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Letter to the Editor
This article originally appeared in the November 2000 Issue of INSIGHT
Another Point of View:
Recycled Parts Usage
by John Disher, Owner of J&L Auto Body in Summerville, South Carolina
Recycling makes sense. It’s good for the environment and can be economically practical. We recycle drink cans, newspapers, magazines, plastic, steel, aluminum, tires, and even animal wastes. But in no instances, except auto parts, does the recycling process only involve dividing the bulk product and reselling it. Consumers would rise up like lynch mobs if recycled drink cans and plastic milk containers were merely refilled and put back on the shelf. Imagine your upset if the bag of recycled waste that you bought for your garden turned out to just be the original material shoveled into a bag.
Only our industry buys "recycled" parts as instructed by a third party, pays recycled prices, and then has to do the "recycling" of the product at our expense. As a repairer, recycled parts mean two things to me: more work and less money. This makes no sense, and until there is parity with OE new this issue will be an enormous thorn for repairers, insurers and consumers. Repairers cannot be expected to subsidize the loss, and consumers will come up short if the parts are not properly "recycled" before being hung.
Somewhere, years ago, somebody (most likely an insurer) came up with the notion that a 25 percent mark-up on salvage parts was adequate. It never has been adequate and never will be. Then surprise of all surprises, today I got an estimate prepared by a USAA DRP shop with a 20 percent markup. Is USAA drawing a line in the sand?
In my judgment, the information providers have been pressured by their big customers to manipulate their estimating program’s labor allowances to figures lower than for new OEM. In Mitchell’s program, they use a totally different set of "p-pages" for used parts than for new, and an estimate may be written using two different sets of "p-pages," yet the shop may not know that. They just can’t figure out why they get 3.0 hours to refinish the outside of a new Volvo hood, yet to refinish a greasy, scratched and rock-pitted used hood the base time decreases to 2.4 hours. I use Mitchell as an example not because they are the worst, only the one I am most familiar with. ADP is ghost written and CCC I find too hard to decipher.
(Publisher’s Note: With each of the estimating systems clean-up preparation and/or repair of a salvaged part, as well as disassembly and assembly times are not included in the base time allowances. The shop must negotiate these separately with either the salvage yard or the insurer. This is a time-consuming, frustrating, and often unproductive exercise.)
The condition of the parts received is going to have to be addressed by every shop that wants to survive. We have started putting together checklists for used parts. As long as salvage yards refuse to use efficient parts racks and continue to stack hoods and doors on a truck bed squashed down by ratcheting straps, we are going to argue about payments for damage. Either we get paid by the yard or by the insurer to repair the damage or the part goes back, but either way the additional time creates cycle time increases.
When I order front end parts and the salvage yard whacks off everything from the seats forward and sends it as a lump we have to figure disassembly time as well as clean-up costs. Because it takes more time and effort to disassemble without damage so that you have acceptable parts, especially with any welded parts, it doesn’t take long for a 30-hour job to become 60 hours and we haven’t even addressed the additional paint prep time necessary. Many times when you factor this in, the cost of replacing with used becomes more than new. Then, if you add the additional rental car expense, it becomes absurd.
If the repair shops would have the guts to refuse to do the recycling operations for free, salvage yards would find insurers coming to them offering them the choice of the all-time favorite "business decision." "Modify your pricing structure so that the real total cost of using salvage is less than OE new parts, or lose the business to the new OEM parts suppliers."
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