Area Auto Wreckers Begin to Feel Squeezed

When cars and trucks meet an untimely end in Southern California, chances are pretty good that they’ll wind up here.

This community is home to one of the country’s largest concentrations of auto dismantling yards--about 100 of the San Fernando Valley’s 160 auto wrecking yards and related businesses, according to the Valley Auto Dismantlers and Recyclers Assn.

Sun Valley became a dismantling capital years ago because land was plentiful, zoning laws allowed it and the auto wrecking business was lucrative, says Larry Miller, membership chairman for the Valley recyclers and owner of World Auto Parts & Dismantling in Glendale.

But Miller and other operators say the industry has been squeezed by factors that make their yards less lucrative and more difficult to operate than they were 10 years ago.

“Fifteen or 20 years ago, this business was very profitable, but it’s changed a lot in the last 10 years,” said Roger Gerzner, owner of Bell’s Auto Parts & Wrecking, one of scores of dismantling yards and related businesses along San Fernando Road in Sun Valley.

Gerzner, a Swiss immigrant who has operated his yard for 22 years, said the forces making life tougher for dismantlers include competition from foreign companies manufacturing replacement parts, the higher prices commanded by salvage vehicles today, the cost of complying with environmental regulations and rising land costs that in turn have driven up rents for yard operators.

In addition, companies have sprung up that specialize in rebuilding alternators and other parts that they can sell more cheaply than dismantlers can.

Computers Change Parts Business

But the number of yards in Sun Valley has continued to rise despite these factors, according to Miller, who said many dismantlers have responded to rising rents and increased competition by operating smaller, more efficient yards.

In fact, Sun Valley today has about 25 more yards than it did 10 years ago, Miller said. Over that time, the number of dismantlers has fallen about 10% statewide over and now totals about 1,550, according to the Sacramento-based California Auto Dismantlers Assn.

One of the keys to operating more efficiently is computers.

At Gerzner’s yard, for example, each part is tagged with an inventory number that’s entered into his computer system. When a part is sold, it’s deleted from the computerized inventory.

“When we get a request, the computer lets us know right away if we have a part,” Gerzner said.

Speed is of the essence, Gerzner explained, because the body shops and repair garages that account for most of his business usually want parts right away, and because other dealers are also trying to be first to fill the requests.

Gerzner’s business contrasts with that of U-Pick-Parts in Sun Valley, which depends on walk-in customers for between 60% and 70% of its business, according to Jerry Martinez, special projects manager for Aadlen Bros. Auto Wrecking, owners of U-Pick.

Martinez said that while land prices have indeed risen and many small shops operate in the area, U-Pick-Parts has 26.5 acres that Aadlen Bros. bought in 1962.

U-Pick doesn’t have computerized inventory, and its customers prefer to take the parts off the cars themselves, he said. U-Pick hauls in about 600 vehicles each month to replace about 600 that it scraps monthly.

While the customers pick their parts in person at U-Pick, most of the parts orders at Gerzner’s yard come in on local, statewide and national computer networks that provide a steady stream of requests all day long, as well as several telephone hotlines that bark out requests over loudspeakers.

Used parts are in demand because they typically cost half the price of new parts, Gerzner said. Dealers say their used parts are better than newly manufactured replacement parts because the used parts are original equipment.

The dismantlers have gotten some support for that argument recently from consumer groups claiming aftermarket parts are inferior, noted Ginny Whelan, president of the national Auto Recyclers Assn.

“A lot of the insurance companies have stopped using the aftermarket parts for repairs,” she said.

Even when their parts are in demand, however, used-parts dealers don’t generally make as much profit as they once did, according to Miller of the Valley recyclers group.

“There was a time when I could buy a car for salvage and then sell the parts for four times what I paid. Today, I’m lucky if I can get twice what I paid,” he said.

Miller said, however, that dealers who market their parts over the Internet might potentially make up a significant portion of the revenue they’ve lost, including business they’ve lost to aftermarket parts, rebuilders and others.

Gerzner said computers and the Internet are clearly some of the biggest changes in the used-parts industry, which has come a long way from the days when many, if not most, dismantlers operated junkyards, a term that still sticks.

Some of the old-style junkyards still exist, he said, but anyone who wants to make it in the business today needs to concentrate on the parts of the car that can be resold.

“There’s no money in junk,” Gerzner said. Once he’s dismantled a car and kept the parts that can be resold, the parts that can’t be recycled get packed off to a scrap yard, he said.

Today’s dismantlers eschew labels like “wrecking” and ‘dismantling” in favor of “recycling.” The 500-member California Auto Dismantlers Assn. ‘think of ourselves as America’s original recyclers,” said Martha Bucknell, the Sacramento-based association’s executive director.

Dismantlers Seek New Image

The industry is also fighting the junkyard image and trying to raise its standards through efforts like the national Auto Recyclers Assn.’s Certified Auto Recycler program, said association president Whelan.

Bucknell said many dismantlers are earning the “recycler” mantle by complying with stringent environmental rules. She said those rules have made it harder for dismantlers who operate legally and comply with environmental regulations because they have to compete with shops that don’t follow the rules.

Dismantlers, who are licensed by the Department of Motor Vehicles, are also required to obtain a $250 yearly storm water permit from the California Water Quality Control Board, said Robert Miller, a spokesman for the board.

Dealers are also required to file storm water pollution prevention plans under state and federal clean water regulations, according to Bucknell.

Bucknell said regulators don’t have enough funding to inspect all yards frequently, so the conscientious yards who pay to develop pollution prevention plans and pay fees for storm water testing incur substantially more expenses than their scofflaw competitors. Those who play by the rules also incur greater expenses for collecting and disposing of oil, Freon, antifreeze, brake fluid and transmission fluid, she noted.

“The legal, complying dismantler is at a distinct disadvantage to the people who are not complying,” Bucknell said.

Despite the changes transforming the industry, selling used parts is still profitable, according to Gerzner and Miller. They said demand remains strong for certain used parts, like front ends of late-model cars, that can’t usually be found elsewhere.

And despite the headaches associated with the business, auto dismantlers will likely remain in Sun Valley as long as rents are affordable, said Herb Lieberman, a vice president of the national Auto Recyclers Assn. and operator of Lakenor LKQ Auto & Truck Salvage in Santa Fe Springs.

Lieberman said dismantlers tend to congregate where they’re permitted by zoning and where rents remain affordable. He said previous concentrations of dismantling yards were squeezed out of other parts of Los Angeles County by rising land prices through the years--one reason that many of the yards moved to Sun Valley.