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Sunday, June 29, 2014

Autosaurus Rex: Car Death in Japan (revised)

Iwao Corp: After the last auction

Thanks to Prof. Shioji of Kyoto University for arranging this tour in conjunction with the 22nd GERPISA Conference, June 2014

Car's don't last forever. Auctions provide one intermediate step, helping set a market in used car prices and facilitating the reselling from the original owner. But what happens after that? One place is the Mogitori Center of Iwao Corporation [リサイクルセンター有限会社イワオ] in Yawata City, Kyoto.

Now as noted earlier this June in the post on auctions, the average life of cars was at one time extremely short, driven by the escalating costs of vehicle inspections, which included mandates for replacing items that might fail with age, at least when the system was set up in the 1950s. Until 1995 inspections were annual from the 10th year, and since they were costly (US$1,000 at a dealer, including biannual vehicle taxes), the result was that few cars were kept longer than 10 years. Indeed, through 1997 the average life of a passenger car was stable at 9¼ years. Thereafter it rose steadily to hit 10 years in 2000, 11 years in 2005 and 12 years in 2010. (The chart in the post on auctions gives a stable 4.7 year average age through 1995, then rising monotonically to 8.1 years in 2013. I do not know the source of the difference – given the context I think it is age at auction, but the underlying source does not make that clear - literally, in that the relevant footnote is too blurred to read.)

Still, cars don't live forever. Accidents happen; depreciation is inexorable. So while about a third of cars sold at auction are exported, most eventually are scrapped. That's what Iwao does.

Disassembling a car takes less time that putting one together. The key is to extract value – and stay legal. Typically the tires and wheels have been removed before Iwao receives the car; sometimes the engine and other replacement parts have already benn removed. For what they do get, they pay by weight – trucks hauling in cars get weighed before and after unloading. Once that's done, the fluids must be removed. The gas tank gets emptied, and cut open to release residual vapors and prevent an explosion. The freon (or other refrigerant) gets recovered, to prevent the release of greenhouse gases. Then the airbags are set off – once the appropriate wire harness is exposed, all that needs to be done is to run a current through it, from a safe distance. The battery's removed, oil and other fluids drained. That all takes maybe 15 minutes, at least for an older car that only has a basic battery and a driver and a passenger side airbag. (Modern cars must be more challenging, with more airbags, multiple batteries, and plastic gas tanks. But for the time being most predate that era.)

Then the fun begins. A forklift is thrust through the windows, and the car moved to the initial disassembly location. A quick flick and it's on its side, so the axles and gas tank can be cut loose with a torch, any underbody wire harnesses cut, and bolts holding the engine removed. Another couple torch cuts and the engine flops out, and is moved to another station where the various appurtenances attached to the block are pulled off, leaving a large chunk of aluminum. The exhaust system (and particularly the catalytic converters) are then cut off and put in the relevant pile, and if they're still in the vehicle, the radiator and air conditioner condensor are removed. (Of course they'll also salvage parts from recent vintage vehicles, but so few remain on the road after year 10 that Iwao makes no particular effort to resell individual pieces of older vehicles.)

Meanwhile, the body is lifted over to face the jaws of death. This tyrannosaurus rex of the automotive world punches through the roof and rips it away. The monster might shake and throw a recalcitrant car around, playing with it until can rip enough roof off. Then in a couple gulps it dispatches the instrument panel, tossing those bites aside. It then punches through what's left to grab the main wire harness: copper's valuable. Once that's done it tosses it to one side for a quick scan for any other easy-to-remove wiring. Then it's to the crusher, and the cube stacked with others awaiting its turn in the shredder. [In Japanese it's a "nibbler" crane [ニブラ重機], though the bites it takes are pretty big! – here's a YouTube link, though it's not the same facility.]

What goes on in the shredder isn't visible, but the noise and dust make it clear that violence reigns. (I didn't ask whether it is a toothed roller or hard steel balls swinging on chains.) Not everything gets shredded sufficiently; a crane picks up big pieces and stacks them for reshredding. For the remainder, a magnetic separator pulls out the steel; a "cyclone" uses air to separate out lighter components, such as the fabric and foam in the seats, carpets and headliner, that then gets compressed into burnable chunks that can be sold as an alternative to coal. Two workers in full suits and breathing units pick out rubber tubing in an enclosed shed through which what's left. Of course that's a function of the resale price of various types of scrap. At present about 20% remains as "shredder dust" headed for a landfill; potentially that could be reduced, if Iwao can find a market for additional types of material.

Back to cars as durable goods. For a given rate of depreciation, the higher the value of recycled components, the sooner a car will get scrapped, by Iwao Corp or one of 3,000 other small-scale operations. However, the advent of auto auctions facilitated more used cars being exported, driving down the number scrapped domestically. At it's peak Iwao handled 150,000 vehicles a year; it's the largest and most vertically integrated firm in the industry. But now it's down to about 70,000 per year, or 50% of peak, though most it buys already compacted; only about 10 per day start as complete vehicles. Still, the scrapping facility we visited generates about US$5 million a year in revenue, with 10 workers, 2 bookkeepers, 2 truck drivers and Mr. Iwao.

In Europe environmentalists have seen that OEMs face mandates that cars be made capable of recycling. Despite high prices for steel scrap, copper and aluminum the labor involved means that only some can actually be profitably culled. Of course if the workers know the layout and composition of each and every model they face in their dirty, noisy shops – but these are not the sort of jobs to attract those with analytic skills and an attention to detail. Watching this operation suggests less may become recycled, because the mix of materials – aluminum bodies, magnesium liftgates, and a wide array of plastics – will be harder to sort through.

Mike Smitka