September/October 1994
From Parts Dealer to Dismantler to Processor
Here’s how one New Jersey firm has expanded through the years to become a used car parts dealer, auto dismantler, used car distributor, and scrap recycler all in one.
By Eileen Zagone
Eileen Zagone is editorial associate for Scrap Processing and Recycling.
When Ray Muir Sr. opened Riverside Auto Parts in 1939 as an automotive repair and parts facility, he probably never imagined that the business would eventually become a ferrous and nonferrous scrap processing operation.
The transformation began shortly after Muir died in 1961 and his then-19-year-old son, Ray Jr., took over management of the company. That year, the junior Muir moved Riverside Auto Parts to its present location on 15 acres in Rahway, N.J. (near New York City), and, seeing an opportunity to expand the business through diversification, soon began dismantling and rebuilding cars in addition to doing auto body work and parts sales. Not surprisingly, the new operation generated plenty of scrap-particularly car hulks, radiators, batteries, and a variety of nonferrous metals-which Riverside sold to local processors for recycling. As the dismantling part of the business grew, however, the company found itself with more scrap hulks to sell than its regular buyers could accommodate, so, in 197 1, the company made its initial foray into scrap processing with the purchase of a car crusher and loader.
"I thought I may as well try processing myself," Muir recalls. "And the whole thing just snowballed from there. I just kept buying more and more, and then more and more people kept coming to me to sell different things."
Initially, Riverside's scrap operations mainly processed ferrous material, but Muir was intrigued by the nonferrous business, and, when eventually offered the opportunity to purchase nonferrous scrap, just couldn't say no. As a result, reports Bob Terefenko, Riverside's marketing manager, today about 75 percent of the 3 million to 4 million pounds of scrap the company processes every month is nonferrous.
Making It Work
One obvious key to Riverside's ability to shift its focus to scrap processing has been its steady acquisition of equipment over the years, which has built a roster that currently includes Akerman, Lorain, and Manitowoc cranes; three mobile shears; and a Mosley two-ram baler. The purchase of more and better scrap processing equipment isn't just a reflection of the company's shift from auto dismantling and parts sales to scrap processing, however. It's also a sign of Ray's self-confessed love of new equipment technology and his reluctance to deny himself and Riverside the latest technical gadgetry that could help the business. "If I see a new piece of equipment that I think can help the business profit, I'll buy it in a New York minute," he says.
That philosophy could translate to an expansion of Riverside's operations in the future, as the company is considering the purchase of an auto shredder, Terefenko says, though emphasizing that even the discussion of this is in the preliminary stages. The company is also considering handling a broader variety of alloys, which might necessitate new machinery, but this too is simply a tentative concept.
In any case, whether it's equipment purchases or other investments, Muir clearly believes in spending money to make money. In fact, he says his company's success in all of its operations relies on reinvestment as well as hard work. As he explains, "You put your nose to the grindstone and put the profits back into the business."
Another key to Riverside's success thus far lies in its attention to customer service, says Terefenko. Specifically, he explains, he sees his goal in dealing with customers as trying to help them--and Riverside--make money. The reason is simple: There are a lot of other scrap processors in the company's buying region, and Riverside has found that to win and keep customers in this competitive setting it must provide superior service, a heading that encompasses everything from offering a fair price for scrap to building personal relationships with customers.
A One-Stop Shop
Riverside's customer service strategy also includes an ability to serve as a one-stop shop for old automobile services. It's a designation the company can claim thanks to its unusual mix of business operations: While it now focuses its attentions on scrap processing, Riverside also continues to provide a medley of auto-related services such as auto dismantling, used parts sales, and even used car sales. (Ray's brother and co-owner of the company, Paul, manages the latter two operations.)
There is a symbiotic relationship among these various facets of Riverside, Muir believes, pointing to some of the advantages to being involved in these complementary businesses. For instance, while many processors are reluctant or refuse to accept scrap cars containing fluids-such as gasoline, oil, and air conditioning coolants-because of the environmental regulations that govern the handling of such materials, Riverside, because of its dismantling and parts businesses, has the equipment and experience to safely and properly remove auto fluids and offers this service to its scrap customers. And Muir plans to continue providing this, and similar, capabilities to his customers. "I don't want to stop taking cars with batteries, freon, and gas tanks, because if everyone stopped taking them, people would be more likely to get rid of these items themselves-by dumping them in the gutter or in the trash-and the environmental problems would be worse," he explains. As testament to the call for this service, Terefenko notes that at least three-fourths of the automobiles the firm purchases are whole and intact, not hulks.
Besides the customer service benefits it provides, being a scrap processor as well as an auto dismantler, used parts distributor, and used car dealer also enables Riverside to take advantage of its buying power. As Muir puts it, "every parts place has scrap-it just depends on what you decide to do with it and how aggressive you want to be. We still buy a lot of cars and parts, and get scrap for free."
It's Not for Everyone, But It Is for Riverside
Would Muir recommend that other auto dismantlers and parts dealers get into the scrap processing industry?
Probably not. While Riverside has clearly succeeded in its transition from dismantler to processor, Muir is the first to admit that times have changed since his company began processing scrap and it likely wouldn't be able to attain the niche position it has if it embarked on that course today.
The capital-intensive nature of scrap processing is a huge obstacle to getting into the business, he believes, stating that it would be "tough" if not impossible to start a scrap processing operation now "because the cost is so prohibitive." This, combined with ever-increasing competition, ever-changing governmental regulations, and the hard work and business savvy needed to turn a profit, make for an awesome challenge to any industry newcomers, he says.
Terefenko, who has been with Riverside since the early 1970s, also can attest to recent evolution in scrap processing that makes it a difficult business for the uninitiated. For one thing, he notes, he must pay a lot more attention now to the markets--both domestic and foreign--than in the past. "Things are a lot more complicated now than they used to be-and you have to understand a lot of different things to make your business work successfully," he explains.
Yet, however difficult it may be to start and run a successful scrap business these days, Muir doesn't have any regrets about getting into processing. In fact, he describes it as a "fun" experience. "The best part was building the business and knowing we built it from nothing," he says.
There's also the satisfaction of proving the skeptics wrong. "A lot of people thought I was crazy to try to get into a business I knew nothing about," Muir says, adding wryly, "I enjoyed the challenge."
Who Really Bought the Brooklyn Bridge?
No doubt you’ve heard the story about the shrewd salesman who attempted to sell the Brooklyn Bridge to an unsuspecting passerby. But have you ever heard the story about the scrap processor that actually did buy the Brooklyn Bridge? It’s a new twist on an old story and part of Riverside’s history.
“We were looking for some suitable materials to use for the flooring of our scrap bale holding facility at about the same time the Port Authority of New York was dismantling the old Brooklyn Bridge,” says Terefenko. “We purchased quite a bit of the steel grating used on the approaches to the bridge and used it for the flooring in our outdoor bale storage area.”
The material worked so well, he says, that Riverside purchased more grating (which the port authority removed from the bridge in 20-by-25-foot sections) for use in its ferrous processing area.
Riverside plans to replace the grating with concrete pads sometime in the near future, but in the meantime, it can show off who really did buy the Brooklyn Bridge.•
Here’s how one New Jersey firm has expanded through the years to become a used car parts dealer, auto dismantler, used car distributor, and scrap recycler all in one.