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Another company going under!

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  1. #1
    sjones99 started this thread.
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    Another company going under!

    Watertown scrap metal company files for protection from creditors



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    NJSouth's Avatar
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    Hmmmm... lots of holes in that story. What you put out can't be more than you take in. Scrap prices adjust for the market prices. Something not smelling right here.

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    Sounds like a lot of employees for a small company with only 4+/- locations.


    Jon.

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    EcoSafe's Avatar
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    there will be lots of reorganization over the next few months. hopefully some of you will be in a position to take advantage of them. It isn't over yet China this past two weeks has lost another few trillion of their fiat $ bubble.
    "anyone who thinks scrappin is easy money ain't doin it right!"

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    zaydeh's Avatar
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    Quote Originally Posted by NJSouth View Post
    Scrap prices adjust for the market prices. Something not smelling right here.
    ? what does that mean? Scrap prices adjust for market prices? Since January of 2014 price from shredder to buy from smaller yards has fallen by around 60 percent in my area. If the price of what you trade in goes down even if your spread (% profit ) stays the same you make less money. Take a look at the stock values of large scrap companies ....they haven't done so well lately.

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    Quote Originally Posted by zaydeh View Post
    ? what does that mean? Scrap prices adjust for market prices? Since January of 2014 price from shredder to buy from smaller yards has fallen by around 60 percent in my area. If the price of what you trade in goes down even if your spread (% profit ) stays the same you make less money. Take a look at the stock values of large scrap companies ....they haven't done so well lately.
    every stage of the business's prices should go down in lockstep, so the margin will remain the same for everyone. if you maintain your volume, you will make exactly the same. any scrap yard having problems because of lower prices, are gambling and not following good industry practices. conversely if volume goes down that causes scrap yards to have problems, especially shredders, because they cost so **** much, and need metal to run to have any chance of paying for themselves.

    its the people that are "HOLDING MY MATERIAL WAITING FOR BETTER PRICES" that are killing scrap yards


    there are lots of other things hurting yards, but lower prices should be a small part of it... I do feel sorry for people that made a major equipment purchase a year ago, depending on growth that has evaporated

    V/r HT1

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  9. #7
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    Some of us have to hold onto our materials. If I hauled shred in to the yard, I would literally be losing money. Shred is $30/Ton, and I'm 50 miles from the yard. In smaller, rural areas, it just flat out won't pan out to haul shred right now.
    More than Scrap Value Shipment Tips: http://www.scrapmetalforum.com/scrap...tml#post242349

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    Hmmm let me think...january 2014 getting 320 for shred & paying peddlers 220 a ton so spread 100 per ton or 31%. July 2015 getting 115 for shred and paying 44 a ton spread 71 per ton or 61%. lets look at those numbers...profit january 2014...15 tons in a rolloff gross profit $1500 .........profit july 2015 ......15 tons in a roll off... gross profit $1065 with same loading and hauling costs as january 2014.
    Now lets talk about the peddler...January 2014 500 pounds curb cruising gross profit $50
    july 2015 500 pounds curb cruising gross profit $10 does not pay so good anymore... he gets a day job. Its not holding material it is a lack of incentive to collect it.
    Back to the dealer even if trade did not drop by 1 pound, profit per load has dropped $435...29% reduction in return to dealer for handling same material.

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    you got a 31% gross margin on shred???

    what was your shipping cost 10%???


    Not pointing at anyone! been saying it all along Scrap was in a huge bubble. the bubble is burst, people that overextended themselves are suffering, and yes some of them are big companies, while the fault lays in some part with the small upstarts. this is cyclical and big companies with a long history should have planned and been leveraged properly... Some of the better upstarts will ride this quite well because they are lean and mean, but fly by nights will disappear or roll back into their core business.

    V/r HT1


    P.S. My two cents work, get out of the scrap business and move into hauling. scrap yards biggest nightmare is trucking, and the trucking companies seem to do fine all the time

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    NewZealands metal prices have dropped a little from a year ago.
    About 10% for Copper. 20-30% for Ali (that hurt a bit) about 50% for Steel.

    Our NZ$ went from over US$0.80 cents down to US$0.65 cents. Which has kept our metal prices higher than elsewhere.
    I expect our government is manipulating our $ to suit the bankers and our Dairy (milk) farmers pay off their loans, since the worlds milk price has dropped a bit.


    Since I don't scrap steel it has not affected me much.

    Google 'scrapmetalpricesnz' to find our scrap prices.

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    Cleansteel years ago had just acquired a 5 million dollar loan before locking the gates filing for bankruptcy. I was holding paper valued just under $4,000.00 for services rendered the company eventually paid out on the paper.

    Cleansteel was a sweet set up with river frontage and a dock for barge loading, when a barge was half loaded with flattened scrap cars a barge move was required to fill the remainder of the deck. I sometimes ran the loader on evening shift on contract and had to assist with a barge move.

    They loaded the first half of the barge deck, to move the barge 3 inch nylon ropes securing the barge were simultaneously removed from the pylons on command as the river current eventually started to move the barge down river all hands were given the command to secure their lines.

    A 3 inch nylon line once secured would s teach from the momentum gained then shrink to a meagre 2 inches then finally return to its initial 3 inch diameter once the barge relaxed into a neutral motion.

    Awesome sight to witness a 3 inch nylon rope stretch like an elastic band, scary to thinking what would happen should the line snap and recoil.

    The JD loader could comfortably pick up two cars for transport to the staging area for barge loading but I could carry three.

    With three cars the loader would lift the rear wheels off the ground then by initiating a forward gear with throttle this would bring the rear back with ground contact, by carrying the load low to the ground made transporting three cars a snap.

    This is why the company hired me under contract, I could move a lot of tonnage during my evening shift on the same amount of fuel the day shift used.

    Crazy scrapper.

    Oh by the way things are never what they appear to be the scripts are easily rewritten, the owner a year later had opened up a new yard in Victoria - Vancouver Island on the water front this yard had a shredder.

    About 15 years ago a car having a corpse in the trunk of a car going through the shredder was discovered, after that the loader operator would pry open all the trucks before feeding the car into the shredder.
    Last edited by alloy2; 08-01-2015 at 12:17 PM.

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    The problem with most companies during down times is they still have to service loans for equipment that make them unprofitable at the current rates. Larger companies can weather the storm and make more money buying up the small guys and their equipment and locations after bankruptcy. There isn't an industry in the last 30 years that has not seen major consolidation.

  16. #13
    DakotaRog's Avatar
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    Any steel plants still going in Youngstown?? You guys probably saw consolidation and increased foreign competition before most anyone else...

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    I am only getting rid of my steel to keep the yard I like going (and yes I can't store steel) Problem I see is the big fish are going to take over all the small fry. Then prices will be what they want, not what the market wants...

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    Quote Originally Posted by DakotaRog View Post
    Any steel plants still going in Youngstown?? You guys probably saw consolidation and increased foreign competition before most anyone else...
    That new pipe making plant is still around.

    Aluminum extruder plant is going to be built by Lordstown I think (Matalco?)

    Most of the big plants died out ages ago, and the smaller ones too more recently.

  20. #16
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    I had to wait a while to get checked in at my yard Saturday because the attendant was working at another station (they split into two different areas, one just shred and the other non-ferrous). Anyway, not a long wait, but a guy I recognized as an equipment operator apologized and said they had been forced to lay off some folks, so it stretched them a little thin. There were only 3 people that I saw on site as employees. They've been around long enough I'm sure they can weather it, but still hate to see folks laid off.

  21. #17
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    The bubble has certainly popped. Goldman Sachs is lowering Copper Predictions by 44% through 2018 (don't ask me what their predictions were I have yet to read in that deeply yet) and similar fall-offs for steel. Aluminum supply is far too high for demand and where there was once high premiums for on-spot-delivery orders (i.e. pay more to skip the line) have drastically fallen as well. Couple this with multiple new higher efficiency smelting plants that can operate (mainly China) off smaller margins and the need for plants in general to keep producing, lest they close their doors, is a very nasty recipe for even lower prices.


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