For immediate release - October 2003

Auto Recycling eNewsletter

Written and published by Ron Sturgeon, RDS Investments, email to email Ron Sturgeon

To register for future free issues, visit http://www.autosalvageconsultant.com

This Month’s News (lots this month!)

ARA Convention Report - I just returned from the convention in Ft. Lauderdale. Many of my old friends weren’t there, but many were. Attendance was noticeably down. ARA’s executive vice president “resigned” in August, and ARA directors reported that they have narrowed their search for a new EVP to two candidates. The new EVP will be on board soon, they say. We desperately need ARA, so please support our association. Much change is needed there, as in our own businesses. I hope they can change enough, and fast enough, although large associations, which are “run by committee”, tend to err on trying to please too many. In our businesses, as well as our associations, change is imminent and occurring so fast, that you have to work with a shovel instead of a spoon.

LKQ Public Offering a Success - LKQ Corporation LKQX priced its initial public offering of 7,000,000 shares of its common stock at $13.00 per share. Selling stockholders offered 2,000,000 of the 7,000,000 shares to be sold in the offering. The selling stockholders also granted the underwriters the right to purchase up to an additional 1,050,000 shares to cover over-allotments, which did occur. The stock closed at over $14.00 on the opening day, last Thursday, October 2, and increased again on Friday. As I write this, it is up again today.

ARA Hosts Panel of Consolidators and Work Groups - I spoke at the recent ARA convention on this panel, representing GreenLeaf. Work groups continue to gain in popularity. The focus of my presentation was the size of the industry, and the huge amount of fragmentation, and room for growth for all recyclers.

Pinnacle Announces New Features at ARA convention - Pinnacle announced a lot of new features at the ARA conference. Notable improvements are the ability to automatically get the VIN from the seller on brokered parts, and a pricing module for new and aftermarket parts, so they are confused with recycled parts.

Collision Industry Conference Convention - Sharon Kellum, URG’s manager and chairperson for a recycled parts committee, spoke about defining clean up time of recycled auto parts. I will give you more details next month.

Parts Grading may be Fully Utilized - Parts grading of recycled parts is important. Currently Pinnacle is the only system that grades parts, but ARA and ADP are both looking at adopting the same standards. These standards allow automated estimating without damaged parts and make recyclers more effective at managing their inventory. In the Pinnacle, for instance, sub grade parts aren’t considered in buying decisions, allowing better purchasing.

URG Sets Date for Next Training Conference - United Recyclers Group has announced its 9^th Annual Training Conference at the Westin Tabor Center, located in the heart of downtown Denver, CO, on April 23^rd – 24^th, 2004. Non-URG partners are invited, and last year the conference was packed with seminars presented by other yard-owners expert in a given area. You can reach URG at 303-367-4391

How’s Business?

Happy people plan actions, they don't plan results." Dennis Waitely

Last month I started this section with a quote, and had several favorable comments, so I will do the same this month.

Speaking with old friends, and making new ones at the recent ARA convention, there is much pressure on sales and earnings. In my presentation, I spoke of 5.7% annual growth in the industry, and ask for a show of hands from those that had seen that in the last year. Only a handful raised their hand.

Sales are sluggish, and costs are up, especially salvage costs. The moral to the story? No matter how fast you change, you likely aren’t changing fast enough. The good news? Following salvage, the next greatest expense most recyclers have is labor expense, and most have way too many employees, allowing lots of room for improvement. Remember, if you aren’t selling at least $15k/mo in parts per employee, you have too many. That amount increases if you broker more than about 10% of your parts, as you should need less site labor. You need to be planning actions to reduce your costs.

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. 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 Ron at www.autosalvageconsultant.com He can be reached at 5940 Eden, Haltom City, TX 76117, (preferably) email Ron Sturgeon or 817-834-3625 ext 6#.