Auto Recycling eNewsletter

August 2005

Written and published by Mike Gibson and Ron Sturgeon, autosalvageconsultant.com, email to email Mike Gibson

To register for future free issues, visit http://www.autosalvageconsultant.com. Don’t forget to watch for our management articles monthly in Recyclers Power Source Magazine, or posted at our web site.

This Month’s News

LKQ Corporation Announces 2005 Second Quarter Net Income Results Up 42.7% -- Increases Full Year Guidance,

LKQ Corporation today reported results for its second quarter ended June 30, 2005, with revenue of $136.0 million, net income of $7.6 million and diluted earnings per share of $0.33. "For the second quarter we exceeded our previously issued revenue and earnings estimates. We once again achieved a record revenue quarter with impressive revenue growth of approximately 30%. This included very strong organic revenue growth of almost 15%. Our net income increased by close to 43% and our earnings per share increased by just over 37%. We were particularly pleased with the expansion of our operating income margin to 10.2% compared to 8.7% in the second quarter of 2004, which was largely attributable to improved gross margin and gaining leverage over our operating costs. We continue to see our 2005 acquisitions perform in line with our expectations," said Joe Holsten, President and Chief Executive Officer.

Tainted Soil Removal Under Way -- Auto Salvage Near Springdale Elementary Likely Leaked Pollutant Onto Premises

For the second time in two years, contractors with heavy equipment are moving dirt near a Memphis school to reduce the threat from contaminated soil. This time, the digging is at Springdale Elementary, near Hollywood and Jackson in North Memphis, where elevated levels of toxic lead were discovered this spring. Lead, which can cause learning disabilities and other problems in children, turned up in concentrations up to 10 times the level considered safe for residential areas. But the contamination was limited to an area along the school's back fenceline - away from the playground - and tests showed no lead problems inside the school. Schoolchildren were not exposed, said Phil Coop, president of EnSafe Inc., the firm overseeing the cleanup. The cleanup, which the U.S. Environmental Protection Agency had projected would cost $300,000, is being conducted by Springdale Memphis LP, which is developing an affordable housing apartment complex nearby. The lead problem at Springdale likely stems from batteries stored at a former auto-salvage yard located on adjacent property, Coop said. "Our hypothesis is that the auto salvage yard stored batteries along that back fence, and over the years, they leaked," he said.

'Not In My Back Yard': Junk Yards, Pig Farms And Other Non-conformists' By Julie Wernau, Shore Publishing, 8/5/2005

Until recently, his business, Blinkers 'N More, was one of just two junk yards left in town. It stood, squirreled away behind Boston Post Road like a shamed cousin, a hidden graveyard of half-motorcycles, tire-less cars, broken headlights and ripped upholstery. But as the junk evaporates, soon 20 homes and manicured lawns will take its place -- a subdivision Snyder has personally ushered through the permitting process and one that will make him more money in one year than five years in the junk yard business. When he leaves, Deans Auto Recycling in Quaker Hill will be the last of Waterford's junk yards and one of the few strongholds left in a quietly dying breed. Waterford, like many Connecticut towns, has dubbed junk yards as a "non-conforming use." In the world of zoning regulations, junk yards, dumps, piggeries and even the Waterford Speedbowl are the proverbial last-picked-in-gym-class: Somebody's got to take them, but nobody wants them. Non-conformists, by definition, aren't allowed in town under local zoning laws. Today, if someone came into town and asked to open a new junk yard, they would be turned away at the door. That's because the goal, according to Waterford's planning director Thomas Wagner, is to eliminate the use completely. To town planners, non-conformists stick out like a polka-dot dress at a wake. The law protects these businesses under what owners fondly call "The Grandfather Clause." They are allowed to stay because, technically, they were here first -- that is, before zoning came into existence in 1954 -- and because, over the years, they've continued to use the same land to conduct the same business. "Once they don't use it for that use, they can't switch it back again," Wagner said. According to Wagner, the town can't force a non-conformist out of business, but the courts say the town can't make it easy for them to stay in business either. That means expansions, business changes and even modernizations are out the question -- which, for some agencies, like the Department of Environmental Protection, can create a Catch-22 situation. "It is possible to have an environmentally compliant automobile recycling operation," said Robert Isner, director of engineering and enforcement for the Waste Management Division of the DEP. The easiest method, said Isner, and the one the DEP would prefer, would be to enclose junk yards, protecting waterways from toxic gases or fluids that sometimes leak into the ground and eliminating the "eye-sore" complaints of neighbors. Junk yards, once permitted to pour a car's contents onto the ground, have caused some major environmental problems in the past. In the '90s in Westbrook, a junk yard left the town with about $4 million of contamination to clean up, and nearby residents were forced to drink bottled water until the town could extend pipes to their homes. The contamination remains, said Tony Palermo, first selectman of Westbrook, and the town is awaiting a DEP report on the damage. Unfortunately, the planning and zoning commissions of most towns don't allow enclosures, which are seen as business "improvements" and, therefore, not compliant with zoning.

Schnitzer Agrees to Acquire Greenleaf

Oregon-based company looks to broaden its auto dismantling acquisition
with purchase. To read the article, go to: http://www.recyclingtoday.com/news/news.asp?ID=8182

Ron Sturgeon Announces His 2^nd Business Book, Available in summer 2005

Ron’s new book, Green Weenies and Due Diligence, a compilation of insider business jargon, raw, serious and sometimes funny will be available in the summer of 2005. The book includes over 1200 terms, and 70 illustrations by world famous Gahan Wilson. Mr. Wilson has been drawing cartoons for Playboy and The New Yorker for decades, and is well known for his macabre style. Visit www.greenweenies.com for more information, or to register for a free weekly email, with the latest Green Weenie term and illustration. You won’t know how to herd cats or have a bake off, and you won’t know what chips and salsa or a Swag is unless you get your copy! Register now to get your free entertaining and educational email weekly! One of the illustrations is shown at the end of this month’s enewsletter, enjoy!

“People are definitely a company’s greatest asset. It doesn't make any difference whether the product is cars or cosmetics. A company is only as good as the people it keeps.” Mary Kay Ash

AutoSalvageconsultant.com was formed in 2001 to help recyclers improve their businesses. With over 50 years of experience in 3 staff members, the group is THE definitive source for recyclers’ management and training needs. Mike Gibson and Tammy Sturgeon joined the team in 2003, and bring a wealth of experience to the team, plus more resources, as there have been more requests for help than Ron could meet. The founder, Ron Sturgeon is past owner of AAA Small Car World. In 1999, he sold his six Texas locations, with 140 employees, to Greenleaf. In 2001, he founded North Texas Insurance Auction, which he sold to Copart in 2002. In 2002, his book “Salvaging Millions” was published to help small business owners achieve significant success, and was recently reprinted and published in Chinese. In June 2003, he joined the new ownership and management team of GreenLeaf. He also manages his real estate holdings and investments. You can learn more about how to help your business at www.autosalvageconsultant.com. Mike can be reached at 1409 Carson, Haltom City, TX 76117, (preferably) email Mike Gibson, or 817-925-8430.