r ;—~
\. •*
e
^ THE AUTOMOBILE CYCLE:
an environmental
and resource
reclamation problem
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THE AUTOMOBILE CYCLE:
AN ENVIRONMENTAL AND RESOURCE RECLAMATION PROBLEM
This document (SW-80t8.1) is a revision of a study
made by the Federal solid waste management program
for the President's Council on Environmental Quality
U.S. ENVIRONMENTAL PROTECTION AGENCY
1972
For sale bjUhe Superintendent ol Documents, U.S. Government Printing Office, Washington, D.C. 20402 • Trice $1.25
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FOREWORD
The United States has witnessed remarkable technological advancement
and scientific progress during the twentieth century. These advances
have stimulated higher standards of living, high-level economic growth,
and dynamic changes in a multitude of disciplines. Yet these advances
have not proceeded without accompanying difficulties and problems. Tech-
nology has not only ensured abundance, but, with its progress, it has
also led to a degraded quality of life. Economic and industrial growth
have induced changes in the environment with far-reaching and undesirable
effects. Residues from our ever-increasing manufacturing production and
mass consumption often contribute to environmental pollution, inducing
increased concern for problems of air, water, and solid waste management.
The concept of solid waste management in reducing and reclaiming
the residuals of a productive society has a twofold benefit: to reduce
the quantity and variety of solid waste (or potential resources) requiring
handling and disposal and to conserve natural resources and preserve the
natural beauty of the environment. It seems, therefore, that a national
policy should focus on decreasing the quantity of waste created and
increasing the reuse and recycling of secondary materials presently
discarded.
iii
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More specifically, the fundamental concern of this report is the
production-consumption cycle of the automobile industry. The production
of automobiles determines both the magnitude and some of the inherent
problems of automobile recycling. As automobiles become obsolete and
inoperable, they are discarded, abandoned, or returned to industrial
processes as secondary materials.
The process of recycling discarded automobiles is, unfortunately,
incomplete. For a number of reasons, many automobiles are abandoned
along roadsides and on private property and are inventoried by dis-
mantlers and processors rather than placed into the scrap cycle for
reuse in iron and steel production. They become, therefore, detrimental
to our environment and a waste of mineral resources.
To counteract these problems where the free market has failed, it
may become necessary for government to provide incentives to stimulate
positive action. To this end, this study was initiated to determine the
extent of the problems and to provide a framework by which potential
government actions can be effectively evaluated. The techniques are
also directly applicable to other similar problems including a large
number of complex and interrelated industrial activities.
— SAMUEL HALE, JR.
Deputy Assistant Administrator
for Solid Waste Management
i v
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CONTENTS
AUTOMOBILE RECYCLING 1
The Problem 1
The Approach 1
The Model 3
MOTOR VEHICLE MANUFACTURERS 9
General Description 9
Resource Conservation 12
Key Decision Areas 15
ABANDONMENT 18
General Description 18
Environmental Damage 27
Resource Conservation 27
Key Decision Areas 27
DISMANTLING INDUSTRY 30
General Description 30
Method of Operation 32
Envi ronmental Damage 36
Resource Conservation 38
Key Decision Areas 38
PROCESSING INDUSTRY 39
General Description 39
Environmental Damage ^5
Resource Conservation **5
Key Decision Areas ^5
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SCRAP-END USE *»9
General Description ^9
Definitions . 50
Steel Industry 52
Foundries 56
Environmental Damage ........... 59
Resource Conservation 59
Key Decision Areas 59
Demand for Automobile Scrap 61
SUMMARY OF AUTOMOBILE RECYCLING PROBLEMS 62
Abandonment 63
Vehicle Inventories 6A
Incomplete Reuti1ization by Mills and Foundries 66
PROBLEM SOLUTION 6?
Minimize Environmental Damage 69
Conserve Natural Resources 69
Minimize Economic Disruption 69
Simplify Administrative Procedures 70
Selecting the Best Strategy 70
Conclusion 71
APPENDICES
A Tactics: The Problem-Solving Tools 73
B Strategies: The Master Plan 89
REFERENCES 113
ACKNOWLEDGMENTS 115
vi
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AUTOMOBILE RECYCLING
The Problem
The automobile, an integral part of our society, has drastically
changed man's way of life. With it have come some environmental and
natural resource conservation problems that went largely unnoticed from
the time of the first automobile until recently. Yet they have become
sufficiently acute (and promise to become even worse in the future)
to warrant a national effort to alleviate them.
Currently, more than 10 million vehicles are being produced annually,
and the number promises to increase at least as rapidly as our population
in the future. Unfortunately, automobiles do not function indefinitely,
and herein lies the problem. When they cease to function, they are
discarded. The discards are only partially reclaimed; the remainder
represents a degradation of our physical environment by abandonment
on our urban streets and alleys and widespread coverage of our rural
landscape. In addition^ discarded automobiles represent a valuable
resource, which, if used effectively, can conserve our valuable natural
resources.
The Approach
The current reuse of discarded automobiles and any attempts at
increased use involve a large, heterogeneous, and widely dispersed
section of our economy. A large number of interrelated but separate
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industries operate in, and affect, the automobile scrap cycle.
Included are the manufacturer, dismantler, scrap processor, steel
mill, and others. Any one of these industries by its current
actions or future plans has a large potential for increasing the
recycling of disused automobiles. Unfortunately, any one of
them can also have a large negative effect on the efficiency of
this cycle or even bring about its collapse. Complex interrelationships
and interdependencies make the "weak link in the chain" analogy
applicable to automobile recycling.
To complicate matters further, dozens of techniques are potentially
available to alleviate whatever barriers exist. There are
numerous subsidies, regulations, and other incentives that may
improve a given industry's strength in the cycle. They may however,
have adverse effects elsewhere in the cycle or on the national
economy. If a comprehensive and meaningful analysis is to be
completed and if recommendations promising a high probability
of success are to be developed, a scientific approach is necessary.
To date, several detailed studies of the individual industries
in the cycle have been completed and limited recommendations made.
No comprehensive study has, however, been completed that evaluates
all the relevant tactics in the light of the total automobile
cycle.
This study presents a comprehensive analysis of the automobile
scrap cycle and a scientific evaluation of the tactics and strategies
to improve it. The analysis is as follows:
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1. A general model of the total cycle is developed to highlight the
interrelationships that exist between the major industrial segments
This model facilitates the systems analysis needed later to
evaluate strategies.
2. Each major segment of the overall model is studied separately.
A detailed flow and process chart is developed to define the scope
of operations and delineate the currently available technology in
each major area.
3. A dec!sion-logic approach is integrated with the flow charts.
This delineates the decisions made within each major industrial
segment.
I). All the key decisions affecting recycling in each industry segment
are noted and the barriers to favorable decisions are enumerated.
This information would be used in the evaluation of tactics and
strategies.
5. Some possible tactics for improved recycling are discussed
(Appendix A).
6. A method for selecting the best course of action is discussed.
The Model
The automobile cycle is composed of many interrelated activities,
most of which are readily definable industries. The major relationships
of these subactivities are shown (Figure 1). Starting in the upper
lefthand corner of the figure are the automobile manufacturers. They
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USED CARS
OTHER
MATERIALS
OTHER
PRODUCTS
AUTO
MFG
DEALER
OWNERS
01
PROCESSOR
INTERNAL
SCRAP
RAW
MATERIALS
OTHER
SCRAP
ITEMS
DISMANTLER
_y
Figure 1. Major relationships in the automobile cycle.
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use many raw materials, including steel, to produce a variety of motor
vehicles (cars, trucks, and buses). This major industry segment is
closely interrelated with dealers, whose primary function is to market
and service new as well as used automobiles for owners. The owner's
automobile enters the remainder of the cycle in two main ways: through
an accident that makes the car unrepairable or through physical, technological,
or psychological obsolescence. When this occurs, the automobile is
either abandoned on public or private property or is placed into the
recycling sequence shown in the lower half of the figure. Generally,
recycling is accomplished by a dismantler accepting automobiles from
consumers, local governments, insurance companies, etc., and stripping
them of useful parts for resale. The residues, commonly called hulks,
are then transported to scrap processors for final preparation before
delivery to scrap users. The processors take stripped hulks from the
dismantlers as well as whole vehicles from other collectors and, in
some cases, from consumers. These hulks and vehicles are then subjected
to one or more processes designed to facilitate their reuse by the
steel and foundry industries. These industries are represented by the
box labelled "scrap end use" in the lower left-hand corner of the figure.
These scrap users combine automobile scrap with caw or pel let!zed
ore and other scrap available to them internally or from scrap
processors to make iron and steel products. These products can be
used for automob!le-related products as well as for an almost infinite
number of other products.
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The boxes shown represent the most readily separable and definable
elements in the automobile cycle. Although major industrial segments
are definable by these boxes, there are overlaps in many cases.
The functional breakdowns shown in the figure are used, even though
at a given physical site two different functional activities might
be performed.
The model shown is repeated with the addition of the key study
areas for this analysis (Figure 2). The five areas shown not only
represent definable functional activities and industries but also allow
us to pinpoint the key problems associated with the automobile cycle.
Area 1 represents the automobile industry which, by its level
of production, implicitly determines the magnitude of present and future
recycling problems. In addition, its decisions on durability, composition,
and design greatly affect later industrial segments. The problems,
barriers, and costs incurred by dismantlers, processors, and end users
are all in part determined by decisions of the automobile industry.
Hence, the need arises to evaluate this critical segment separately.
(The dealers, consumers, insurance companies, etc., represent only
the lag between time of manufacture and time of final disposition and
as such are not analyzed separately.)
Area 2 represents the critical interface between the final owners
of vehicles and their orderly and efficient transportation into the
recovery industries. It is here that abandonment, and the degradation
of our environment that it implies, takes place. It is in urban as well
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USED CARS
r
OTHER 1
MATERIALS1—
lf
OTHER
PRODUCTS
tA
A
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>£
i
L
INI
c
L_
/TV
! A
i
vj/l \|/ \1/ ! INSURANCE'
— > AUTO |
-> MFG |
1
J
_
SCRAP
LNU *-
USE
1 I
FERNAL RAW
5CRAP MATERIALS
! ' — * co
•x^ rM~ A 1 C"D ; i . "^i ^\A/MPDQ "^
> ULALtK ( -^ •" UWIMtKo ^
i
1 * t
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1 f1 :
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1
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I® i^r ( \
i i I
i 1 i^—
PROCESSOR r- *- DI5MAN 1 LLK ^ i '
Ii 1 Y~
1 1
^^ !
C ' 1
V
! PUBLIC AND
; PRIVATE
j PROPERTY
V
OTHER ' ^ ,
SCRAP | 1
1 ITEMS ill
_L = 1 L I
Figure 2. Key areas in the automobile scrap cycle.
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as rural areas that promiscuous abandonment and large automobile graveyards
litter our public property and occupy our open land. In addition to
environmental pollution, these accumulated cars represent an unused
resource.
Area 3 encompasses the dismantling industry and its attendant
problems of automobile inventories, which cause aesthetic and resource
conservation problems. In addition, many new and restrictive laws
on air pollution, etc., can seriously affect and perhaps hinder this
industry's valuable functions.
Area k represents the scrap-processing industry, an indispensable
link in the final reuse of discarded automobiles. Yet this industry's
methods of operation and inventories can also create environmental
and resource conservation problems.
Finally, area 5 represents the industries responsible for the
actual use of the scrap from processed automobiles. The trends in
these industries will ultimately determine whether out-of-service automobiles
will be reused and to what extent our natural resources will be conserved.
Indirectly, their failure to use automobile scrap will increase the
accumulation of automobiles abandoned and in inventory. This will
further degrade our environment.
These five major areas are each discussed in detail to document
current conditions, important new trends, and key decision areas, which,
if encouraged or changed, can lead to more efficient automobile recycling
with subsequent improvement in environmental quality and increased
conservation of natural resources.
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MOTOR VEHICLE MANUFACTURERS
General Description
The production of automobiles in the United States is carried
out mainly by four manufacturers located in ^0 cities in 17 States;
the production of trucks and buses is performed by 15 manufacturers
located in 35 cities in 17 States. The United States imports approximately
17 brands of cars, trucks, and buses from more than 12 countries.
The import total has been steadily on the increase (Figure 3), but the
export total (Figure 4) has not been increasing as consistently, in
part because export of trucks and buses has decreased.
The motor vehicle manufacturer is related to the scrap cycle in
that he produces the vehicle that eventually is consumed as scrap.
Hence, the amount and type of automobile scrap available in the future
can be assessed by looking at automobile manufacturing. Total production
of automobiles for 1969 was approximately 8 million with an additional
2 million trucks and buses, or about 10 million total motor vehicles.1
The production of motor vehicles appears to be on the increase and
should reach about 15 million by 1980 (Figure 5)-2 Production plus
net imports, those motor vehicles actually added to those in use in
the United States, are also shown (Figure 5).
The amount of steel used in cars is static or declining while
the use of nonferrous materials, primarily used in the options that
are now available, is increasing. This material consists principally
of plastic (inside trim, tail lights, grill, etc.,); vinyl (roofs);
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TOTAL MOTOR VEHICLES
1961
1962
1963 1964
YEAR
Figure 3- U.S. motor vehicle imports.
1965
1966
1967
O
cc.
LLJ
OQ
0.5
0.4
0.3
0.2 —
0.1
TOTAL MOTOR VEHICLES
CARS
1
1
1961
1962
1963 1964
YEAR
Figure 4. U.S. motor vehicle exports.
1965
1966
1967
10
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15
14
13
12
11
10
QC
LU
S? 9
TOTAL MOTOR VEHICLES
MOTOR VEHICLE PROD.
PLUS NET IMPORTS
1950 1955
1960
1965
YEAR
1970 1975
1980
Figure 5- U.S. motor vehicle production.6*11
11
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rubber-like material (bumper); copper for power windows and seat motors
(although overall copper might decrease owing to better engineered
alternators and printed circuits in ignition systems); and nonferrous
metals (wind stabilizers, spoilers, etc.). It was estimated, for example,
that 1 billion Ib of plastic materials would be consumed by motor vehicle
manufacturers in 1970.3 Consumption of rubber products was estimated
at 210 Ib per car for 1970.4
Resource Conservation
Since the scrap cycle starts with the production of the motor
vehicle this is a good place to consider ways to improve the dismantling
of the vehicle. In order to determine if improvements are necessary
or even feasible, it is necessary to look at the composition of the
motor vehicle. Some studies on the composition of the automobile
have been completed,7-9 but no known work has been undertaken on trucks
and buses. The lack of composition data on trucks and buses is not
critical, because there are substantially more automobiles than trucks
and buses and because the same general procedures and problems involved
in scrapping trucks and buses are also encountered in scrapping automobiles,
The composition of the various makes and models of automobiles
varies to some extent. The Bureau of Mines has compiled composition
data on a "typical" automobile.'' This composite was derived from data
obtained when 15 automobiles were dismantled and analyzed (Table 1).
It can be considered to be a 10-year-old, four-door sedan, in the low-
price class, with automatic transmission and heater, and of modified
unit!zed body design.
12
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TABLE 1
TYPICAL AUTOMOBILE COMPOSITION7
Material
Light steel
Heavy steel
No. 2 bundle steel
Cast iron
Copper*
Zinct
Al uminumf
Lead
Rubber
G lass
Other combustibles"''1
Other noncombustiblestt
Total
Lb
1,309.5
1.222.4
2,531.9
51 1 .4
31.9
5^.2
50.6
20.4
145.0
87.2
127.2
14.8
3,574.6
Total
automobi le
(*)
36.6
34.2
70.8
14.3
0.9
1.5
1.4
0.6
4.1
2.4
3-6
0.4
100.0
"Including copper in brass but not copper in solid solution in steel
tAs zinc base die cast exclusive.
fAs scrap sheet and cast aluminum.
**Cardboard, textiles, padding, plastics petroleum products, etc.
ttDirt, glass wool insulation, body putty, and ceramics.
The Bureau of Mines estimated that the scrap value of all the metallic
components of the car would have been about $55.94. Five metals of various
weights and values could be recovered (Table 2). A dismantling/processing
yard was hypothesized to process the car. The cost to separate the components
was estimated to be $51.25. Hence, a profit of about $4.69 per car could
be realized.
Although such an operation is feasible, there are few if any processing
'ards in the country that can operate on the scale of the hypothetical
'smantling/processing yard. This yard is more the exception than
13
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TABLE 2
VALUE OF RECOVERABLE METALS IN COMPOSITE AUTOMOBILE5
Metal
No. 2 bundle iron
Cast iron
Copper:
Radiator stock
No. 2 heavy and wire
Yel low brass sol ids
Zinc, die castings
Aluminum, cast, etc-
Lead:
Battery
Battery cable clamps
Totals
Lb
2,614.0
429.3
15-4
13-8
2.7
54.2
50.6
20.0
0.4
3,200.4
Price
$18.70 per ton
42.20 per ton
0.3275 per Ib
0.396 per Ib
0.31 per Ib
0.0625 per Ib
0.124 per Ib
1 .40 per battery
0.11 per Ib
Value
$24.44
9.06
5.04
5.46
0.84
3.39
6.27
1 .40
0.04
55.94
the rule. Most dismantlers and processors are separate operations
and must dismantle on a small scale. Hence, it would be impossible
for the typical dismantler to strip a car to the degree necessary to
realize the expected value for the estimated cost of $51-25.
The typical dismantler removes the components that are easily
marketed, usually the radiator, battery, motor and related parts, and
sometimes the radio, and then tries to sell the remaining hulk. The
problem arises in the fact that the remainder still contains unwanted
contaminants, including copper, which make the hulk unappealing as
a source of steel scrap. The maximum desired leve' of copper in scrap
is about 0.15 percent by weight.10 Since the car contains about
0.07 percent copper in solid solution in the steel, this means that
only 0.08 percent copper is permitted to be left on the hulk. Data
14
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obtained from the Bureau of Mines' typical automobile indicates that
the normally removed parts (radiator, battery, motor, and related
parts) account for only 21.0 Ib of the 31-9 total Ib copper in the
vehicle. Removal of other common parts like the transmission, differential,
brake drums, and brake cylinders still leaves 3.6 Ib of the remaining
10.9 Ib copper. This remainder is still in excess of the .08 percent
permissible. This copper can be separated, but this is difficult
and quite time consuming. The value of these materials as parts is
negligible, and their scrap value is low. The only reason for removal,
therefore, is to make a high-quality No. 2 bundle. Since it is impossible
to tell if the copper has been removed, it is easier to leave it
in, and this apparently has been occurring over the past few years.
Therefore, a steel manufacturer usually pays only for a low-quality
No. 2 bundle or may not even want the scrap at all.
Key Decision Areas
Since an automobile is designed for transportation, not scrappage,
little consideration is given to the eventual problems in its recycling.
Some work has been done, however, to determine how the scrapping
potential might be improved during construction.8,10 These methods
are primarily directed to reducing the copper contamination level
of vehicles so that high-quality steel scrap can be obtained. Although
the thought was to decrease the copper contamination in the No. 2
bundle, the design changes suggested could also improve other types
of automobile scrap (i.e., automobile slab and automobile shreddings).
15
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The easiest way to remove copper from a car is not to have it
there in the first place. Poliskin suggests that the copper wire
in the automobile be replaced with aluminum.10 The conductivity of
aluminum is about 62 percent that of copper, but since aluminum has
a lower specific gravity, 1/2 Ib of aluminum could replace about 1 Ib
of copper as an electric conductor. The diameter of an aluminum conductor
would be approximately 50 percent greater than the equivalent copper
conductor. The property of aluminum that makes it suitable as a substitute
for copper is that during melting and refining of scrap steel, the
aluminum oxidizes and enters the slag and therefore separates from
the steel while copper dissolves into the steel. Further reduction
in copper can be obtained by replacing the electric motor stators,
presently wound with copper, with stators composed of permanent ceramic
magnets of barium or strontium ferrites.
The typical car has 5-6 Ib of copper electrical wire and electric
motor wire that could be replaced with aluminum. If the heater core
is also removed (a quick job) total copper content would be approximately
0.16 percent in the steel scrap. This is very close to desirable
levels in steel manufacture.
Another way to provide scrap with less copper contamination is
to provide an easy method of removing the parts that contain copper.
Stone has proposed several of these mechanisms.8 If copper components
now present under the hood were placed in one or two standard locations,
removal would be simplified. One location might be a mounting bracket
on the radiator (which is usually removed anyway). This bracket might
16
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contain the horn, voltage regulator, relays for high-current-draw
accessories, and the solenoid (if not located on the starter). Other
copper-containing components (heater core, windshield wiper motor,
heater motor, and some relays) might be attached to a plate located
»
on the fire wall. All wires going to and coming from these two locations
could be consolidated in one or two wire looms, that would be easily
removed during dismantling.
Removal of the plate on the firewall could provide easy entrance
to the wires and instruments under the dashboard. If the dashboard
wires were consolidated into a wire loom and had pullaway connecting
plugs, these could be easily removed. A standardized location for
the fuse box that would serve as a junction for the wiring would also
assist in wire removal. If instruments were mounted in groups around
the driver, as is the present trend, this entrance would also provide
easy access for removing them.
The body wiring could be consolidated wherever possible and
enclosed by a plastic conduit mounted beneath the car. If the connections
of these wires were of the pullaway type, removal would be simplified.
Motors for such accessories as power seats and power windows could
be positioned for easy removal. The motor for the power seat could be
attached to the seat, which is normally removed. The motor for power
windows could be in the armrests, which are quite easy to remove.
Numerous design changes are possible, and many appear quite
feasible. Some changes, such as making power window motors more accessible,
could even lower repair costs. Others, such as locating high-current-
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drain relays close to the battery might lower production costs. Assuming
that the suggested design changes are made and that the voltage regulator,
electric motors, heater core, dashboard wiring, instruments, radio,
body wiring, horn, and relays are removed, about 1 lb of copper would
remain in the car. This is about 0.0^4 percent of copper by weight
of the steel scrap. The total copper remaining in the hulk would
be 0.11 percent, well within the 0.15 percent desired maximum.
ABANDONMENT
General Description
When a motor vehicle is no longer considered of value by its
owner, he can dispose of it in an acceptable manner or abandon it
on public or private property. Since abandonment has adverse effects
on the environment and on resource conservation, it is a key part
of the motor vehicle scrap cycle.
Each year a growing number of motor vehicles have been retired
from service (Table 3)- Estimates for future years project continuing
growth of out-of-service vehicles (Table 4).
For example, it has been estimated that of the more than 100 million
vehicles on the road in 1970, 8 to 9 million would go out of service.114
The key question is how many would be abandoned? In New York City, for
example, 20 times more abandoned automobiles are removed annually
than were removed 10 years ago (Table 5). Estimates for abandoned
vehicles nationwide are shown (Table 6). The accumulation of abandoned
vehicles on public and private property will probably increase if no
18
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TABLE 3
ESTIMATED NUMBER OF VEHICLES RETIRED FROM SERVICE
(in mill ions)
Year
1965
1966
1967
1968
Cars
6.0
6. A
6.0
6.6
Federal
Estimate11
Trucks
& buses
0.9
0.9
1.0
1.1
Total
6.9
7-3
7.0
7-7
Trade Association
Es t imate12
Cars
6.0
6.3
6.6
6.9
R.
Cars
6.2
7-0
6.2
6.3
L. Polk &
Trucks
& buses
1.1
0.9
0.9
1.0
Co.13
Total
7.3
7-9
7.1
7-3
TABLE k
ESTIMATED NUMBER OF VEHICLES RETIRED FROM SERVICE*11
(in mi 11 ions)
1969
Cars 6.8
Trucks & buses 1.1
Total 7-9
1970
7.
1.
8.
5
4
9
1971
7.6
1.5
9-1
1972 1973
7.8 8.0
1.6 1.7
9.4 9-7
1974
8.
1.
10.
2
8
0
1975
8.6
1.8
10.4
1980
9.6
2.0
11.6
1985
10
2
13
.8
.4
.2
1990
12.0
2.6
14.6
-The motor vehicle registrations used in this forecast are based primarily on experience, plus
population data. The production and retirement (scrappage) forecasts are computed on the basis
of the numbers necessary to maintain the forecasted motor vehicle registrations, provided that
the average vehicle life is 10 years. If safety, emission controls, or other factors change the
average vehicle lifespan or if the registration forecast proves wrong, the retirement forecast would
have to be changed accordingly.
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TABLE 5
NEW YORK CITY-ABANDONED CARS REMOVED
Year
Number
1959
2,500
1964
13,000
1968
32,000
1969
58,000
TABLE 6
ABANDONED-VEHICLE FLOW
Year
Opti misti c*
Medi um+
Pessi mi sti ct
1970
1975
1980
890,000
1,040,000
1 ,160,000
1,340,000
1,560,000
1,740,000
1,780,000
2,080,000
2,320,000
cBased on Department of Commerce estimate of 10 percent abandoned15"
and DOT estimate of out-of-service vehicles.11
tA 15 percent abandonment rate (note: actual rate for 1965 is
estimated at 13-5 percent).
tA 20 percent abandonment rate.
TABLE 7
ABANDONED-VEHICLE INVENTORY, PUBLIC AND PRIVATE PROPERTY
Year
J965
1970
1975
I960
Super
Optimistic-
1,890,000
900,000
500,000
500,000
Optimistic!
1,890,000
1,890,000
2,862,000
3,972,000
Medi umr
1,890,000
3,636,000
5,823,000
8,321,000
Pess imistic**
3,200,000
5,916,000
9,318,000
13,203,000
"Estimates based on assumption that high scrap prices and demand
will continue through 1980 and only residuals will not be put
into the cycle.
tUsing adjusted BDSA inventory9 estimate in 1965, accumulation
rate of 2 percent after 1970, DOT estimate of out-of-service
veh fcles . *
fBDSA starting inventory, 4.5 percent accumulation rate after 1965,
DOT estimate of out-of-service vehicles.11
—ISIS starting inventory,12 7 percent accumulation rate.
20
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concerted action is taken (Table 7) » but to date actions at the local
and State levels are largely ineffective and expensive.
The owners of motor vehicles, those who determine how they will
be discarded, are individual consumers, dealers, and insurance companies.
There are four disposal alternatives for unwanted vehicles available
to their owners; (l) dismantlers; (2) processors; (3) solid waste disposal
sites; (A) public or private property. The first three are acceptable
while the last involves abandonment.
To understand abandonment, the decisions that give rise to the
problem must first be examined (Figure 6). Once the owner has decided
that his vehicle is no longer of value to him (Decision 1), he then
selects the way he wants to discard it (Decision 2). He may choose
to dispose of it in a responsible and legal manner or to abandon it.
Roughly 10 to 20 percent of the motor vehicles retired from service
each year are abandoned. The decision as to where to leave the vehicle
(Decision 3) resulted in approximately 60 percent of the vehicles being
abandoned on public land and the remainder on private property.15
The selection (Decision k) of an acceptable (legal) way to dispose of
the unwanted vehicle is partly based on a knowledge of disposal availability,
convenience, costs of disposal, and local regulations. These items
vary considerably in different locations and over time.
The decision to dispose of the vehicle at the processor or at
the dismantler (Decision 5 or 6) may be rejected by the business (e.g.,
lack of demand or complex procedures for transfer of title) or by the
owner (e.g., lack of "value"). At the solid waste disposal site, the
21
-------
IS3
ro
| -. i_ OWNERS ~i
(§) j 'NSURj^vloEALERJ
1 l_ u;_ j j i
1 1
(
1 J
1
1
1 - '
1
|
i
1 j
r \
\
f /°* "^
r
1 ^
/FINAL DISPOSAL \
\SOLID WASTE /
p
\
1 rPROCESSOR]«-fe) roiSMANTLERre— (e)
1 L -iv L _i \/
1 j
I \
{ \
'
-t ^
\ r
V V
PRIVATE PUBLIC
PROPERTY PROPERTY
|_
Figure 6. Abandonment: problem creation.
-------
vehicle may be rejected (Decision 7) by the operator as not being acceptable
at the site, or the fee charged may be too high. In these three cases,
the decision on how to dispose of the vehicle is again made by the
owner (Decision 2). Obviously, rejection at acceptable sites increases
the likelihood of abandonment, and the owner decides where to abandon
it.
Given that there presently is an abandonment problem, the decisions
that affect the flow of abandoned vehicles from public and private
property to acceptable disposal places are examined next (Figure 7).
Vehicles stored on their owners' private property are not cases
of abandonment, but they provide many of the same hazards and problems
as if they were. Local laws (e.g., zoning, licensing) may regulate
storage of these vehicles. If the owner decides (Decision 1) to dispose
of a stored vehicle, the process is the same as if the car were abandoned
on his property by someone else. If the local government decides (Decision
2) to remove the vehicle (a complex question of jurisdiction over private
property arises), the situation is similar to that in which the car has
been abandoned on another's property.
The decision to remove an abandoned vehicle from private property
may be made by the individual who owns the property (Decision 3), or
by the local government (Decision 4), if empowered to do so. If it
is made by the individual, he must decide how to remove the vehicle
(Decision 5). He may ask the help of the local government or of a
private tower or do it himself. The private tower may not agree to
do it (Decision 6), or the government may have a contract agreement
23
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ilNDIVIDUAL)
CAR
OWNER'
STORED
ON OWN
PRIVATE
PROPERTY
INTERMEDIATE
STORAGE
^—-
w
/ L
! DISMANTLER^-
i FINAL DISPOSAL1,
IL.SCL4!?_W^-1[.E_ J
l_
I
.i
J
Figure 7. Abandonment: problem solution.
-------
(Decision 7) with private towers for the removal of vehicles in specified
di stricts.
The local government makes the decision on whether to remove a
vehicle abandoned on public property (Decision 8). It will either
remove it or contact a private tower with whom it has a contract (Decision 9)
Once the vehicle is removed by the government or private tower,
a decision is made on the necessity for impounding it (Decision 10).
Release of the car from the impounding area is made after its owner
does not reclaim it (Decision 11).
The next decision is whether to put the vehicle into intermediate
storage or haul it immediately to a dismantler, processor, or disposal
site (Decision 12). Anticipated increases in scrap prices or the practice
of accumulating several hulks before hauling may encourage the intermediate
storage of vehicles.
One of the three ways of disposal is selected: processor, dismantler,
or a solid waste disposal site (Decision 13). The method chosen may be
rejected at the site or deemed not worthwhile (Decisions 14, 15, and 16).
If rejected by either party, the decisions of storage (Decision 12) or
selection of an alternate place (Decision 13) come up again. The flow
and inventories for out-of-service vehicles in 1965 are shown in Figure
8. (The flows represented by dashed lines in Figures 6 and 7 are discussed
i n detai1 later.)
25
-------
162
INDIVIDUAL
7.247
OTHER
1.407
CAR
DEALERS
1.137
INSURANCE
COMPANIES
2.057
515
PUBLIC
PROPERTY
200
462
PRIVATE
PROPERTY
1,420
342
1,164
INDIVIDUAL
COLLECTOR
Figure 8. 1965 estimated flow and inventory of out-of-service
motor vehicles (in 1,000's), based on reference 9 and OSWMP estimates,
Inventories for each cycle segment are inside the boxes.
-------
Environmental Damage
Environmental damage is centered in the areas of: (1) abandonment
on the private property of others; (2) abandonment on public property;
(3) storage on own private property; (k) intermediate storage; (5)
impounding lots.
Automobile hulks are unsightly and generally reduce aesthetic
values. Vehicles stored on private property or left abandoned extend
and aggravate urban blight. At times, abandoned cars become traffic
safety hazards and reduce the traffic flow capacity of streets. Children
are attracted to the hulks in their neighborhood, using them as playgrounds,
which are fire and safety hazards. As breeding places for rodents
and insects, these hulks become health hazards as well.
Resource Conservation
Metal and other materials in discarded automobiles are valuable
resources that are not being used if the vehicles remain abandoned.
Preservation of natural beauty and open space cannot be maintained
with abandoned vehicles in abundance.
Key Decision Areas
The key decision that creates the abandonment problem is Decision
2 in Figure 6, that is, whether to dispose of the vehicle in an acceptable
manner or to abandon it on public or private property. Unfortunately,
it is easier to abandon an automobile than it is to dispose of it properly.
The cost of having a vehicle hauled away may be greater than the rarely
27
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enforced penalty for abandoning it. Private collectors, dismantlers,
and scrap processors often will not accept certain vehicles (Decisions
5 and 6 in Figure 6). Even solid waste disposal sites (central incinerators,
sanitary landfills) frequently turn down car hulks (Decision 7). Hence,
not only must a responsible decision by the vehicle's owner be encouraged
but also the vehicle must be accepted by dismantlers, processors, or
others (Decisions 5, 6» and 7), or the owner may have no alternative
but to abandon his vehicle. In order to maintain a we!1-functioning
automobile scrap cycle, it is necessary for individuals to be able to dispose
of their unwanted motor vehicles without excessive expense and without
violating the law. It is essential that automobile owners be able to
place their old cars into the cycle with greater ease than now exists.
The vehicle owner's original reason for abandonment is in many
cases based on ignorance. The individual responses to a U.S. Department
of Commerce study on abandonment for 1965 showed the following results:15
Percent
1. The car broke down and I left it
where it was 30
2. It cost too much to have the car
removed 25
3. I did not know where to take the car
or whom to cal 1 25
^4. I could not find the title or the bank
had the title 10
5. Other reasons 10
28
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If the cost (or penalty) of abandoning a car were greater than the
expense for having it removed, or if an artificial value of sufficient
size were placed on the vehicle, then 55 percent of the reasons for
abandonment would be eliminated. If the public were made aware of
where and how to dispose of their cars, an additional 25 percent of
the abandonments would be prevented. Thus, 80 percent of the reasons
for abandonment as reported in this study could be greatly reduced
through positive action.
The reasons for rejection by dismantlers and processors are complex
and are more fully dealt with in the discussions of their respective
industries. The legal problems of the title transfer are a major factor
affecting their decisions. Because of these barriers, an increasing
number of vehicles are abandoned, and this transfers the disposal problems
from individuals to the local government.
Barriers also exist that slow the removal of abandoned vehicles.
Presently there is little or no financial incentive in most places for
property owners to remove old cars from their property and have them
actually delivered to a scrap processor or for an automobile owner to
make sure that his junked car reenters the cycle.
Government's greatest problems are related to its authority to
remove vehicles stored on private property. If the storage location
is not operating as a business and is too small to be classified a
graveyard, zoning and licensing do not apply. Protection of individual
property rights often restricts the government's authority to take the
vehicles (Decision 2 in Figure 7).
29
-------
The cost of removal of vehicles by the government (Decisions 2,
4, and 8) is presently high and rapidly increasing. New York City's
Department of Sanitation, for example, had to pay between $50 and $60
in labor and operating costs to remove each car before it contracted
private towing firms, which now pay the city up to $5 for each car
removed.
A long period of impounding time (Decision II) is required to:
(l) determine ownership; (2) search for lienholders; (3) give notification;
(k) advertise; (5) hold for a specified time; (6) auction. Impounding
lots usually operate at capacity, this often being the critical factor
preventing the continued removal of abandoned vehicles from public
and private property (Decisions k and 8).
The intermediate storage (Decision 12) areas (e.g., at gasoline
stations) scattered throughout the city may look like junk yards, for
example, since towers may wait for an increase in scrap prices or an
accumulation of vehicles before hauling them away.
DISMANTLING INDUSTRY
General Description
The third major element of the automobile scrap cycle is the
dismantling process for automobiles. The term "dismantling" is used
herein synonymously with other common terms such as "wrecking,"
"junking," and "salvaging." The function actually performed by a
company using any of these terms in its title is generally the same:
(1) obtaining unwanted automobiles from automobile dealers, insurance
30
-------
companies, consumers or municipal pounds; (2) selling usable parts from
these automobiles; (3) keeping an adequate inventory of parts through
a substantial hulk accumulation; and (4) removing outdated hulks to
processing facilities. The function performed by the dismantling
industry is invaluable as a source of used automobile parts for repairs.
Without the parts supplied by this industry, automobile repairs would
become impossible on many older model vehicles.
The need for the services of the dismantling industry has spawned
its growth in every corner of the country. In 1968 an estimated
15,600 companies were engaged in dismantling operations employing 98,500
workers.16 The industry is characterized by a large number of small
companies, 17 percent of which are one-man operations and 53 percent of
which employ from two to five employees.16 This is not to imply, however,
that the economic impact of the industry is small. In 1968 the industry
had gross receipts totaling more than $^.7 billion, which, on the basis
of 9 million automobiles and trucks handled, amounted to $523 per vehicle.
This contrasted with an average price paid for incoming vehicles of $280
per automobile and an average $7 per automobile return for the sale
of the hulk, which left an average of $250 per automobile to cover
operating expenses and profit.16
The role of the automobile dismantler in the scrap cycle is significant
because it provides a link between the community and the scrap processors.
In 1968 the dismantlers not only handled the estimated 7.7 million
vehicles that were taken out of service but also eliminated 1.3 million
of the backlog of vehicles previously abandoned.17
31
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Method of Operation
Within the industry, many different techniques are used in handling
vehicles. Since variations in standard operating procedures can affect
the aesthetics and the economics of a company, it is important to analyze
the procedures commonly found within the industry. Reference to a schematic
diagram of the industry will complement the discussion (Figure 9).
i
The first problem facing the dismantler is locating a source of
vehicles. Vehicles for dismantling come from several sources (Table
8): (1) private individuals; (2) automobile dealers; (3) insurance
companies; and (4) State and local agencies through vehicle impoundment.
By far, the large majority of dealers prefer late-model vehicles
because of the increased market for the parts. Dealers retain the
right to reject vehicles even if they are brought to them (Decision 1).
This is especially true of early-model vehicles with any damage
whatsoever to the body. In addition, the widespread practice of private
individuals stripping parts from abandoned cars severely weakens the
market for older vehicles. Owners of these vehicles cannot
dispose of them through normal channels and therefore abandon them in
despa i r.
Once a vehicle has been acquired by a dismantler, he must decide
the best way to handle it (Decision 2). This procedure is generally
established from the beginning of the dismantler's operation and is
altered only because of restrictions subsequently placed on the operation.
There are generally three choices available: (l) dismantle the vehicle
and store or sell the parts (a technique used by only the high-profit
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SOLID WASTE
AIR POLLUTION
NOISE
ODORS
REJECT
Figure 9- Automobile dismantling industry.
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TABLE 8
AUTOMOBILE-WRECKING INDUSTRY'S INVENTORY SOURCES,9 1965
—,= ,=•.. = .s, v, - ^~—,-,.-.r •".- ; -. .... . —-. - ~ ~-~ -- --. .' ' "=! -s="ja—r . -. -_^.,.v,-. ,7^. -—i. , ±- ^ z-^sr^ ——__ -T j::=_s^a:
Sources Percent
Individuals 38
Automobile and truck dealers, new and used 26
Insurance companies 2)
State and local agencies 12
Other 3_
Total 100
urban dismantlers); (2) store the vehicle undismantled with parts
to be removed later as needed; (3) shortcut the dismantling process
altogether and make little or no attempt to reclaim any parts. The
outcome of the decision concerning which of these alternatives v/i 11
be chosen is determined by the location of the dismantler, the quality
of the vehicle, the age of the vehicle, the proximity of a processor,
the size of the dismantler's inventory, and the basic method of operation
of the dismantler. The second method is generally chosen because
it requires less labor and because in most cases storage space is
not a problem. If, however, the dismantler chooses to dismantle the
parts, he must also decide whether or not to store dismantled vehicle
hulks (Decision k) and whether to store dismantled parts or to sell
them directly (Decision 3). In any case, if the hulks are inventoried,
a decision must eventually come to remove them from inventory and
return them to the cycle (Decision 5 or 6).
Once the parts have been removed, a decision must be made to determine
how the waste material will be removed from the dismantled hulk (Decision
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7). In some cases, no waste removal is required by the processor,
since his equipment can remove waste materials. If wastes are removed
by the dismantler, there are generally three methods available: (1)
open burning; (2) hand stripping; (3) controlled incineration. Traditionally,
open burning has been the least expensive and most widely used of the
three methods. In many areas, stricter air pollution standards are
all but eliminating this alternative. Hand stripping is being more
widely used in areas with open burning restrictions. It is very expensive,
however, with a cost ranging from $3.00 to $5.00 per vehicle.16 In
some marginal operations, this alternative is economically impossible.
Controlled incineration is slowly taking the place of open burning.
The switch to this form of waste removal is slow, however, since it
requires the installation of equipment to ensure control of air pollutants.
A result of waste removal is the accumulation of waste materials in
the dismantling yard, and in some cases, this accumulation can occupy
a considerable amount of space.
After the waste materials have been removed, the hulks may be
stored temporarily (Decision 8). This storage will generally not be
for any appreciable period of time, but a decision to remove the hulk
from storage must be made (Decision 9). When the vehicle is ready
to be removed from the yard, sometimes a form of volume reduction is
used before shipping to the processor (Decision 10). This is often
some form of flattening prior to shipping via flatbed truck.
35
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This constitutes the spectrum of activities performed by the dismantlers,
Other variations of the techniques described have undoubtedly been
used. The attempt here has been to examine the commonly found procedures.
Environmental Damage
Complaints directed at the dismantling industry from the general
public usually stem from some form of environmental exploitation or
deterioration caused by the industry. This is generally evidenced
by various forms of pollution and aesthetic deterioration.
Air pollution is a major environmental problem for the dismantlers
and could occur at Decision 7- Open burning, the primary source of
this problem, is the cheapest and quickest way to remove nonmetallics
from dismantled automobile hulks. In many areas, this practice is
being outlawed by stricter air pollution control statutes. In rural
areas, however, it may still remain one of the most common methods
of waste removal.
Noise pollution is common to many operators. This is a difficult
problem to rectify since machinery commonly used in the dismantling
process is inherently noisy. Compacting, smashing, or flattening vehicles
for removal to a processor as a result of Decision 10 also generates
noise. Solution of the noise problem can be partially achieved through
an information program that draws the attention of the dismantlers
to the noise problem and suggests ways to minimize it.
-------
A third environmental problem caused by the dismantlers is one
of aesthetics. Many dismantlers1 inventory practices resulting from
Decision 2 create large piles of vehicle hulks that are aesthetically
unpleasing. Attempts at screening legislation have partially corrected
the problem near major interstate highways, but the coverup achieved
by screening is not the best solution. Dismantlers1 inventories have
been estimated (Table 9).
Table 9
DISMANTLERS1 CUMULATIVE INVENTORIES
Year
1965
1970
1975
1980
Opt i mi stic*
6,570,000
3,285,000
3,528,000
3,805,000
Med i umt
6,570,000
6,958,000
7,W»,000
7,999,000
Pess imi st i cf
12,000,000
12,388,000
12,87^,000
13,^29,000
"Based on inventory estimate in reference 9, reduced by 50 percent
through 1970 to reflect removal of cars with little or no parts
value, then 0.5 percent of out-of-service vehicles retained thereafter.
tSame inventory9 but 1 percent retention rate.
tlnventory based on references 9 and 12 with 1 percent retention rate.
Another environmental problem indirectly caused by actions of
the dismantlers is the vehicle abandonment problem. By self-imposed
vehicle input restrictions (Decision 1, Figure 9), the dismantler can
adversely affect the number of vehicles abandoned. With some incentive,
direct or indirect, to handle as many vehicles as possible, the abandonment
problems caused by the dismantlers could be alleviated.
37
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Resource Conservation
By holding large inventories of vehicles within their yards, dis-
mantlers restrict the flow of vehicular scrap through the scrap cycle
and thereby withhold the scrap from its reuse potential. This problem
is influenced by the results of Decisions 2, ^, 5, 6, 8, and 9 (Figure
9), which determine the amount of scrap stockpiled and held in dismantlers1
i nventori es.
Key Decision Areas
There are several key decisions within the dismantling industry
that affect the expeditious flow of vehicular scrap (Figure 9).
Decision 1 determines whether or not a vehicle ever moves into
the dismantling stage of the scrap cycle. The present reluctance of
dismantlers to accept vehicles with a low potential for the resale of
parts produces an adverse effect on the number of abandoned vehicles.
Legal problems resulting from local statutes concerning abandoned vehicles
cause dismantlers to be cautious about accepting titleless vehicles.
Decisions 2, ^, and 8 determine whether or not vehicles will be
inventoried in the dismantling yard for any period of time. The present
tendency of dismantlers to establish an inventory of vehicles for the
potential sale of attached parts produces a delay in the movement of
scrap through the scrap cycle.
Decision 7 determines the method by which waste materials are removed
from a dismantled hulk. This decision is being increasingly influenced
38
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by the establishment of stricter air pollution regulations outlawing
open burning. These regulations present an economic barrier to the
small dismantling companies, which cannot afford to handstrip nonferrous
waste materials from hulks. These companies may be forced to stockpile
dismantled hulks because processors will reject them, and they may eventually
be forced out of business, leaving their inventory of hulks behind.
Small communities would be affected because abandoned vehicles would
accumulate in the areas normally served by the extinct dismantlers.
A final barrier to scrap movement is the high freight schedule
for automobile hulk shipment. This tends to restrict the movement of
vehicular scrap from dismantlers to processors. Dismantlers tend to stock-
pile hulks waiting for higher scrap prices to cover the high freight costs.
PROCESSING INDUSTRY
General Description
Processors used balers, shredders, and shears to produce the estimated
8.6 million tons of motor vehicle scrap purchased by the iron and steel
industry in 19&7-16 Most processed scrap was baled or shredded. Sheared
automotive scrap is a relatively recent development. There are about
800 balers in operation in the country, some companies having more than
one baler.16
The Business and Defense Service Administration (BDSA) has estimated
that there are 62 shredder plants with an annual capacity of 4,163,000
tons of scrap production. In addition, seven more such plants were
39
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under construction or planned for 1970.16 Their geographic distribution
is shown (Table 10). Baler capacity is estimated to be at least that
of shredders.
TABLE 10
GEOGRAPHIC DISTRIBUTION OF AUTOMOBILE SCRAP SHREDDER PLANTS
IN THE UNITED STATES (STATUS AS OF DECEMBER 1969)16
New England
Middle Atlantic
East North Central
West North Central
South Atlantic
East South Central
West South Central
Mountai n
Pacific
Total
No. of
plants*
4
7
19
k
7
5
6
7
10
6T
Estimated annual capacity
Net tons
205,000
WO, 000
1,^70,000
252,000
265,000
261,000
198,000
350,000
682,000
A, 163, 000
Percent of total
5.0
11.5
35.4
6.0
6.3
6.3
4.7
8.4
16.4
100.0
"Operating, under construction, or definitely planned for 1970.
May include some plants also using other that automobile scrap. Source:
BDSA estimates; based upon information from the Institute of Scrap Iron
and Steel and automobile wrecking industry association data and shredder
companies.
The actual physical operation of a processing facility begins
with the receipt of the automobile hulk from the dismantler and ends
with the development of a raw material that is useful for steel manufacturers
(Figure 10).
After the dismantler has stripped from the vehicle all parts with
significant market value, the remaining hulk is delivered to the processor.
At this point, the processor must decide (Decision 1) what he is willing
-------
r
TRANSPORT
SEPARATEMi iHSHREDfe
-44*
1
FROM DIS-
WANTLER
•—*• REJECT
INPUT
INV.
Figure 10. Automobile hulk processing industry.
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to pay for the hulk. The hulk price depends on general acceptability,
weight of recoverable material, expected scrap prices, and the amount
of processing needed to separate the contaminants from the salable
scrap. If the hulk is accepted by the processor, he has to decide
(Decision 2) whether to process immediately or to inventory. Relevant
factors that affect this decision are the operating capacity of the
facility, the immediate market value of the scrap, and the mobility
and amount of labor available to do the processing.
The next decision (3) confronting the processor is either to increase
or decrease his inventory of unprocessed automobile hulks. The factors
that influence his decision are the same as those outlined in Decision
2 as well as other factors, such as the marginal cost of land for storage.
Once the automobile hulk has been obtained either from inventory
or directly from the dismantler to be processed, Decision k must be
made whether or not it is desirable to strip the hulk further of contaminants.
This decision depends upon the quality of the automobile hulk to be
processed. If it is decided that the dismantler has removed enough
of the contaminants (nonmetals and other material that have a marked
effect on market value when mixed with ferrous metal) or if the actual
processes to be employed can separate or reduce the contaminants
to an acceptable level, further stripping can be bypassed. If, however,
it is decided that there is a sufficient amount of contaminants that
cannot be removed in the processes, further stripping cannot be avoided.
-------
Having decided that further stripping of contaminants is needed,
the processor must decide (Decision 5) which method best meets his
needs. The choice between hand stripping, open burning, and enclosed
burning is affected by many factors, the majority of which are beyond
the control of the processor (i.e., prevailing air pollution laws,
labor wage scale, beautificat ion laws, etc.) .
The next decision (6) to confront the processor Is the choice
of slabbing the automobile hulk. Slabbing is basically just compressing
the hulk into a more manageable size--usually 2 ft X 2 ft X 20 ft. Slabbing
is necessary if a guillotine shear is used in the processing scheme
and is beneficial if inventory space is a problem or if transportation
precludes further processing. The decision (7) to place the slabbed
automobile hulks, "scrap logs," into inventory depends on the same
factors affecting inventory Decision 2 on the prevailing market value
of scrap and the production capability of the processes. The size
of the inventory (Decision 8) also depends on the marginal costs of
the land.
At this point in the processing scheme the most crucial decision
(9) must be made. The processor has to decide the quality of the scrap
his facility will produce and then specify the appropriate equipment
and techniques to be used--baling, shearing, or shredding. This capital-
intensive decision has a major effect on the unit costs of the whole
scrapping process but also, and possibly more importantly, affects
the unit revenue from the scrap.
-------
If the automobile hulk is baled, processing ceases, and all that
remains is to transport the bale to the steelmaker. If, however, shearing
or shredding is considered, further decisions must be made by the processor
A shearing process using vibrating conveyors passing over magnetic
separators produces a scrap of higher quality than baled scrap. Now
the processor has the option (Decision 10) either to sell the scrap
or to improve the quality further by shredding followed by magnetic
separation. The main consideration is whether the increase of the
unit costs by use of the shredder is less than the increase in revenue
from a higher quality scrap.
Regardless of the decision to shear before shredding, another
decision (11) has to be made by the processor after the automobile
hulk has been shredded and passed over a magnetic separator. The scrap
at this point is of better quality than baled scrap or sheared scrap.
The scrap can, therefore, be easily marketed, but the processor may
find that melting and pigging the scrap may upgrade its quality and
increase its density, thus increasing the value of the scrap and reducing
transport costs. Currently, however, this is not widely practiced.
After the scrap has been processed to a predetermined quality,
the processor must decide (Decision 12) whether to place the scrap
into inventory or ship directly to the steel-process ing plant. The
factors that affect this decision are the market price of the scrap,
mode of transportation from facility to steel plant, and processing
capabilities. Reducing inventory (Decision 13) depends on essentially
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the same factors mentioned in the previous inventory decision, the
value of the scrap, marginal costs of the land, storage capacity and
processing capabilities of the facility, mode of transportation, and
aesthetics.
Environmental Damage
The scrap-processing industry affects the environment in two main
ways: aesthetically by the inventory of automobile hulks, and by any
action on the part of the industry that would place unreasonable
constraints on the dismantling industry. This can cause increasing
hulk inventories and also increased abandonment. Noise and dust may
also be problems.
Resource Conservation
The scrap-processing industry is the critical link between useless
automobiles and useful, ferrous scrap. Actions by the processors that
affect either scrap price or quality adversely act as an impediment to
reuse of automobile scrap in foundries and mills. This, of course,
directly influences the increased use of raw ores and, hence, the
decreased conservation of natural resources.
Key Dec is ion Areas
The key decision areas in the automobile processing industry
are inventory Decisions 1, 2, 3, 7, 8, 12, and 13, and process
-------
Decision 9- Each area will be discussed in detail. The inventory
decisions are affected by the following factors.
1. Fluctuations in the market value of scrap may cause the processors
to inventory rather than process when the price is low.
2. The minimum operating capacity of the facility also affects
inventory decisions and Decision 2 in particular. Even when the scrap
prices are low, a facility continues to produce these inventories because
of their fixed costs. This inventory also acts as a buffer to ensure
that a minimum daily input to the processing equipment is maintained
regardless of automobile hulk deliveries.
3. The cost of the land and taxes limits the inventory that a
processor is willing to maintain. Currently, because most processors are
in urban areas, this factor does limit input inventories significantly.
^. Aesthetics, new zoning laws, municipal ordinances, and the
Federal beautificat ion program have either regulated or have affected
the costs of having large inventories.
The inventory Decisions at 2 and 3 involve automobile hulks; at
Decisions 7 and 8, automobile hulk slabs; and at Decisions 12 and 13,
either bales or sheared or shredded scrap. Automobile hulks are less
pleasing to the eye than shredded scrap; similarly, more area would
be required to store automobile hulks than to store shredded, baled,
or sheared scrap. If, therefore, an inventory control were needed,
it should be applied to automobile hulk inventory. This apparently
is not a problem, however, because in 1965, processors processed more
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than 6 million vehicles. Of these, less than 10 percent were in inventory
during the year.9 Moreover, to prevent an inventory at the beginning
of the process, the decision to reject the incoming automobile hulks
(Decision 1) would be made. This would cause worse problems at dismantlers1
yards and on public and private property.
Decision 9 in the processing scheme determines the quality of
scrap to be produced, which in turn indicates the types of processes to
be used. Basically there are three qualities of scrap produced
by three different processes. The factors that affect the choice of
quality and processes are the following:
1. The market value of the different qualities of scrap steel.
As of February 1970, American Metal Markets Prices at Cincinnati, Ohio
were No. 2 bundle steel (the product of a baler) $26.00 per ton; No.
2 heavy melting steel (the product of a shredder) $37.00 per ton.
2. The amount of available capital needed to purchase the selected
process equipment. Given equal capacities, a shredding process requires
a substantially higher investment than either a shear or a baler. A
range of capital costs for each process is as follows:
Balers $ 15,000 to $200,000
Shears $ 2,000 to $175,000
Shredder $300,000 to $3 million
3. As is evident by the price quotations, the shredder produces the
highest quality scrap, and detailed demand analysis indicates that it has
-------
higher demand elasticity. Therefore, the shredded product is much
easier to sell, even in times of low steel production. Consequently,
a more certain business may be possible.
The final transportation of the processed automobile scrap to
the scrap users represents the final key problem area in the processing
industry. The cost of scrap to manufacturers is a critical factor
in their decision to use it, and this cost is a function of the raw-
material cost (automobile hulks), the actual processing, and the cost
of transportation.
As of 1966, the average cost per ton to haul ferrous scrap material
was $4.12 while the cost for iron ore was $1.64.18 These rates are
in part based on relative percentages of usable raw material. As of
1966, usable raw ferrous material in ore represented approximately
60 percent of gross ore weight. On the basis of this adjustment, ferrous
scrap should have been transported at a cost of $2.46 per ton if iron
ore were transported for $1.64 per ton, minor increased costs of transporting
scrap being assumed. The discrimination against scrap relative to
iron ore amounted to $1.66 per ton. Since 1966, several rate increases
have caused costs of transporting scrap to increase to $4.97 while
iron ore transport costs rose to $2.05 per ton. Adjusted to the 60
percent ore content, scrap should be transported for $2.98. The discrimination
amounted, therefore, to about $2.00 per ton. In addition, pelletizing
of iron ore has increased dramatically, and 90 percent usable content
is expected in the near future. Even with the assumption of an increase
48
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of usable ferrous material to only 75 percent of total weight, the
adjusted transportation difference between iron ore and ferrous scrap
is $2.25. If the adjustment were ever to be 90 percent in reality,
the difference would amount to almost $2.70.
Clearly, this differential added to the price of the scrap should
be reevaluated in light of the environmental and resource conservation
advantages associated with scrap reuse.
SCRAP-END USE
General Description
Any analysis of the possibilities of recycling automobile hulks
to rid the landscape of these eyesores must necessarily involve a look
at the iron and steel industry, for it is in this area that "recycling"
actually occurs.
The steel industry and the foundry industry are the major consumers
of scrap iron and steel. Production of raw steel has increased from
130 million tons19 in 1965 to 139 million tons20 in 1969. A 3 percent
rate of growth in the consumption of steel mill products has been predicted
to 1975.21 Although production in the foundry industry has not changed
from the 18.8 million tons produced in 1965,9'22 a growth rate of it.5 percent
has been predicted to 1975-22 Whereas the steel industry is concentrated in
areas like Pittsburgh and Chicago, foundries are more numerous and
widely distributed.
49
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DefIni tions
The steel and iron industry normally uses properly prepared scrap
in the production of castings. "Scrap" is a generic term that must be
further defined to be meaningful in the following discussion. The
areas of scrap origination used to define the scrap are listed in the
order of desirability from the standpoint of the scrap user.
Home Scrap. In the production and casting of steel there is waste
steel in the form of trimmings and spills at the steel plant. This
home scrap is most desirable from the viewpoint of cost and the fact
that it is of known composition and purity.
Prompt Industrial Scrap. This scrap is produced in industrial
plants as they process and finish the raw steel for their own particular
needs. It also is generally of known composition and purity.
Obsolete Scrap. This scrap is of two main types: (l) Demolition
scrap. Although depreciated somewhat by age, this scrap is of fairly
uniform quality and desirable to the steel industry; (2) Other. As
the name implies, this type of scrap has various sources and thus is of
varying quality and composition. One such source is processed automobile
hulks. When the steel producer wishes to reduce consumption of scrap,
"other, obsolete" scrap is the first to go.
Scrap iron and steel play an important and interchanging role
in the production of raw steel and cast iron. The relative percentages
of the various types of scrap used in iron and steel production are
shown in Figure ]1.
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BRIDGES
BUILDING
RAILROAD
DEMOLITION
SCRAP
OTHER
AUTOS - 9%
STEEL CANS
ETC
) PROMPT
SCRAP
16%
OBSOLETE
SCRAP
24%
Figure 11. Scrap used in steelmaking.
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Steel Industry
The production of steel is illustrated in Figure 12. As steel
scrap moves from the processor, it is exported, sold on the domestic
market, or rejected (Decision l). This decision generally depends on
the selling price of scrap in each market and the quality of the scrap.
The export of scrap steel has traditionally been significant. It
is estimated that 9 million tons of scrap were exported in 1969,
the majority to Japan. Because of the smaller capital investment
in electric furnaces, developing countries are installing more
of them. This trend may increase export demand for scrap steel,
because electric furnaces can use over 90 percent scrap.
The exported scrap steel is from purchased scrap rather than from
home scrap. This fact increases the impact that foreign markets may
have on automobile scrap consumption.
At Decision 2, the ferrous scrap may either be used by steel plants
or foundries (Figure 12). In 1969, 28.4 million tons of purchased
scrap were used by the steel industry and 4.5 million tons by foundries
At Decision 3, steel scrap may be used in steel-producing furnaces
or in blast furnaces in the production of pig iron. The reason for
usage in pig iron production is unclear, but scrap consumption in these
blast furnaces is considerable. In 1968, the consumption of scrap
by this method was 4,267,000 net tons.12
The two materials flowing into the steelmaking furnaces are pig
iron and scrap steel. Pig iron is produced primarily in blast furnaces
52
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en
co
STEEL
USER
PURCHASED
SCRAP
(STEEL)
HOME SCRAP
REJECT
EXPORT
CAST
IRON*
USER
1
r" y
F
OPEN
HEARTH
BOF
ELECTRIC
y
INGOTS
BENEFICIATED
AND
PELLETIZED
ORE
TO
FOUNDRY
EXPORT
OR
REJECT
PURCHASED
SCRAP
(CAST IRON)
Figure 12. Scrap-end use.
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through the heating of coke, limestone, and iron ore. Traditionally,
the pig iron has been cast into ingots for transportation to the steel
furnaces, where final refinement occurs (Decision ^, Figure 12).
In many steel plants, the reduction of iron ore to pig iron by
the blast furnace occurs adjacent to the steel-producing facilities.
There is an economy in transporting the pig iron to the steel furnaces
in a molten state, rather than in casting ingots and transporting them
solidified. In these integrated plants, the hot metal goes directly
to the steel furnaces, requiring no reheating of the cold iron. Because
of the resulting cost savings and the capital investment in the transporting
system, the steel producer is less interested in purchasing cold scrap.
In the production of steel by integrated plants, approximately 39 percent
of the furnace charge is scrap, while in nonintegrated plants this
percentage is about 80. The existence of these integrated plants should
not have a significant effect on future scrap consumption, because
in 1963, 92 percent of steel production was at integrated plants.
Thus, the impact of the integrated plant has essentially been assimilated
by the scrap industry.
At Decision 5, the producer establishes the ratio of scrap steel
to pig iron consumed in the steel furnaces. This ratio depends on
the type of furnace employed and thus depends on the decision made
at point 7 in the flow diagram (Figure 12). The decision to use home
scrap in the steel furnaces (point 6 in the diagram) is usually predetermined
by the amount available, the cheap cost, and close proximity. The
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most crucial decision with regard to automobile scrap consumption is
made at Decision 7- For the sake of background and simplicity, the
three basic steel-making processes will be discussed individually:
Open Hearth. The open hearth furnace has been the primary method
of producing steel for many decades.23 In 1969, 60.9 million tons of steel
were produced by the open-hearth method (accounting for A3.2 percent
of total U.S. steel production).- The open hearth uses about kO percent
scrap in its furnace charge.
The trend in steelmaking is away from the open hearth and toward
more efficient furnaces. (In 1959, the open hearth accounted for 86
percent of total U.S. steel production.) There is also a slight trend
toward using less scrap in the open-hearth furnace charge.
Basic Oxygen Furnace (BOF). The basic oxygen furnace was introduced
into the United States in 195** and since then has made tremendous strides
in capturing steel production capacity (mostly at the expense of the
open hearth). The BOF is highly efficient and is almost to the point
of revolutionizing steel production in the country.
In 1969i 60.2 million tons of steel were produced by the BQF, accounting
for k2.7 percent of total U.S. steel production.23 In 1970, BOF production
surpassed steel production by open hearth. The scrap consumption by
the BOF has consistently held at about 28 percent of the furnace charge.
The percent of steel production by BOF's has risen dramatically in the
past several years.
*Total steel production in 1969 is estimated to have been 139 million tons
55
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Electric Furnace. The electric furnace is substantially different
from the other two furnaces. A relatively small capital investment
is required in the facility. Because it relies totally on electric
power and a 98 percent scrap charge, the criteria for the physical location
of such a plant are different than for the BOF and open hearth.
The production of the electric furnace has risen steadily to 1^.1
percent (19.9 million tons) of total production in 1969. The percentage
of scrap in the furnace charge will remain at about 98 percent.
The steel as produced by one of these three methods is now ready
for final preparation for the steel consumer (Decision 8, Figure 12).
Conventionally, the molten steel is solidified and partially cooled so
that it may be shaped to meet the specifications of the consumer (the
lower branch at Decision 8 on the flow diagram). A more recent technique
is continuous casting, wherein the molten steel is poured in the proper
shape to meet the needs of the consumer. The continuous-casting technique
produces 50 percent less home scrap and can cause increased use of prompt
and obsolete scrap. This development will, therefore, increase somewhat
the demand for automobile scrap.
Foundries
Iron foundries take pig iron, cast iron scrap, and scrap steel,
melt them in a furnace, and then pour the product into molds to solidify
in a given shape (Decisions 10 and 11). The resulting cast iron is
more brittle and harder than steel and particularly suited to be machined
for use where resistance to vibrations and shocks is required. With
56
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reference to the industry flow diagram, two major types of furnaces
are used in producing cast iron (Decision 12). For the 15 years before
1963, the cupola furnace consistently accounted for about 91 percent
of cast iron production (the air furnace accounting for essentially
the remainder). It is assumed that this ratio holds at the present
time.
During the 5-year period 1959-1963, the average annual cast iron
production was 15-7 million tons. It is estimated that in 1970 the
cast iron production was 18.3 million tons. During the 1959-1963 period,
scrap ferrous metal accounted for about Ik percent of the charge in
cupolas and about 85.5 percent of the charge in the air furnace. In
the cupola, one-third of the scrap charge is steel and two-thirds is
scrap cast iron. The same ratio of steel to cast iron for the air furnace
being assumed, estimated scrap consumption for iron foundries in 1970
is shown (Table 11).
TABLE 11
ESTIMATED SCRAP CONSUMPTION FOR IRON FOUNDRIES IN 1970
Material
Pig iron
Scrap steel
Scrap cast i ron
Totals
Cupol
Furnace
charge
(*)
26.0
24.7
49.3
100.0
a
Consumption
(ton x 106)
4.33
4.11
8.21
16.65
Air
Furnace
charge
(%}
14.5
28.5
57.0
100.0
furnace
Consumption
(ton x 106)
0.2*4
0.47
0.94
1.65
Total
Consumption
(ton x 106)
4.57
4.58
9.15
18.30
57
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There does not appear to be any recent major technological breakthrough
in iron casting that will significantly change scrap consumption. The
determining factor in scrap consumption appears to be the production
of new cast iron. BDSA predicts that the industry production of cast
iron will increase at a rate of A.5 percent per year through 1975.
If this estimate holds, there should be a continually increasing demand
for obsolete scrap.
Cast iron production
(mi 11 ion tons)
1959-1963: 15.7 (yearly average)
1968: 17-9
1969: 18.8
1970: 18.3
Scrap cast iron elements (engine blocks, brake shoes, crankshafts,
car wheels, etc.) cannot be used in the production of steel, because of the
high percentage of carbon (3 percent) in cast iron (Decision 2, Figure 12).
On the other hand, steel is used in foundries because of the less
stringent requirements in composition of cast iron. Thus, the recycling
of certain elements of a junked automobile depend solely on the iron
foundries. But these elements are less objectionable than the hulk
itself. It is hoped that the cast iron elements of an automobile will
become a byproduct of the preparation of hulks for use by the steel
industry. The market mechanism influencing the use of this byproduct
must necessarily escape detailed analysis in this report.
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Environmental Damage
Although numerous primary environmental problems are associated
with the iron and steel mills and foundries, they are not directly related
to automobile recycling. Minimal scrap demands, however, result in
accumulations of automobile hulks in processors' and dismantlers1 inventories
and in increased abandoning of junked automobiles on public and private
property—and this directly affects the environment.
Resource Conservation
Insufficient utilization of scrap automobiles automatically implies
inefficient resource conservation. Every ton of scrap not used implies
an additional amount of raw materials consumed. Complete utilization
of automobile scrap can, therefore, mean maximum conservation of natural
resources.
Key Decision Areas
To ensure adequate utilization of available and projected automobile
scrap, several key decision areas must be analyzed to explain the complex
trends that will affect future automobile scrap recycling. Three decision
areas appear to be crucial (Decisions 7, 8, and 9). Decision 7 determines
the type of process used and, therefore, the ultimate demand for scrap.
Because the steel industry is in a period of change, it is important
to examine what effect these changes will have on the consumption of
scrap steel. The most apparent change is in the type of furnace used
59
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to produce steel. These developments will be discussed first and then,
using furnace trends as a baseline, che effects of other trends will be
examined. Statistics for 1969 steel production and projections for 1975
are shown (Table 12).
TABLE 12
PERCENT SCRAP USED IN AVERAGE FURNACE CHARGE
1969
1975
Furnace
type
Open hearth
and
Bessemer
BOF
E lect ri c
Totals
Open hearth
and
Bessemer
BOF
E lect ri c
Totals
% of steel
production
1*3.2
1*2.7
11*. 1
100.0
20
55
25
100
% of furnace Weighted percent of
x charge as = scrap used in
scrap
4o
28
98
1*0
28
98
average fur
17
12
13
43
8
15
2k
47
nace charge
.3
.0
.8
.1
.0
.1*
-5
.9
In 1969 43.1 percent of the furnace charge was scrap, and it is
estimated that 47-9 percent of the furnace charge will be scrap in 1975.
Thus there should be an increased demand for scrap in 1975 due solely
to the expected shift in furnace production. On the assumption that
there will be no increase in total steel production by 1975, the increase
in scrap consumption over the 1969 consumption of 61 million tons would
be 6.8 million tons. Of course, steel production will probably increase.
60
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Decision 8 concerns the type of casting method used and therefore
determines the quantity of home scrap available to compete with automobile
scrap. It is estimated that 18.5 percent of all final steel preparation
was by continuous casting in 1970. It is also estimated that by
1975 this percentage will rise to 38.5 percent. Continuous casting
does reduce the quantity of home scrap by 50 percent. If the steel
producer desires to maintain a constant input of the scrap proportion,
then the scrap deficit will be made up by purchased scrap. If,
because of less waste steel produced in the continuous-casting process,
the producer desires to decrease the proportion of scrap in the charge,
then the consumption of purchased scrap may not increase. The third
alternative is to increase the proportion of pig iron in the charge
in order to operate the furnace at capacity. In this case, the purchased
scrap may not be increased. In any of these three cases, it appears
the consumption of purchased scrap will not decrease and may increase.
Decision 9 affects the type of ore used in steel and foundry
production. In many areas, low-quality iron ore is treated before
reduction in the blast furnace. This treatment raises low-grade
ore (taconite) from 25 percent iron to about 65 percent iron (equivalent
to high-grade ore). The treated ore is formed into pellets for ease
of handling and feeding to the blast furnace.
Demand for Automobile Scrap
In 1969, the gross domestic consumption of scrap steel was 61
million tons. Coupling this figure with 9 million tons of exports
61
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yields a total of 70 million tons of U.S. scrap consumed in 1969.
Specific data are unavailable regarding the source of this quantity
of scrap. Traditionally, the scrap source is as shown (Table 13).8
TABLE 13
SOURCES OF SCRAP
% of total scrap
Source consumed domestically
Home scrap °0
Prompt industrial 16
Obsolete 2/t
Since automobile scrap composes approximately 36 percent of the
obsolete scrap, it amounts to only about 9 percent (approximately
5.5 million tons in 1969) of the total scrap used in domestic steel
production. The scrap market apparently is not saturated with automobile
scrap. On the basis of the general trends in the steel industry discussed
earlier and the amount of automobile scrap currently used, it appears
that the demand for scrap in the immediate future will remain strong,
provided price and quality requirements are met.
SUMMARY OF
AUTOMOBILE-RECYCLING PROBLEMS
The foregoing discussions have dealt in detail with the problems
caused by the individual industries in the automobile cycle. In addition
the interrelationships have been briefly mentioned. In this section,
62
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the overview will again be taken to put the main problems in perspective
and to delineate the key decisions and interrelationships that cause them.
Abandonment
The abandonment of vehicles on public and private property is
a significant problem. In 1970, approximately 1,300,000 vehicles
were abandoned. By 1975. approximately 1,500,000 vehicles will be
abandoned if current trends are allowed to continue. Although these
numbers represent a small percentage of total vehicles taken out of
service, in absolute numbers they cannot be discounted. In fact,
the accumulations of abandoned vehicles may exceed 8 million by 1980.
Clearly, this problem must be remedied if the Nation's natural beauty
is to be maintained. The actual abandonment is caused by the last
owner's decision to leave it on public or private property rather
than take it to an adequate disposal or recycling facility. This
can be attributed to many factors, including lack of knowledge and
rejection of vehicles by dismantlers and processors. The latter,
as well as the owner's basic decision to abandon, is primarily due
to the little or no positive value of the obsolete vehicle, or perhaps
to the cost of disposing of it adequately. Any solution to the basic
decision by the owner to abandon must either include the assurance
of an obsolete vehicle's positive value for proper disposition or
a severe and enforceable negative value (fine) for improper disposition.
The latter would make the cost of abandonment higher than the cost
of transportation.
63
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These provisions to decrease or eliminate abandonment must also
be augmented with a provision or incentive to encourage the removal
of the current and projected accumulations of abandoned vehicles. As
with the basic decision to abandon, the decision to collect is also
hindered by the lack of substantive value of an abandoned vehicle. Only
if the value exceeds the cost of collection will the accumulation of
previously abandoned vehicles be reduced. In addition, titling and
title transfer laws must be eased to reduce the lag time between
abandonment and removal as well as to reduce the costs associated with
title searches, impoundment periods, and owner notification. If the
costs of removal and related legal aspects are reduced relative to the
value of the abandoned vehicle, collection of abandoned vehicles by
public or private agencies will be encouraged.
Vehicle Inventories
The second major problem area is related to the inventories of
the industries involved in the automobile cycle. Although both processors
and dismantlers have inventories of automobiles and automobile hulks,
a detailed analysis indicated that the inventory of processors during
1965 was less than one-tenth of their total throughput of automobile
hulks. This is well within levels required as a buffer against changes
in supply. Dismantlers, on the other hand, had average inventories
equivalent to 1-1/4 times their annual input. Even though they do require
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inventories, their ratio of inventories to throughput is clearly excessive,
as is demonstrated by the total inventories dismantlers are estimated
to possess. In 19&5, the Department of Interior estimated these inventories
as 6,570,000. As of 1970, this inventory was approximately 12 million.
These large numbers clearly indicate a substantial inventory of unused
resources as well as a blight on our landscape.
Although a complete elimination of this inventory is unreasonable
and would unfairly hamper dismantlers1 used-part sale operations,
substantial reductions are possible. The Department of Commerce estimates
that as much as half of the dismantlers1 total inventories are no
longer of value as parts. The dismantlers' decisions to accumulate
and maintain these large inventories are based on a complex set of
circumstances. Their decisions to keep the hulks after the parts
have been removed, even though the hulks are readily available for
processing, depend on the low scrap value of the hulks relative tp
the high cost of preparation for and transportation to processors.
preparation costs, a key factor, are increasing because of more stringent
restrictions on open burning of the vehicles to remove contaminants
and because processors insist on stripped vehicles. To encourage
the reduction of automobile hulk inventories, either the value of
the vehicle to the processor must be high enough to allow him to pay
dismantlers the high cost of hand stripping or his method of processing
must be made largely independent of preliminary stripping by dismantlers.
In addition, the costs of transport to processors could be reduced
through more economical transportation techniques or shorter distances
65
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between dismantiers and processors. This problem is critical in rural
areas, where distances to processors can be several hundred miles.
A reduction in these hulk inventories as well as in inventories of
undismantled cars can also be brought about by making the costs of
inventory higher than their expected value from parts and so forth.
Incomplete Reuti1ization by Mills and Foundries
The final problem area depends on the steel mill and foundry
industries' desire to utilize automotive scrap. The detailed study
indicated that exports and mill and foundry demand potentially far
exceed total scrap available. Current trends and projected changes
indicate that this will continue at least through 1975 and probably
far beyond. Automotive scrap is but a small percentage of total scrap
used and, as such, represents no significant effect on usage. Unfortunately,
it is also one of the least desirable forms of scrap and is, therefore,
the first to be reduced in times of decreased iron and steel production.
Moreover, Its low quality makes prices paid to processors of bales
very low, and this low price is reflected throughout the scrap cycle.
Hence, these factors can cause the cycle to stop, thus increasing the
number of vehicles abandoned on our streets.
The decision to use automobile scrap is determined by price and
quality. Certainly, a reduced price of scrap relative to that of
competing raw ore and pellets can increase usage, although this is
unlikely without at least a moderate increase in scrap quality. Currently
available techniques can shred scrap and separate out nonferrous components
-------
to an acceptable degree. Unfortunately, this is not being pursued
by all or even most of the processing industry. Of the 500 to 1,000
processors, only 75 to 85 are using shredding equipment, and these
are only in the densely populated areas of the country. The remainder
are using balers to produce low-quality scrap. With the low-quality
baling operations in rural areas, low prices for automobile hulks
have increased the inventory problems in these areas. Incentives
to scrap processors to produce good-quality scrap, in combination
with reduced costs of automobile scrap production or transportation,
can ensure full utilization of all automobile scrap. Encouragement
to locate in more rural areas can also reduce the inventory problems
in the areas where they are most pressing. Unfortunately, shredding
plants need large quantities of cars and large capital investments.
If these were, nevertheless, encouraged, higher prices for hulks could
be obtained and more stability against demand fluctuations maintained.
The increased utilization of automobile scrap will of necessity
aid in the reduction or at least the stabilization of inventory hulks
at the processor and dismantling levels. There is, however, no assurance
about the time period or magnitude of the effect of increased demand
by steel mills and foundries.
PROBLEM SOLUTION
The three main problem areas in the automobile cycle have been
delineated and the decisions of consumers, processors, dismantlers,
steel manufacturers, and others, that caused them have been discussed.
67
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In addition, the barriers to or causes of these decisions were illustrated.
Unfortunately, the existence of the problems indicates that the free
market has been unable to reduce or rectify the problem. Additional
action is, therefore, required if these key decisions are to be changed
and the problems rectified.
Basically there are four main types of tactics: (l) economic
incentives; (2) regulatory action; (3) education; (4) research and
development. Within each of these broad categories are numerous specific
tactics that can be applied to one or more of the main industry segments
in the automobile cycle. An extensive, but by no means exhaustive,
list of specific tactics, grouped by type and briefly explained, is
presented in Appendix A.
In general, any one tactic will not alleviate all the problems.
Tactics can, however, be combined in innumerable ways to form basic
strategies to alleviate all the environmental and resource conservation
problems. Many combinations that can alleviate one or more problems
may, however, simultaneously cause some undesirable effects in the
automobile cycle. This possibility can be minimized by evaluating
the impact of proposed strategies on all the key decision points through-
out the automobile cycle.
To determine the strategy to be selected, four main objectives
upon which each may be evaluated have been proposed: (l) minimize
environmental damage; (2) conserve natural resources; (3) minimize
economic disruption; (4) simplify administrative procedures. Each
of these major objectives is now discussed in detail.
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Minimize Environmental Damage
Environmental damage includes scenic blight from motor vehicles
abandoned on public and private property and dismantlers' yards; harborage
of rats and other vectors in out-of-service vehicles; air pollution
from burning by dismantlers or processors; water pollution from runoffs
of motor vehicle oil and grease; and solid waste from various parts
of the motor vehicle cycle. To be effective in obtaining this objective,
a strategy must not only have a high probability of reducing these
factors but must also do so in a relatively short period of time.
Conserve Natural Resources
It is desirable to recycle the various materials contained in
out-of-service vehicles as well as to reduce the amount of land used
to store them. A strategy that achieves this objective must recycle
as much of the ferrous and nonferrous materials as practical in both
the accumulated inventories and all future vehicles that go out of
servi ce.
Minimize Economic Disruption
Economic disruption includes undue interference with the markets
for new and used cars, used parts, out-of-service motor vehicles, and
processed motor vehicle scrap. The economic burden imposed in order
to improve the motor vehicle cycle should not be larger than necessary,
and its distribution should be equitable. The productive capacity
of any segment of the cycle should not be stimulated beyond what
69
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long-run conditions will support. Hence, a strategy must effectively
reduce pollution and conserve natural resources without causing worse
problems in the rest of the economy.
Simplify Administrative Procedures
The number of people and amount of money necessary to implement
the suggested program for improving the motor vehicle cycle should
be as small as possible. Reporting requirements and record keeping
should be minimized, as should enforcement responsibilities. If
administration is complicated and expensive or enforcement is impossible,
then the related strategy is of questionable value.
Selecting the Best Strategy
Once alternative strategies have been formulated and the objectives
have been defined, a panel of experts can use one of the many decision-
making techniques available to select the best strategy. Some possible
strategies are presented and discussed in Appendix B. The panel could,
for example, rank the objectives and obtain relative weights for each.
In turn, each strategy could be rated in terms of how well it meets
each objective. The objective and strategy weights obtained would
then be cross-multiplied and summed to obtain an overall rating for
each strategy. The specific mathematical procedure will not be discussed
further, because it is the creative aspects of this decision-making
procedure that should be emphasized. In discussing objective ratings,
the panel of experts will shed light on the really important aspects
70
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of the abandoned automobile problem. In rating each strategy with
respect to how well it will meet each objective, the strengths and
weaknesses of each proposed solution become clear. It is possible
that strategies can then be synthesized and prove superior to those
originally proposed.
Conclusion
There are many interrelated decisions that affect the final
disposition of vehicles going out of service and, in many cases, result
in their being abandoned. Although many of the estimates in this
report are based on 1965 data, it is obvious that the abandoned vehicle
problem persists. Strategies can be formulated to alleviate the
problem, but this is not as simple a task as might be expected.
This report has analyzed the entire automobile cycle and
pinpointed the key areas to which any successful strategy must be
directed. Unfortunately, each possible solution can have undesirable
consequences. A procedure for evaluating strategies has, therefore,
also been discussed that allows the achieving of desired effects while
minimizing undesirable consequences. This report provides the overall
framework and analytical tools needed to evaluate alternate strategies
I
and select the one that is most appropriate.
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APPENDIX A
TACTICS: THE PROBLEM-SOLVING TOOLS
I. Economic Incentives
Economic tactics are inducements that influence the flow of funds
into and out of specific segments of a given industry to bring about
desired changes. These incentives can be either positive or negative
and are further classified as revenue sources and revenue uses.
I.A. Revenue Sources, Government can acquire funds to finance new
programs by taxation, reduction of current payments or involvements,
monetary penalties, or elimination of subsidies and price supports.
I.A.I. Domestia-automobi.le-manufaoturn.ng tax. A Federal tax would
be levied on all new cars manufactured and would be used to supplement
the cost of disposing of or recycling the cars. The tax could be used
as a positive action if it were assessed on a sliding scale to reflect the
design and relative adaptation of the vehicle to improve its potential for
recycling.
I.A.2. Imported-automobile tax. This would be the same as the
domestic-automobile-manufacturi ;-g Lax, except that it would be assessed on
all imported automobiles at the port entry.
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I.A.3. Dealers' new-oar sales tax. This would be similar to
the first two taxes, but the burden of payment would be placed on
the middleman (dealer) who has little capability to change the recycle
patterns or improve environmental insult. A tax on the dealer, then,
is probably inferior to one on the manufacturer. It would, moreover,
be more difficult to administer, given the large number of dealers.
I.A.A. Used-oar sales tax. This would be the same as that on
new cars except that it would be assessed on used cars.
I.A.5. Licensing tax. This would be a State tax collected at
time of licensing of all new and used vehicles on an annual basis.
It could be collected through already established channels, and the
administrative procedure could be minimized thereby. It would place
the burden of payment on the consumer and would be distributed among
all owners of operated vehicles. If administered on the Federal level,
more administration and new channels would be required.
I.A.6. Gasoline tax. This would be a Federal tax based on the
sales price of each gallon of gasoline and be similar to other Federal
excise taxes on gasoline. It too could be collected through already
established channels, although there would be a large number of individual
transactions. The mechanism for redistribution to the States is in
existence. Resistance might be strong on an item already burdened
by State and Federal taxes on road use.
I.A.7- Competitive natural resources tax. This would be a Federal
tax assessed on raw materials (iron ore, coke, and limestone) that
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directly or indirectly compete with secondary materials from automobile
recycling. This would be a direct tax on raw materials to bring their
cost of development in line with the costs associated with reclaiming scrap
steel and other recyclable materials. It might have an impact on a
segment of the economy far larger than that involved in the automobile
cycle.
I.A.8. Elimination of natural resources subsidies. This would be
reduction or elimination of depletion allowances for selected minerals
and raw materials and would thereby indirectly encourage recycling of
scrap steel and directly force responsibilities for improving
environmental quality on the original extractor or developer. This
tactic would directly Influence conservation of natural resources and
restoration of disturbed environments. It would also have, however,
large-scale effects on the national economy.
I.A.9. Fines and penalties on abandonment. This would be a
penalty inflicted on any individual (last owner) accused and convicted of
abandoning an obsolete or inoperable vehicle on public or private
property. This negative tactic to reduce abandonment would be
effective only if there were a high probability of enforcement.
I.A.10. Fines and penalties on excess inventories. This would
be a penalty inflicted on any collector, dismantler, or processor for
maintaining inventories of discarded vehicles or hulks in an excessive
amount and for long periods of time.
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I.A.ll. Consumer-returnable deposit. A buyer of any new or
used vehicle would be charged a fixed fee that would be placed in
a special fund for later return to him. The deposit would be returned
to a vehicle owner upon submission of proper evidence that his old
car had been released to a recognized used car dealer, collector,
dismantler, or processor. In essence, the deposit would guarantee
a positive value for any discarded vehicle and, if it were large enough,
it would reduce abandonments. Interest would be earned over the time lag.
I.B. Revenue uses. Revenue obtained by taxation, penalties,
and interest could be used to encourage, support, or subsidize desirable
industries or to encourage increased consideration of and action toward
environmental problems and recycling of secondary materials.
I.B.I. Bounty on abandoned automobiles. This would be a fixed
price paid to anyone who collected an abandoned automobile from public
or private property and arranged for its proper disposal or recycling.
This would be a positive incentive to individuals, collectors, dismantlers,
processors, and public authorities to collect all abandoned vehicles
and speed their movement through the scrap cycle. Effectiveness would
depend on the size of the bounty and on local conditions. The level
of administration would depend on the safeguards against fraud.
I.B.2. Bounty on all automobiles given to dismantle? or processor.
A fixed price would be paid to anyone who gave hi; discarded automobile
to a recognized dismantler or processor. This bounty would be highly
inefficient since recovery would be paid for all vehicles--whether
or not they were abandoned. Administration again would depend on
the tolerable level of fraud.
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I.B.3- Subsidy to dismantle?. A flexible payment would be made
to the dismantler to allow him to accept all abandoned vehicles, to
abide by accepted standards, and to serve as a responsible link in
the recycling chain—and yet cover his cost of operation and earn a
satisfactory return. As a subsidy, it would automatically upset the
free-market mechanism. It would force a balance between the two objectives
of minimizing economic disruption and minimizing environmental insult.
The large numbers of firms would make administration costly.
I.B.4. Subsidy to scrap processor. This would be similar to
the subsidy to dismantlers, except that indirect payments would be
made to the processor for using advanced technology and adequately
processing all vehicles and hulks coming to him. Owing to the large
quantities of other scrap products handled, fraud would be possible.
This mechanism could ensure growth of the key industry segment.
I.B.5. Subsidy to steel mills. This would be similar to the
two subsidies just discussed, except that indirect payments would
be made to the steel mills for using processes that favor acceptance
of processed scrap steel over home scrap or raw material. It would
be difficult to administer and enforce.
I.B.6. Subsidy to scrap exporter. A payment would be made to
the scrap export broker to make the price of U.S. scrap more competitive
on the world market. This could aid the balance of payments but might
have international repercussions.
I.B.7. Low-interest loans to scrap processor. These would be
made for installation and use of advanced equipment and technology
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to handle larger quantities of vehicle hulks and to process higher
grade scrap steel. This, in turn, would make the higher grade processed
scrap available in larger and more consistent quantities and would
enable it to draw a higher price because of its increased value to
the steel mill. This tactic would not tend to upset the free-market
mechanism significantly. The effect on the cycle would not, however,
be immediate.
I.B.8. Low-interest loans to steel mills for electric furnaces.
Electric furnaces accept a very high percentage of scrap steel (approximately
95 to 98 percent). Because, however, automobile scrap is only a small
percentage of total scrap used, this mechanism might be inefficient.
Moreover, large loan amounts would probably be involved.
I.B.9. Establishment of free disposal areas. A program would
be operated by a public authority whereby a private citizen could
bring in his vehicle for subsequent recycling or proper disposal.
This would be useful when private industry failed to take the initiative.
I.B.10. Government stockpiling of automobiles. The government
(either State or local) would accept the responsibility for collecting
and stockpiling abandoned vehicles when the free-market mechanism failed
to support the complete cycle. This would at least control the abandonment
problem, although unsightly public stockpile yards might develop,
caused by a small demand by dismantlers and processors for discarded
vehicles. Administrative responsibilities would be great.
I.B.11. Government differential-price purchasing of high-scrap
eteel products. The government would pay higher prices for products
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having high percentages of scrap steel. This would tend to reduce
the demand for nonscrap steel production and force steelmakers to
consider using more processed scrap. In essence, this would be a
discriminatory buying policy favoring scrap steel products. This
might, however, increase demand for low-quality automobile scrap only
sightly.
I.B.I2. Payment for better automobile composition or design.
A payment would be made to automobile manufacturers to conduct research
on and development of technical changes that could improve and increase
the ultimate recycling of ferrous and nonferrous materials. In essence,
government would subsidize research and development contributing to
improved environmental quality and reducing environmental Insult.
I.B.13- Funded educational program. The government would support
mass educational and informational programs publicizing new efforts
for solving critical problems. Car owners could be made aware of
proper channels of recycle, of those interested in collecting and
buying discarded vehicles, and of specific new automobiles having
favorable design features.
I.B.14. Accelerated depreciation for steel mills. This would
be a tax writeoff for capital-intensive equipment using large quantities
of scrap steel. This would have the same drawbacks as the low-interest
loans.
I.B.15. Accelerated depreciation for processors. This would
be a tax writeoff for capital-intensive equipment producing higher
grade scrap and accepting larger quantities of discarded vehicles
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and hulks. It would also support new technology for recovering other
nonferrous material from processed vehicles.
II. Regulatory Actions
The precedent for intervention by government in affairs of private
enterprise is justified on grounds that regulation will result in
health, safety, or consumer protection; maintenance of a free but
fair economic system; conversion of important natural resources; support
of industries vital to national welfare; maintenance of the Nation's
defense posture; control of monopolies or semimonopolies; and control
of industries closely linked to defense preparedness like air, water,
and land transportation. Recently, regulations have been proposed
and introduced to deal with environmental problems where they affect
our future health and safety and our aesthetic enjoyment, and the
problems encountered with automobile recycling are in this category.
Regulatory actions are, in essence, government sanctions and
controls that impose involuntary constraints upon specified activities.
They should be used only as a last resort to accomplish objectives
that are beneficial to public welfare and to offer solutions to critical
problems.
11.1. Fines fov abandonment. These would be legal penalties
that could take the form of cash remission or potential imprisonment
for those who abandon automobiles on public and private property.
This would be a punitive measure to thwart further environmental blight.
The administrative procedure for enforcing these fines might be somewhat
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complicated, expensive, and time consuming. The technique would be
useful only if enforceabi1ity were obtainable at moderate cost and if
potential abandoners were cognizant of that fact.
11.2. Uniform titles and eased transfers of ownership. This would
be a tactic designed to facilitate the flow of abandoned vehicles from
public and private property into the cycle. At present, transfers of
ownership are time consuming and costly. Easing of titling restrictions
would reduce the costs involved in processing low value, abandoned vehicles.
This would encourage their removal by either public or private operations.
11.3. Composition of new automobiles. A Federal standard would
reduce or ban the use of certain materials in new vehicles. It is apparent
that a reduction in the percentage of copper, which is particularly
offensive to steelmaking processes, would lead to higher quality processed
scrap steel. Other materials, such as plastics, textiles, and nonferrous
jnaterials, might be designed and used so as to facilitate easy removal
and recycling. This tactic would, however, be potentially disruptive
as well as administratively complicated.
11.A. Quotas on mater-Lai resources. When it is determined that raw
jnaterial sources are being depleted at a rapid rate or that usage of raw
materials is severely restricting usage of secondary materials, the Federal
government could impose quotas on material resources. This tactic would
be most restrictive to private industry and might well induce unjustifiable
hardships on the industries involved and perhaps on the overall economy.
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11.5. Import quota on raw ore. A Federal quota would be imposed
on the importation of raw ores (iron ore, coke, and limestone) to prevent
flooding the domestic market with low-cost ores from other countries.
This mechanism, in the past, has been used to protect domestic industries
that cannot compete effectively in the world market; to maintain balance
of payments equilibrium; to protect our national defense preparedness-
and to distribute national purchases according to favored-nations
agreements. Import quotas on raw ores would have broad significance
and would only indirectly influence recycling of vehicles. Their
implementation might also have international repercussions.
11.6. Quota on number of new automobiles or total tons of steel
used therein. A Federal quota would limit the number of vehicles manu-
factured or would limit the tons of steel used in their manufacture.
This would certainly control the quantity of vehicles requiring recycling
but the political implications and resultant economic disruption would
not be justified.
11.7. Hulk inventory restrictions. This would be a regulation
imposed on dismantlers and processors to limit the size of their hulk
inventories. Conceivably, a minimum inventory turnover rate would be
established on a gradually increasing scale. This tactic could well be
an effective means of controlling inventories of discarded vehicles,
although the procedure for enforcing standards might be difficult to
administer, and disruption of the dismantling industry would be likely.
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11.8. Differential interstate freight rate changes. This tactic
lould involve reassessment of freight rate structures to bring the cost
of transporting vehicles, hulks, and processed scrap more in line with
the cost of shipping raw ores. More competitive scrap prices would
encourage more scrap use.
11.9. Restrictions on percent scrap for government purchase. The
government, in its buying decisions, would restrict purchase to steel
products having a specified minimum percent scrap content. This might
be hard to administer and its effect on automobile scrap consumption might
well be negligible.
11.10. Screening of inventories. Licensing of dismantlers and
processors would require that they screen their facilities by proper
fencing or foliage and thus shield their operations from public view and
enhance the aesthetic surroundings. In many large graveyards and dis-
mantlers1 facilities, however, £hjs migj}t ^e impractical.
III.
Although economic incentives, regulations, and development of
Improved techniques for recycling and reuse are promising, good public
and private educational programs are essential.
111.1. Develop public information campaigns to increase consumer
awareness. Support of public education through Federal- and Staje-
funded campaigns would increase awareness of the need to solve environ-
mental problems. Television, radio, and newspaper advertising could
stimulate awareness of new laws and of contact points for returning
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discarded vehicles. Speakers meeting with community groups would focus
attention on the need for and significance of action programs.
I I I.2. Training programs for industry and government personnel.
Federal and State support of training programs would be designed to
educate industry and government employees in acceptable ways of recycling
automobiles and of developing improved techniques for operations.
IV. Research and Development
To provide for development of more efficient production processes,
more durable and consumable automobiles, improved systems for complete
recycling, and motivation of intermediaries to perform needed action,
appropriate research and development programs are essential.
I V.I. Develop new technology to make scrap contaminant removal easier.
Federal funds would support research leading to design and implementation
of module electrical and mechanical systems that could be removed easily
from vehicle bodies.
IV.2. Develop new technology to use fully and recycle nonferrous
automobile solid waste (including tires). Federal research grants and
contracts would aid private industry and research-oriented firms.
IV.3. Develop new technology to reduce transport costs of automobile
hulks. The Federal government would support research leading to greater
hulk density or improved systems for handling and transporting hulks.
IV.A. Develop improved data sources on quantities and locations
of junked and abandoned vehicles. Support would be given to a material
data network that identifies vehicles according to serial number, type,
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model, etc., and cross-classifies them according to location and proximity
to processing facilities.
IV.5. Develop neti design parameters and materials for automobiles.
Support would be given to research leading to development of copperless
vehicles, and usage and design of materials more amenable to complete
recycling and reusage.
IV.6. Fund automobile demonstration project on results of these
research projects. Through the use of Federal demonstration grants, new
concepts, processes, equipment, and systems would be demonstrated.
This list of tactics can be applied to remedy (to some degree) one
or more of the three major problems in the automobile cycle: (1) abandon-
ment; (2) hulk inventories; (3) incomplete automobile scrap reuti1ization.
Each basic tactic is related to the industry segment where it may be
potentially employed to alleviate the three problems (Tables A-l, A-2,
A-3).
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TABLE A-l
AUTOMOBILE ABANDONMENT PROBLEM
Type
Auto
Mfg
Consumer
Government
Dlsmantler Processor
Scrap-end
use
I. Economic
Incentives
I.A. Revenue
Sources
I.A. 1,2,3
I.A. 1,2,3,4,
5,6,8,11
o>
I. Economic
Incentives
I.B. Revenue
Uses
11. Regulatory
Actions
II. 6
I.B. 2,13
II.1
I.B. 1,9,10,
13
11.2
I.B. 1,2 I.B. 1,2
11.2
III. Education
III.)
III.2
IV. Research
and Development
IV. k
IV.
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TABLE A-2
DISUSED-AUTOMOBILE INVENTORY PROBLEM
Type
Auto
Mfg
Consumer
Government
Dismantler Processor
Scrap-end
use
I. Economic
Incentives
I.A. Revenue
Sources
I.A.9
I.A.9
CO
I. Economic
Incentives
I .B. Revenue
Uses
I.B.10
I.B.7
I.B.8
II. Regulatory
Actions
11.2
H.2,7,8,
10
11.7,8,10
11.9
III. Education
III.2
IV. Research
and Development
IV.3,* IV. I
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TABLE A-3
INCOMPLETE AUTOMOBILE SCRAP UTILIZATION PROBLEM
Type
Auto
Mfg
Consumer
Scrap-end
Government Dismantler Processor use
I. Economi c
Incentives
I.A. Revenue
I.A.ll
I.A.7,10
GO
CO
I. Economic
Incentives
I.B.
I.B.12
I .B.3
I.B.I,4,7,
11,15
I.B.5,6,8,
11. Regulatory
Actions
M.3,6
11.8 11.8
M.4,5,9
III. Education
II I .2
I 11.2
IV. Research
and Development
IV.5
IV.2
IV.1,2 IV.1,2
IV.1
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APPENDIX B
STRATEGIES: THE MASTER PLAN
STRATEGY A
This strategy is based on the assumption that direct actions must
be taken to ensure that aban.J-VT:.-) .. n^mobPss """" no ^-r.gr- - ~"?blem,
inventories are reduced to acceptable levels, and potentially valuable
materials are fully recycled.
I. Economic Incentives
I.A. Revenue Sources
1. An annual Federal tax of $2 would be assessed on all licensed
vehicles and payable to a special fund.
2. Automobile manufacturers would be charged a recycle fee
of $20.00 for each new vehicle manufactured and soid--a fee payable
to a special fund.
3. Provision would be made for taxing cxcecirivc iiv/er.tories
of collectors, dismantlers, and processors at the ra.c o' $5 per excess
vehicle per year. A minimum inventory turnover rate would be established
on a gradually increasing scale.
1.B. Revenue Uses
1. A fixed return of $20 would be paid to the last registered
owner of a recycled vehicle (verified by a "certificate of delivery"
to a licensed collector).
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2. A fixed amount of $5 would be paid to a collector or dismantler
for each vehicle hulk leaving his inventory and sold to a scrap processor.
3. Low-interest loans would be provided to processors for
installation of improved processes.
II. Administrative and Regulatory Actions
1. Ease titling restrictions—all obsolete or inoperable vehicles
with assessed valuation of less than $150 and determined to be a public
nuisance may be regarded as not having substantial value and therefore
subject to collection by licensed collectors.
2. License all collectors, dismantlers, and processors of discarded
vehicles.
3. Provide for disbursement of funds to "last owners" and "dismantlers"
through existing channels of government. Support State government
for administration of funds.
k. Provide for a maximum fine of $500 or 30 days in jail, or
both, for those who discard vehicles on public and private property
and along roadways.
5. Negotiate with railroads and trucking lines through ICC for
more equitable transportation rates for shipment of vehicle hulks
and processed steel scrap.
6. Eliminate mineral depletion allowances to make steel scrap
more competitive with raw ores and, if necessary, provide for negative
depletion allowances to force environmental restoration on original
extractor or developer.
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7. Establish a Federal Vehicle Recycle Committee to review progress,
allocate funds, plan for future actions, and make changes in existing
programs as deemed necessary.
til. Education Actions
1. Provide for development and use of public information and
education programs through mass media, public presentations, etc.
2. Provide for training of collectors, dismantlers, and processors.
IV. Research and Development Actions
1. Support research on and development of new and improved processes
to convert discarded vehicles to high-quality steel.
2. Support research on and development of new and improved
processes to recycle nonferrous materials.
3. Support research to study ways of improving environmental,
social, and political systems where relevant.
Strategy A has potential for effectively accomplishing the following
four key objectives.
Minimize Environmental Damage
The problem of unsightly and hazardous abandoned automobiles
would be attacked by paying the last owner of a vehicle $20 for its
proper return. If he still failed to return Ms inoperable vehicle,
he could be subjected to a heavy penalty. The problem of excessive
inventories of vehicle hulks would be approached by paying collectors
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and dismantlers for turning over their inventories at a rapid rate
and supplying hulks to scrap processors. Furthermore, a tax would
be levied on vehicles in excess still remaining in inventories. Easing
of titling restrictions would accelerate the recycling process of
returning abandoned vehicles to profitable reuse. Licensing of operators
would force certain performance standards.
Conserve Natural Resources
The primary mechanism for conserving natural resources would
be to eliminate depletion allowances for the purpose of forcing original
developers of raw minerals to be responsible for environmental depletion
and for restoring the land and the environment to its natural or improved
state. This in conjunction with reduced freight rates and other positive
incentives would have the effect of making scrap more competitive
with raw ores. Manufacturers would be induced to consider redesign
of new vehicles by reducing their recycle fee through use of improved,
recyclable materials.
Minimize Economic Disruption
The procedure for obtaining funds to support a Federal vehicle
recycle program would call for a balanced assessment on both manufacturers
and consumers. The consumer, in licensing his vehicle, would be required
to provide for its proper recycle through minimal annual payments.
This money would be returned to him in the form of a guaranteed payment
for his adequately discarded vehicle. The manufacturer would be charged
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a recycle fee for each vehicle sold, forcing him to share responsibility
for its ultimate reuse. If he were to improve a vehicle's design
to permit more effective recycle, then the $20 fixed charge could
be reduced accordingly to a minimum of $10. There would be no direct
price support (determined unwanted and unnecessary) of scrap prices.
Nor would the private industries be severely upset to the point that
small operators would be forced out of business. It is recognized,
however, that a reduction or elimination of mineral depletion allowances
could cause significant readjustments in the steel industry. It is
important to face up to the fact that primary industries must assume
responsibility for preserving environmental quality. Scrap processors
would be rewarded for improved processes by granting of low-interest
loans and reduced freight rates.
Simplify Administrative Procedures
A Federal committee of minimal size but of flexible authority
would be set up to monitor the Federal system and make adjustments
where necessary. For the purpose of collecting and disbursing funds,
the existing mechanisms of State and local government would be used
much the same as at present. Of course, easing of titling restrictions
would reduce the legal, administrative, and temporal difficulties
involved in obtaining and recycling discarded vehicles.
STRATEGY B
This strategy is based upon the assumption that if automobile
hulks were provided, processors and the steel manufacturers would
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use the processed scrap. It is necessary to take direct action to
collect vehicles and provide penalties for abandoned vehicles.
I. Economic Incentives
I.A. Revenue Sources
1. Increase excise tax on gasoline from $0.04 to $0.05
(Federal level).
2. Fines for vehicle abandonment (State level).
3. Vehicle sale (local level) .
4. License fee (local level).
I.B. Revenue Uses
1. Provide localities with funds to collect vehicles (local level)
2. Provide localities with funds to establish vehicle storage
areas before vehicle is sold to processor (local level).
3. Provide money (10 percent gasoline revenue) for research
(Federal level).
k. Provide money for program administration (local, State, and
Federal levels) .
II. Administrative and Regulatory Actions
1. Set up Federal Vehicle Recycling Committee within existing
agency (Federal level).
2. Establish State staff to be responsible for vehicle recycling
(State level).
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3. Establish local staff of consultants to develop, plan, and
provide for monitoring surveillance system (local level).
k. Ease titling restrictions — any vehicle under $50 not licensed
or having a storage permit can be removed from public or private property
(State level).
5. Provide a vehicle identification/ownership mechanism
(Federal-State levels).
6. Require licensing of all dismantlers, processors, and collectors
of discarded vehicles (local level).
7. Establish a $200 fine for abandoning vehicles (State level).
III. Education
1. Inform public of the mechanism for vehicle recycling and of
penalties for abandonment (State-local levels).
IV. Research and Development
1. Support research to improve technology in the area of steel
scrap (Federal level).
2. Support research to investigate ways to recover nonferrous
metals and materials from vehicles (Federal level).
3. Support research to investigate methods to make a car easier to
scrap (Federal level).
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Minimize Environmental Damage
The problem of the discarded/unwanted vehicle would be eliminated
by providing a mechanism for collecting and storing vehicles. To
encourage people to use the system a fine would be established to
make vehicle abandonment costly. The storage area would be shielded
so as to prevent an unsightly appearance. The stored vehicles would
be sold directly to the processor to prevent the dismantler from accepting
any unwanted vehicles.
Conserve Natural Resources
Natural resources would be conserved in two ways: first, by
removing the existing inventory of vehicles scattered throughout the
country and getting them into the scrap cycle; second, by providing
a mechanism to keep the unwanted vehicle in the scrap cycle by establishing
a collection and distribution system.
Minimize Economic Disruption
No money would be spent for subsidies or payments to make some
material appear more attractive. Hence the price structure would
remain the same. The supply of vehicles to the processor would not
be greatly affected, since the excess vehicles collected would be
stored and sold only to fill the processor's capacity. The dismantler
could still sell his vehicles to the processor at his existing rate.
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Simplify Administrative Procedures
The strategy was formulated with ease of administration in mind.
The gasoline revenue would be collected by using the existing excise
tax structure. The funds would also1be distributed to the States
by using the same system. Federal participation would be by a committee
within an existing agency. Research would be channeled through an
existing agency by earmarking of funds for motor vehicle research.
State administration would use its existing system but would merely
increase the staffing. Local administration would use its existing
sanitation department.
STRATEGY C
I. Economic Incentives
I. A. Revenue Sources
1. One-time $10 fee, added on to State motor vehicle registration
fees, would be established as a Federal recycling fund.
2. A blue ribbon committee would be given power to levy $1 to $3
add-on to registrations if warranted in future years.
I.B. Revenue Uses
1. Local governments would be reimbursed for collecting,
storing, and delivering abandoned motor vehicles to processors.
2. For cities not within a reasonable distance of processor,
flatteners would be provided and cars sent by most economical means to a
processor.
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3. Railroads or other freight company would be subsidized for
moving flattened motor vehicles. Subsidy would vary on regional basis
as necessary.
4. Education and research would be provided by the Federal
government.
5. Local governments would be reimbursed for the net cost of
licensing dismantlers and processors as well as for surveillance.
6. Local governments would be reimbursed for moving a dismantler's
unwanted hulk inventories to a processor.
I I. Regulation
1. State legislation would enable local government to take title
to abandoned motor vehicles.
2. Legislation would be enacted permitting fines for motor vehicles
abandoned on public property and storage fees on private property.
3. Legislation would empower local governments to set standards
for dismantlers and processors with respect to environmental insult,
including unsightly inventories.
4. ICC would be encouraged to decrease freight rates on processed
motor vehicle scrap in line with rates for iron ore.
III. Education
Citizens would be made aware of local government vehicle
collection services, fines, and storage fees.
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IV. Research and Development
Research and development for methods of recycling nonferrous
materials would be supported.
Minimize Environmental Damage
This strategy would empower local government to take direct action
against scenic blight caused by abandoned motor vehicles on public and
private property. It would further enable local government to regulate
the environmental aspects of dismantling and processing. By delivering
to the processor, the local government would avoid increasing dismantlers1
unwanted inventories. Local governments could also take direct action to
remove inventories left by dismantlers who choose to go out of business.
Subsidizing freight rates for moving flattened hulks would help reduce
dismantlers1 inventories as will adjusting freight rates for processed
motor vehicle scrap.
Conserve Natural Resources
By reimbursing local governments for delivery to processors rather
than, say, for landfilling disused motor vehicles, the ferrous content
of the vehicles would be recycled. Demand for processed scrap would
be expected to be sufficient if vehicles could be delivered to processors
Adjustment of freight rates that tend to discriminate against processed
scrap in favor of iron ore resources would give added assurance that
vehicles delivered to processors would be reclaimed. Research to
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develop new ways to reclaim nonferrous materials would, in the long
run, make less and less the portion of disused automobiles that became
solid waste. Subsidies to railroads for hauling motor vehicle hulks
would tend to reduce the amount of land needed by dismantlers.
Minimize Economic Disruption
i < i
The amount of money needed for this strategy would be minimal
since it is directed only to problem areas. The burden would fall
directly on car owners. Thisrmight, in fact, lighten their load since
no overhead would have to be paid to the motor vehicle manufacturers
and dealers. The markets for new and used motor vehicles, raw steel,
and foundry iron would not be affected by this strategy. The supply
of processed scrap might be stimulated somewhat but not enough to
cause overcapacity. The heaviest burden would fall on the dismantler
forced to improve his operating conditions. For the marginal dismantler,
entering or leaving this occupation would be of minimal consequence.
That is, a one- or two-man-operation processor with a small capital
investment might find alternative employment much easier than, say,
a processor with a $2 million investment. Here we must face squarely
the dilemma that the small businessman is the one who tends to insult
the environment. Either the dismantler uses his ingenuity to meet
licensing requirements or he goes out of business. He would, of course,
receive some help from subsidized freight rates on hulks. Some benefit
from more equitable processed-scrap freight rates might reach him.
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In addition, some money from the recycling fund might be used to help
the small dismantler meet local licensing requirements as an adjustment
to this strategy.
Simplify Administrative Procedures
Revenue collection would use existing State mechanisms and be
adjusted annually. Implementation and surveillance would be at the
local level, where it must be to have effective action. At the Federal
level, machinery must be set up to deal with local governments. Not
all local governments, however, can be expected to participate. New
York City, for example, is currently being paid for the privilege
of removing abandoned automobiles from the streets. Not all of the
10 to 20 percent of cars out of service annually that are abandoned
would be involved. Only those presenting a problem would be touched
by Federal funds through local government. Cars with sufficient value
to be of interest to dismantlers would be handled as they are now.
STRATEGY D
I. Economic Incentives
I.A. Revenue Sources
1. Increase in gasoline tax of $0.005 (or a Federal registration
fee of $5.00 per vehicle) would be levied; each State could receive
as much as one-half of its collected share provided the regulatory
requirements shown here were implemented within 1 year.
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2. As much as $10.00 per newly manufactured car in 1972
and thereafter would be payable by manufacturer unless copper content
of vehicle is below acceptable limits as set by the Bureau of Mines
to be measured by a technique of its approval. As much as an
additional $10.00 per newly manufactured car would be payable in
1975 unless nonrecyclable nonferrous elements were reduced to an
acceptable level as set by governing authority.
I.B. Revenue Uses
1. Federal share of gasoline tax would be applied in the
following priorities.
a. Low-interest loans to qualified processor would be
determined by Bureau of Mines (quality of scrap) and Department of
Commerce (location and capacity) jointly.
b. Low-interest loans for automobile hulk flatteners and
transport equipment.
c. Research and development.
d. National educational campaigns.
2. State share of gasoline tax would be applied in the following
priori ties.
a. Enactment of uniform titling legislation would speed
title transfer, remove impound periods, remove notification procedures,
and allow contract sale of low-value abandoned vehicles.
b. New registration procedures would be instituted to
require proof of disposition of last vehicle.
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c. Dismantlers, processors, insurance companies, and
car dealers would be licensed for acceptable procedures and permitted
to give proof of disposition.
d. Limited random-check procedures would be instituted
on proof of disposition.
e. Needed forms for certifying disposition of automobiles
would be made available.
f. Local government activities in cleaning up accumulated hulk
problems would be supplemented.
I I. Regulation
1. Model for State titling law.
2. Model licensing agreement for dismantlers, processors, etc.
3. Model proof of disposition certificate and registration
modifications.
k. Renegotiation of ICC rail rates on scrap transport.
5. Accelerated depreciation for qualified shredders, etc.
6. Establishment of a commission to determine overall Federal
policy, changes in gasoline tax, and other key factors regarding automobile
recycling.
Minimize Environmental Damage
An enforceable provision (fine and imprisonment for perjury)
on all future abandonments would be provided by ensuring adequate
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disposition of past vehicles at time of title application for next
vehicle. The burden would be on the abandoners rather than on everyone.
Inventories in dismantlers would also be reduced by encouraging lower
transportation costs through loans for trucks and flatteners as well
as for more shredders nearby. Educational campaigns would speed implementation,
Conserve Natural Resources
By lowering transport rates and encouraging higher quality scrap,
scrap would be reused, and hence, natural resources would be conserved.
Manufacturers would, moreover, be encouraged to aid recycling by changing
composition and design. Research and development would improve future
recycling.
Minimize Economic Disruption
Potential charges to automobile manufacturers would be small
and deferred. Consumer/owner payments would also be small and spread
over several years. The incentives to processors would be subject
to qualification to prevent overcapacity in the industry.
Simplify Administrative Procedures
Channels already exist for the collection and distribution of
funds. Licensing and forms design would require more administration
but again channels exist. New legislation would be required, but
this is a one-time effort. Enforcement of abandonment fines and titling,
impounding, etc., would all be dramatically simplified.
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STRATEGY E
I. Economic Incentives
I.A. Revenue Sources
1. A $10 deposit would be charged for each vehicle currently
registered and $15 on each one manufactured or imported thereafter.
2. A reduction of $10 would be made on all newly manufactured
vehicles that meet Bureau of Mines standards (to be set) on composition.
3. Fines of $10 per car would be levied on excess dismantlers'
or processors' inventories.
I.B. Revenue Uses
1. Payment of $10 would be made to each processor/dismantler
who accepts vehicles.
2. Low-interest loans would be made to qualified scrap processors
as determined by Bureau of Mines (quality of scrap produced) and Department
of Commerce (regional location and overcapacity considerations).
3. Excess would be directed to education and research.
11. Regulatory
1. Uniform titling would ease transfer of abandoned vehicles,
with following added provision: a $500 penalty unless new vehicle
registration were accompanied by proof of acceptable disposition of
last vehicle by sale or delivery to dismantler or processor.
2. A $500 to $5,000 fine would be levied on any dismantler or
processor who accepts a $10 payment but rejects any other vehicle
delivered on which the title is presented.
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3. A dismantier/processor inventory turnover tax would be based on
inventory divided by vehicles received where tax is levied for all
vehicles in inventory that exceed:
1.25 X received in 1971
1.00 X received in 1972
0.75 X received in 1973
0.50 X received thereafter.
k. An amendment to interstate commerce laws would prohibit
rate setting that discriminates against secondary materials transport.
III. Education
1. Federal consumer education program on abandonment.
2. Training for scrap processors and dismantlers.
IV. Research and Development
1. Improved shredding.
2. Enclosed incineration.
3. Substitutes for copper.
4. Decreased transportation costs for automobile hulks.
Minimize Environmental Damage
The environmental insult caused by abandonment would be reduced
by high fines levied on failure to show proof of acceptable disposition
of the consumer's last vehicle and assurance that the fines could be
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easily enforced because the past owner would, in all probability, require
another automobile. Moreover, each processor or dismantler would be
paid to accept vehicles and fined heavily if he refused. Simultaneously,
dismantlers' and processors' inventories would be reduced by regulated
inventories.
Conserve Natural Resources
Low-interest loans would be provided to scrap processors to ensure
high-quality scrap and its subsequent utilization by steel mills and
foundries. Moreover, freight rates would further increase scrap's
competitiveness with raw ore.
Minimize Economic Disruption
By minimizing the size of the charge to the consumer, his buying
decisions would be minimally affected. Moreover, the staying of inventory
reductions would limit the input on the dismantling industry and provide
adequate time for it to adjust its operations. Furthermore, because
most of this strategy would be accomplished through regulation with
penalties for failure to obey, subsidies and their long-term effects
would be minimized.
Minimize Administrative Procedures
A one-time charge on all vehicles with subsequent charges on new
vehicles would aid in reducing administration of revenue collection.
Moreover, determination of qualifications of scrap-processing facilities
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for low-interest loans would be accomplished by existing agencies.
Enforcement of abandonment fines would be made routine, and no extensive
search and notification procedures would be required.
STRATEGY F
I. Economic Incentives
I.A. Revenue Sources
1. A deposit of $50 would be required from each consumer
on each vehicle registered the first year of the bill and on all vehicles
manufactured or imported thereafter. A high-level appointed committee
would regulate and update the bill.
2. A Treasury Department revolving fund would be set
up to invest excess money and obtain interest from time lag between
deposi t and return.
3. A charge of $10 would be made to each manufacturer for
each new car produced dropped to $5 per car if copper content were
reduced below 0.1 percent of total weight by stripping of a simplified
harness, which is possible through redesign. Bureau of Mines would
admi nister.
I . B. Revenue Uses
1. A $50 deposit would be returned to last legal owner of
any vehicle, including those in inventory on which no deposit has been
collected--payments in excess would be limited to amount of interest.
2. Payments of sum to municipal governments if they have title.
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3. Low-interest loans would be made to scrap processors for
operations to produce high-quality scrap (administered by Bureau of
Mines) in locations where overcapacity did not exist (administered by
Department of Commerce).
I). Excess would be retained for inventory data network,
educational programs, and research and development.
I I. Regulation
1. ICC rail haul rates on scrap would be renegotiated to bring them
in line with pelletized ore.
2. Tax laws would be changed to allow accelerated depreciation to
scrap processors currently qualifying or about to qualify within 3
years (qualifications administered by Bureau of Mines).
3. A 1-year writeoff would be given for all screening costs
for inventories.
1». A new eased titling law would facilitate transfer of title to
municipality of abandoned vehicles.
III. Education
1. Federal consumer education program on abandonment.
2. Training for scrap processors and dismantlers.
IV. Research and Development
1. Improved shredding.
2. Enclosed incineration.
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3. Substitutes for copper.
A. Decreased transportation costs for automobile hulks.
Minimize Environmental Damage
The strategy would reduce and should eliminate abandoned vehicles
as an environmental blight by ensuring a positive value to the last
legal owner of all obsolete and inoperable vehicles. The consumer
would assume responsibility for recycle at the point of purchase and
would be rewarded in the same amount for proper return of his discarded
vehicle. Screening of inventories would at least shield dismantling
and collecting facilities from public view.
Conserve Natural Resources
Manufacturers of new vehicles would be induced to share the burden
of recycle and to consider design changes by paying a $10 maximum charge
per vehicle. By carefully designing new vehicles and reducing difficult-
to-recycle materials, manufacturers would be entitled to reduce their
di rect cost burden.
Minimize Economic Disruption
Although manufacturers would be charged a direct disposal cost,
it is important that they too share the burden of improved environmental
quality. Consumers would be refunded their initial deposit upon return
of any registered inoperable vehicle. Processors would be invited
to install more effective and improved processes, but their financial
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outlays would be offset by accelerated depreciation provisions and
reduced freight rates.
Simplify Administrative Procedures
A new eased titling law would facilitate transfer of title to
the municipality of abandoned vehicles and would reduce the administrative
and legal difficulties of obtaining ownership of discarded vehicles.
A special Treasury Department revolving fund would be set up to administer
and allocate funds.
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REFERENCES
1. Gawronski, F. J. '70 Production pegged at 1969 level. Automotive News,
Whole No. 4260:6, 27, Dec. 22, 1969.
2. The shape of the 1970's. Morgan Guaranty Survey. Nov. 1969- p. 3-10.
3. In Detroit: 75 . •-85-..100...bingo! Modern Plastics, 46(10):54-58,
Oct. 1969.
4. Eshelman, R. More rubber in 1970 automobiles. Rubber Age,
101(9):66-74, Sept. 1969.
5. Ward's 1968 automotive yearbook. 30th ed. Detroit, Powers &
Company Inc., 1968. 264 p.
6. Predicasts, Issue 38, Fourth Quarter 1969. Cleveland, Predicasts,
Inc., Jan. 23, 1970. 143 p.
7. Dean, K. C.,and J. W. Steiner. Dismantling a typical junk automobile
to produce quality scrap. U.S. Bureau of Mines Report of
Investigations 7350. Washington, U.S. Department of the Interior,
Dec. 1969. 17 p.
8. Ralph Stone and Company, Inc. Copper control in vehicular scrap
with special emphasis on component design. U.S. Bureau of Mines
Mar. 22, 1968. 109 p. Unpublished data.
9. Automobile disposal, a national problem; case studies of the
factors that influence the accumulation of automobile scrap.
U.S. Bureau of Mines Special Publication 1-67. Washington,
U.S. Department of the Interior, 1967. 569 p.
10. Poliskin, J. S. Automobile steel scrap of low-residual copper.
Presented at 27th Electric Furnace Conference, Metallurgical
Society, American Institute of Mining, Metallurgical, and
Petroleum Engineers, Detroit, Dec. 10-12, 1969.
11. U.S. Department of Transportation, Federal Highway Administration.
News Release, Jan. 29, 1970.
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12. Institute of Scrap Iron and Steel. 1969 yearbook. 30th ed.
Washington, 1969. 129 p.
13. Car scrappage again tops 6 million. Automotive News, Whole
No. 4269:1, 43, Feb. 23, 1970.
14. Automotive News. 1969 almanac. 33d ed. Detroit, Slocum
Publishing Company, 1969. 266 p.
15. Derrickson, G. F. Motor vehicle abandonment in U.S. urban areas.
Washington, U.S. Business and Defense Services Administration,
March 1967. 51 p.
16. Hassell, E. W., and E. R. Killam. Auto wrecking industry: problems
and prospects. Scrap Age, 27(2):202-267, Feb. 1970.
17. Ralph Stone and Company, Inc. Resource reclamation: yard
efficiency. U.S. Bureau of Mines, July 18, 1968. 110 p.
Unpublished data.
18. Story, W. F. Increased freight rates, 1969. Testimony before the
Interstate Commerce Commission, Exparte No. 262, Jan. 5, 1970.
p. 4.
19. Callahan, D. Basic puts its eggs in more than one basket.
American Metal Market, 76:2-3, 14, Oct. 24, 1969.
20. Steelmaking in the decade of the squeeze. Steel , 165(21):33-40,
Nov. 24, 1969-
21. Brewster, D. L. Steel outlook. The Wall Street Transcript,
26(8):18, 682, Nov. 24, 1969.
22. Ferrous castings industry. J_n_U.S. Department of Commerce.
U.S. Industrial Outlook, 1970. Washington, U.S. Government
Printing Office, 1970. p. 218-220.
23. Roche tells NAM of steel's efforts against pollution. Steel
Facts, Whole No. 209:4, Dec.-Jan. 1970.
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ACKNOWLEDGMENTS
In the development of this report, many individuals, organizations,
and other Federal agencies contributed valuable information and insights,
although separate acknowledgments for each of the numerous outside
participants are not possible. The following, however, summarizes the
participation by staff of the Office of Solid Waste Management Programs:
Eric R. Zausner (project direction), George A. Garland (statistical
analysis and strategy evaluation), Dennis E. Carruth (tactics and
strategy formulation), Stanley E. Endlich (automobile manufacturers
analysis), Stanley J. Meresman (abandonment analysis), William T. Dehn
(dismantling analysis), Thomas Sanders (processors analysis), Thomas R.
Leslie (scrap-end use analysis), and James C. Curry (legal aspects).
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