Expert By Chrysten Newton, PMR Game of Cores A
s a processor and toll-refiner, we are asked what the difference is between
selling per-unit as opposed to assay. The answer is quite simple; when you are paid on assay, you are receiving the true value of your converters with no guess work. When auto recyclers are looking to make the switch to toll refining, they sometimes mis- takenly base their converter selling decisions on unreliable information provided by one or multiple core buyers, who undoubtedly have the most to lose from the potential switch. This often results in the ultimate “Game of Cores.” Frequently, we speak to automotive recy-
clers, who are experts in their field, but just don’t have the same expertise when it comes to converters. We are here to help our industry partners, by sharing our collec- tive experience, and by exposing the games played -- in order to keep you up to speed.
Plot 1: Wish Upon a Star Often times, core buyers will visit a yard
with a “star” price list including some of the highest value’s recyclers have seen for spe- cific converter serial numbers. These buyers promise to purchase all of your converters by code, but when all is said and done, only a small percentage end up being paid by number. The rest are paid on the core buyer’s personal grading scheme/system – which more often than not, ends up being a lot lower than what your material is truly worth. Most core buyers have an “all-star” list, with codes they know recyclers are familiar with; they use this to get their foot in your door. So, although they may overpay on a few
“star” units, the $50-80 profit they are making on the majority of the rest of your material (that is not identifiable by code), more than compensates. In reality, those units that fall outside of your knowledge, actually end up providing your core buyer with a “star” profit right under your nose!
20 // May-June 2021
As a recycler, it’s important to start asking yourself: am I constantly wishing on a star, or am I shooting for the stars?
Plot 2: Who’s Counting?
Another game core buyers play is the counting game. Basically, an “across-the- board” price is offered – but, when you get into the nitty gritty, many recyclers will often make the mistake of getting excited with a high dollar figure per unit and not investigate further to take into account all of the aftermarkets, DPF or foil units being counted as a single piece. For example, a lot of 150 mixed pieces including 30 aftermarkets, becomes 120 units with 1 aftermarket. The discrepancy in numbers not only affects your bottom line and your pocket, but it also inflates the perceived price versus true real value. Additionally, core buyers utilizing “across- the-board pricing”, will tend to allow only a maximum percentage of Aftermarkets and Foil Units in any given purchased load -- as it is impossible to turn a $30 converter into a $300 converter.
Plot 3: Hand in the Cookie Jar Using a consultative approach with our suppliers, we typically start by asking for more details around converter manage- ment and selling methods; shockingly, our detail oriented inquires have actually helped our suppliers uncover internal staff (responsible for converters), with their hand in the cookie jar. Essentially, what happens, is the internal manager gets a cut per converter in return for selling to that specific buyer. Typically, this is why the employees that have a hand in the jar don’t respond well to our questions and discourage change.
When it comes to these valuable cores, we cannot stress the importance of putting someone in charge that is trustworthy, prin- cipled and can be held accountable -- as their
actions will determine whether converters generate the proper revenue stream for your business.
Plot 4: Needle in a Haystack This plot relates to larger businesses with multiple locations. It is still common for a multi-location recycler to consolidate their material, to meet most toll-refining’s min- imum lot requirements. While this is the best method for return, combining converters can hide internal issues. A great example of this is a supplier of ours who switched to multi-facility results; by using our small lot-assay technology and proper material separation reporting, he was able to uncover a facility manager switching out 70% of the location’s mixed converter load with aftermarkets.
When converters are consolidated without proper internal controls, averages will hide this type of theft. Once the business was able to maintain inventory control, material sepa- ration and assay by location, the owner had a clear overview of his converter yield and can spot irregularities much faster. Do you have a needle in your haystack, or is your business all bundled up securely? To summarize, in the words of George
R.R. Martin “when you play the game of thrones, you win, or you die. There is no middle ground.” I would argue, the same rings true when you decide to play the “Game of Cores.” When you decide to play the game, there is always a winner and a loser. Make sure you are on the winning team by working with a partner that can help you accurately inventory your units, provide payment based on true value, and monitor the consistency of your results.
Chrysten Newton has been on the PMR team for over 6 years, where she has amassed extensive knowledge and expertise within the
converter recycling industry. Having started her career with a university background in business and finance, Chrysten utilized her skillset to help strengthen core business functions; she then completed graduate level studies in marketing, with the goal of strengthening brand awareness. Primarily focusing on building and strengthening all business relationships and endeavors, her attention to detail and ability to recognize needs, enables her to best service PMR’s suppliers.
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