‘Best practice’ talks highlight CAR’s annual meeting
Denver—Attendees at the annual meeting of the Colorado Automotive Recyclers (CAR) on Jan. 23 at the PPA Event Center were treated to “best practice” presentations from key recycling industry leaders, along with a trade show, general business sessions, and networking opportunities.
Outgoing CAR President Ryan Hochmiller, of Active Truck Parts in Hudson, Colo., kicked off the one-day event by giving the more than 50 attendees and vendors an update on CAR initiatives. During the meeting, Ben Silver, owner of Central Auto Parts in Denver, was elected the association’s 2016 president.
The featured speakers for the day were Robert Counts, owner of Counts Business Consulting, who gave the audience pointers on implementing change in a business. And Rian Garner, general manager of American Auto Salvage in Fort Worth, Texas, who discussed key automotive recycling benchmarks.
Automotive Recyclers Association (ARA) President Mike Swift, owner of Swift’s Trails End Auto Recycling in Des Moines, Iowa, also gave the group an update on national legislative initiatives, stressing the need for recyclers to obtain current OEM recalls and build-sheet information.
Between presentations, attendees visited with the 10 exhibiting vendors, promoting everything from yard management software programs to core buyers and specialized yard equipment. Among the exhibitors were platinum sponsor Centennial Insurance Agency and diamond sponsor Car-Part.com.
Accepting and implementing change
“When steel prices turned, it was like a shock wave throughout the industry,” Counts said, citing scrap metal prices that have been in decline for several years. He went on to discuss how many recyclers have been able to deal with this change, adapt, and recover.
Counts said his consulting business has put him in contact with recyclers across the country, many of whom share similar circumstances and struggles. It is crucial, he said, to understand the difference between urgent change and important change, something every yard deals with.
“There will always be ‘urgent’ — it never goes away,” Counts said, referring to day-to-day decisions that need to be made. “The ‘important’ changes the game. It puts you in a different place and changes the starting point.”
Once important change is identified, he said, a business owner should focus on one or two items for a six- to 12-month implementation period. Attempting to change more at once is counterproductive, since nobody multitasks well, he said.
Urgent changes will always compete with important change items, he said. “You have to fight for the time to achieve your goal.”
Ambiguous goals, such as increasing parts sales, need to be more specific, he said; a better goal would be to focus on selling 15 more parts a day. If a yard understands its closing ratios, that will translate into how many more parts quotes have to be offered a day, he said, adding that this often means locating and quoting a part you don’t have in inventory.
Measuring performance and making it visible to team members is also important, he said, because without that, nothing changes.
Manage by the numbers
Auto recycling veteran Rian Garner said he developed a reputation as a yard turnaround specialist while working for Greenleaf Auto Recyclers and for LKQ Corp. At American Auto Salvage, where he currently is general manager, he said he’s been able to increase sales by 40 percent in only 20 months on the job. He explained to the audience the key benchmarks he fought to achieve and how they affected the bottom line.
“When I buy (cars), I buy for projected sales and gross profit,” he told the audience. After vehicles are acquired, he said it’s important to make sure dismantlers are efficient, with any one individual dismantling up to five cars a day. Under-producers are then identified and notified that their performance is costing the company money.
Rather than have a dismantler cut a $300 quarter panel when he could be pulling a $2,000 powertrain, Garner said, he hires parts pullers and pays them by the piece.
Another key benchmark that Garner said he measures is how long it takes him to break even on a purchase. On average, he said it takes 54 days to earn back what he paid for the car. Each car is then held for 100 days for more sales before scrapping, he said.
Rather than tie up inventory dollars in remanufactured powertrain, Garner said he’s better off investing money in purchasing cars since he gets far greater return on investment much sooner.
With salespeople, he said you have to set expectations, tracking everything from daily phone activity to quotes, invoices, and gross sales. A key to growth, he said, is a follow-up phone call for quotes over $1,500.