Scrap business turns to junk
On a cold, wet morning at Atlas Iron and Metal yard south of downtown, scrap peddler Charlie Anderson was not happy about the cash he was handed in exchange for a truckload of junk.
“Oh man, it took a week to collect this stuff,” Anderson, 75, groused to his associate, Sunny Miles, also 75. “All we get for it is $17. After $10 for gas, that leaves us with $3.50 each.”
Atlas owner Gary Weisenberg sympathized with his customers. But Atlas Iron and Metal -- like all the yards of Alameda Street, a grimy swath that only months ago was at the top of the scrap yard industry heap -- has fallen on hard times.
“Demand for scrap metal plunged, prices dropped and business is lousy,” Weisenberg said as he stood on a dock where peddlers were unloading recyclables scavenged from streets and alleys throughout Southern California.
Scrap peddlers behind the wheels of an endless parade of trucks unloading metal discards -- bicycles, refrigerators, brake shoes, radiators and exercise machines -- were earning nearly $500 per ton last summer.
China’s hunger for metals had fueled an economic boom not seen in the rough-edged area since World War II. Scrap-yard owners treated themselves to new cranes, forklifts and shredders that Weisenberg described as “the fruit of the good times.”
Some scrappers bought all the metals they could, believing that prices would continue to rise.
Likewise, peddlers and yard workers, most of them Latino immigrants and African Americans from surrounding neighborhoods, prospered and moved their families into bigger apartments.
But the bottom fell out in October, when foreign markets suddenly dried up and the price of scrap iron fell dramatically to about $40 a ton. Even copper, which has been a hot commodity for thieves, has sunk from $3.49 per pound in July to $1.33 per pound. Stainless steel has dropped from $1.18 per pound to 35 cents.
Compounding trouble among the dozens of fortress-like scrap yards -- surrounded by corrugated metal walls rimmed with razor wire -- demand for raw material in the United States had already plummeted because of the depressed housing and automobile industries.
To be sure, scrap metal has always been a volatile business. But “what’s going now is unusual,” said Bob Garino, director of commodities for the Institute of Scrap Recycling Industries. “We’ve never seen market prices go so high and fall so fast.”
Garino, whose association serves producers, brokers and consumers of recyclables, said: “It’s almost as if there was a buyers’ strike all along the $70-billion scrap metal market chain.”
Now, operators are laying off workers or slashing their hours by as much as 50%.
One yard, Central Metal, was stuck with 30-foot-high mounds of scrap it bought when prices were high -- an unusual sight for a region that has been an important supplier of exported scrap.
Also hard hit are peddlers, who worry about being able to provide for their families.
Business at local doughnut shops around the Alameda yards is off 20%. Elias Aramouni, co-owner of A & N Liquor, said the paychecks “we’ve been cashing lately are a lot smaller, so these guys are not buying as much on their way out of the store.”
Then there was Airgas, an Alameda Street supplier of liquid oxygen and propane gas that earned about $30,000 a year from surplus brass valves sold to local scrap metal yards. “This year, they told us to take them to the dump because they don’t want them,” said Scott Farrar, operations manager at Airgas.
“Business is down, down, down; I’m working very hard for very little money in return,” Salvadore Gallo, 71, said as he waited on the Atlas dock to get paid for scrap plucked out of dumpsters in Costa Mesa and Westminster.
“I’ve got two small boys, daughter in high school, and an apartment that costs me $1,200 a month,” he added. “If things don’t get better soon, we’ll have to move into a smaller place.”
A few blocks down the street, peddler Gladys Boch, a 39-year-old mother of four, backed her battered blue Toyota mini pickup to the edge of a mound of glistening discards at the Alameda Metal Recycling yard, where a sign at the entrance beckoned in Spanish, “Tenemos los mejores precios,” “We have the best prices.”
As one of her children watched from the cab, Boch, a diminutive woman with shoulder-length brown hair and an easy smile, got out and climbed into the bed of the truck.
She pulled on a pair of heavy work gloves and began pushing off items she said she had collected “street by street since 4 a.m.” -- pipes, bicycles, chairs, curtain rods, steel shelves, a refrigerator, a stove, an artificial Christmas tree and a red fire extinguisher.
Wiping sweat from her brow, Boch complained that scrap was getting harder to find because in the weak economy, people were holding on to potential recyclables longer than they used to. In addition, she added, “The competition is terrible out there.”
“I used to be a photographer; I took photos of weddings and parties and such,” said Boch, who expected to get about $25 for the material. “I wasn’t getting enough photography jobs to pay the bills, so I turned to this.”
At his Sun-Lite Salvage business, Jay Lite said it is only a matter of time before things improve.
In the meantime, the type of discards arriving in his yard continue to reflect the hardest hit sectors of the nation’s economy.
“Take a look at this,” he said, pointing to a corner of the yard dominated by stacks of crates containing tens of thousands of new steel brake shoes and brass-plated steel door hinges.
“They couldn’t sell them, or customers canceled orders,” he said.
“The good news is that demand for steel recently picked up a bit overseas,” he said. “So this stuff will be heading back to China where it will be melted and made into something else.”