Waste Business Watch


By John Nicholson

The typical view of an auto salvage yard is an abandoned farmer’s field strewn with hundreds of smashed up vehicles haphazardly piled on top of each other as oil, gasoline and transmission fluid slowly leak into the ground. But there are a number of factors moving the auto recycling industry toward a cleaner, more efficiently and environmentally sound sort of “junkyard.”

The first factor is the vehicle end-of-life vehicle Directive from the European Union (Directive 2000/53/EC), which has had a significant effect on North America. The Directive places requirements on member states, vehicle manufacturers and recyclers to minimize the impact of end-of-life vehicles on the environment and to encourage recycling and reuse of parts.

A similar program in Canada to the Europe Union’s Directive 2000/53/EC is the mercury “Switch Out” program. The Canadian Vehicle Manufacturers’ Association (CVMA) initiated guidelines for vehicle dismantlers and recyclers on how to properly remove mercury-containing switches and how to properly dispose of them.

Another factor prompting the move to greener junkyards is the greater focus on quality recycled auto parts by the automobile insurance industry in an effort to control costs. A used part can cost up to 50 per cent less than a new part. The increased use of “like kind quality” original equipment manufacturer (LKQ OEM) parts reduces repair costs and therefore can lower automobile insurance premiums. The key for this system to work is an adequate supply of LKQ parts.

Redefining junkyards

One auto recycler that has recognized the trends and is positioned to be an industry leader is AADCO Automotive Inc. The company has totally redefined the term “junkyard.” The company has developed a dismantling line process, which will in time parallel the assembly line in reverse. All dismantling and auto parts storage is done indoors resulting in superior quality parts and reduced risk of environmental contamination.

Listed on the TSX venture exchange (symbol: AA), AADCO was founded in 2000. The company has one facility located in Brampton, Ontario but has plans to expand throughout the country.

AADCO is the first in Canada in many areas. It is the first and only auto recycler endorsed by Environment Canada’s Environmental Choice Program. It is the only recycler in Canada to totally dismantle and store all its parts entirely indoors. AADCO has applied epoxy sealant to its floors to ensure environmental containment of any fluids. The company is so proud of its operation it provides virtual tours on its plant and processes on its web site (www.aadco.ca).

AADCO realizes that its focus to be environmentally sound also results in better quality parts for resale. The company’s goal is to recycle one hundred per cent recycling of a vehicle is. Currently, 90 per cent of a vehicle is recycled by AADCO (the industry average is the 75 per cent).

When a vehicle arrives at the facility, its fluids are drained and stored in double-lined explosive proof tanks. A separate company comes in and recycles the fluids with the exception of windshield washer and gas, which are used in AADCO’s own fleet of vehicles. Original equipment manufactured parts (OEM) still in working condition are certified and resold to the public for one-third less than the cost of brand new car parts. A 60-day replacement warranty is given on most parts unless otherwise noted.

All material not recovered as re-saleable parts are sorted, ground, shredded or cubed for delivery to end users of these recycled materials. AADCO’s approach to material separation positions it well in anticipation of future legislation and to meet the move toward closing the automotive recycling loop.

Governmental incentives

AADCO’s ambitious recycling goal is not due to government mandate, nor has it received any government assistance other than recognition through the Environmental Choice program.

One North American jurisdiction that is encouraging vehicle recyclers to comply with environmental regulations is Florida. Vehicle recyclers that complete an industry program are certified by the state’s Department of Environmental Protection as Florida Green Yards. To achieve Green Yards designation a company must demonstrate environmental compliance with over 35 best management practices, which range from proper container labeling to development and implementation of a stormwater pollution prevention plan.

John Nicholson is a management consultant with Environmental Business Consultants based in Toronto, Ontario. E-mail John at john.nicholson@ebccanada.com

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The AADCO parts storage area holds hundreds of vehicles. In the adjacent area the car hulk is processed, and all fluids collected is separately stored in secure storage tanks.