Materials: Talking Trash

Ford Motor Co. has been trash talking.

No, not the brazen gesturing and vocal tormenting that usually occurs between athletes during a sporting event. Literally, Ford has been talking, or maybe whispering is the right word, about trash since it announced its entry into the parts recycling business in April.

It seemed like an oddball venture then, even with Ford's stated goal of being the most environmentally friendly automaker in the industry. But Ford's seriousness is evident by the 26 dismantling yards it has purchased in nine states since last March.

Unofficially called Greenleaf Acquisitions, the effort went international in December when it purchased one of Canada's leading auto recyclers, Plazek Auto Recyclers Ltd.

There are more foreign ventures coming, too, Ford indicates, in Mexico, Europe and elsewhere. The automaker isn't saying how many recycling outfits it wants to own. "I can just say we want to be in all the top markets," says David Montgomery, who was hired by Ford last August to run the Greenleaf operations.

It also may eventually build rather than buy salvage yards. "I would say that's down the road, though," explains Mr. Montgomery.

By owning and managing the salvage yards, Ford believes it can dramatically reduce the amount of scrap that goes into landfills.

Its goal is to recycle or reuse at least 90% of every vehicle, compared to the current 75% recyclability. Greenleaf will accomplish that by having its recycling sites operate on a standardized set of guidelines for environmental compliance, parts quality and other factors.

Right now, the industry is fragmented with some 5,500 independent salvage yard owners in just the U.S. A more efficient recycling system would be especially helpful to Ford in Europe where the automaker is faced with increasingly stringent regulations. In 2002, the Europe Union will begin mandating that automakers take care of their vehicles from cradle to grave.

Greenleaf also likely would reduce purchasing expenses. Recently increasing pricing pressure on many materials, notably aluminum and plastic, make it more difficult for automakers to continue their seemingly relentless cost cutting drive. Moreover, Greenleaf could be a boon to materials that are easier to recycle than others. So-called alternative materials that currently are more expensive than steel could become more reasonable options in vehicle applications.

In addition to saving money, Ford believes Greenleaf can post $1 billion in annual revenue in the future.

But at whose expense? Ford faces the unenviable task of convincing the U.S. public it is good that another major corporation is buying up mom-and-pop businesses to string together a national chain of outlets. Not that junkyards are as endearing as your local drugstore or pizzeria, but it is another symbol of the decline of the American dream.

At the Automotive Recyclers Assn.'s annual meeting in November in Anaheim, CA, Mr. Montgomery at times faced sharp criticism from auto recyclers. And ARA leaders greeted Ford's entrance into recycling with concern, though the relationship now has improved.

"I view (Greenleaf) as not a threat at all (to salvage yard owners). I view it as raising all boats in the harbor," Mr. Montgomery tells WAW.

Then why the seemingly stealth buying mode from a company known for its strong public relations? Plus some salvage yard owners who have entered the Ford fold have been barred from talking to the press by the automaker. "I think everybody's just been real busy," reasons Mr. Montgomery. "For a certain amount of time while (Ford) was just getting into the business, there wasn't a whole lot to report quite frankly."

There will be, however. Mr. Montgomery says Ford's recycling venture soon will be given an official name. It likely will start with a single title for Ford's global salvage yard operations.

"As we start rolling it out, that could change," Mr. Montgomery reveals.