haunt a dealer if the collector is caught and provides the authorities with a list of his sources.
Then there is the liability issue involving used tires. If the used tire a dealer sells or gives away causes an accident or another problem, then the dealer can be held liable if it can be traced back to him, noted Gust. “The dealer who sells or allows someone else to sell a used take-off without proper inspection and/or repair could certainly be liable.”
And that liability extends to illegal dumping, as well.
“It’s interesting that liability issues regarding used tires even from an illegal dumping standpoint ®“ haven’t come to the forefront more today than they have,” Gust said. ®Some states are just now able trace a tire back from illegal dump piles to the collector and back to the dealer. And with the manufacturer’s name on the sidewall, I would imagine it would go back to the tire company, who can trace it to the dealer using the serial number.®
Most scrap tires do end up in proper uses, Gust pointed out. “But by ‘most’ you could be talking 60%. So what happens to the other 40% of them, and those who create the problems?”®′