Calculated outcome

As a sales manager for shredding systems integration company Wendt Corp., based in Buffalo, New York, I get questions about how to properly size an automobile shredder on virtually a daily basis.

In answering this question, it’s important to first bring an accurate industry perspective of just how many—and how many different sizes—of auto shredders are operating within North America currently.

Respected sources within the industry will tell you some 300-plus auto shredders currently are running. And of these 300 shredders, more than a dozen different sizes are in operation, ranging from those on the small side at 60x60 up to 130x115.

This means a prospective buyer is faced with a series of potentially confusing questions: What size of shredder should I buy? What do the numbers mean? What factors should I consider? How important is nonferrous recovery? Why have small shredders become more popular than big shredders? These are all relevant questions, and they have multipart answers.

In addition, there are two very different types of potential buyers—first-time owners and experienced shredder operators. Here, I have attempted to provide insight that will be helpful to both groups.

I also have chosen to focus only on traditional automobile shredders. Because they often are not designed to shred cars efficiently, can result in lower productivity and higher operating expenses and represent a small fraction of the market, nontraditional or mobile shredding systems are not included in this article.
 

Almost like buying a car

Remember buying your first car? You made a list of all the features or options that you wanted before ever setting foot on a dealer’s lot. Buying a shredder is somewhat similar to that process, so let’s review some of the most critical factors buyers must consider when contemplating the purchase of a shredder and start building your list.

What do the numbers mean? First things first: Auto shredder suppliers will frequently refer to shredders as a 60x60, 60x90, 80x104 or perhaps a 130x115, where the first number denotes the diameter of the shredder rotor in inches when the hammers are fully extended. The bigger the number, the larger the shredder will be and the greater its processing capacity. The second number defines the width of the shredder opening in inches. A 60x60 shredder is not wide enough to accept full car bodies, so they must be sheared prior to shredding.

What is your budget? Ask any potential buyer to name the most important buying decision or factor, and what they will most likely immediately answer, with a conditioned response that has taken years to develop, is: “Price!” When considering the size of shredder to purchase, a simple rule applies: As the shredder gets larger, so does the price tag. Therefore, one of the first entries on your list is the budget for your shredder.

What is the feedstock? While other factors also are important, perhaps the most critical factor is feedstock. You must have a clear understanding of how many “captive tons” of shreddable material are available, what type of material makes up those tons and where those tons are coming from. All buyers hope their businesses will grow over time, however they must know how much shreddable material they can count on month in and month out. What type of material makes up the available tons also is important. A mix of car bodies, light iron, breakage material and large household appliances, such as washing machines, dryers, stoves and refrigerators (collectively known as white goods), is a good place to start. Therefore, understanding the approximate percentages of car bodies and white goods will be helpful.

Your list should include how many tons you plan to shred each month and what type of material makes up those tons.

Where will you site the shredder? When buying an auto shredder, choosing an appropriate location is essential, as is understanding how much space is available for the shredder within the selected location. A small shredder will require the spatial equivalent of a football field, and a large shredder can require the equivalent of more than two fields. Needless to say, choosing a large shredder for a small space is less than ideal.

Other site-related factors that will affect sizing a shredder are whether the shredder will be placed inside an existing building or outside and the availability of electricity, which will determine what type of drive system can be used.

Drive systems are based on three types of power: AC, DC or diesel. Each offers advantages and disadvantages; however, it is important to understand that as the size of a shredder increases, the available power options decrease.

Make sure your list includes the availability of electricity and whether a building is involved.

What is the expected equipment utilization? The next factor to consider surrounds managing operating costs. Equipment utilization is the primary driver for reducing fixed costs. In simple terms, it is a measure of the actual revenue earned by equipment (assets) against the potential revenue it could have earned during a specific period. To properly size a shredder, you must decide how many hours you plan to run the mill every month and how many shifts will be used. As an example, let’s say you have 15,000 tons of shreddable material available every month. This falls within a range that could be processed by two different sized shredders. A 60x90 mill could handle the task but would require two shifts, whereas by moving up one size to an 80x104 mill, the material could be processed in a single shift. In this example, the fixed costs would be lower with the 60x90 shredder; however, because it would requires two shifts to process the specified amount of material, the variable costs would be higher.

By knowing how many hours you plan to operate each month, you can calculate which option is the better choice. Ensure your list includes how many hours per day and how many days per week you plan to run the shredder.

What is your nonferrous strategy? While it has nothing to do with the sizing of a shredder, nonferrous recovery is essential to the profitability and success of an operation. Because of rising costs, margins on the ferrous side of a shredding operation will continue to be compressed in the years ahead, which places an increased emphasis on nonferrous recovery opportunities.

You might have heard the old adage that failing to plan is planning to fail. When it comes to shredder projects, I failing to include nonferrous recovery equipment is planning to fail. The market value of aluminum, copper, brass, stainless steel, circuit boards and insulated copper wire is much greater per pound than that of shredded steel. Your list should include the cost of the equipment needed to provide a secondary revenue stream from nonferrous metals.
 

Making the decision

At this point, your list should contain the following items: a budgetary number, how many captive tons are available to shred, the material comprising those tons, the amount of available space, whether electricity is accessible, the shredder location, how many hours (and shifts) the shredder will operate each month and the cost of equipment to recover nonferrous metals. This information provides a good starting point to help determine what size shredder will be required.

After completing this exercise, many companies may find a small shredder, such as a 60x90, is an ideal choice. This represents a significant shift within the industry—especially within the last five years—begging the question: Why the change?

As a brief side note, my career in the scrap industry began in October 2005. At that time, the majority of shredder companies were promoting the “bigger is better—much better” concept. Shredders being marketed included 98-inch, 120-inch, 124-inch and even 130-inch, which were powered by as much as 10,000-horsepower AC motors and capable of processing 400-plus tons of material per hour. Companies created a hub-and-spoke model whereby multiple scrap yards surrounded a strategically located large shredder. Feedstock was plentiful, and truckload upon truckload of feedstock was shipped hundreds of miles every day. The rising costs of fuel and transportation have forced some of these companies to look for a new, more cost-effective business model, and many consider a smaller shredder to be at the center of the new model. However, these big companies represent a small portion of the overall market and have only had a modest impact on the popularity of smaller shredders.

In my role at Wendt, I specialize in assisting first-time buyers and I’ll estimate that we field 10 inquiries for 60x90 shredders for every one inquiry we receive for all other sized shredders combined. Nearly all are existing scrap yards that seem to be facing the same recurring challenges, and they typically believe a small shredder can become an integral part of their future.

The first of these factors is independence. Some potential buyers view a small shredder as a vehicle for providing direct control over their captive tons. This in turn allows them to maximize revenue from the tons they already handle and to improve their long-term stability.

A small shredder also offers scalability, or the ability to start small and grow in phases as needed. For the shredder, a company can start with a minimum amount of core equipment and then add items, such as an infeed conveyor, at a later time when business warrants it. Similarly, a nonferrous plant can begin with some simple sizing equipment, a single eddy-current separator and some manual labor. The revenue created from the recovered nonferrous metals can then be used to fund future growth of nonferrous recovery capabilities, such as the addition of sensor sorting equipment to recover insulated copper wire or stainless steel.

The last major factor is cost. Simply stated, the equipment and installation costs of a small shredder make it more affordable than ever before to become a shredder operator. Today, a buyer can purchase a complete, state-of-the-art 60x90 shredding plant and have it installed for roughly $4.1 million. The modular design that is now available from some suppliers has significantly reduced site development costs as well as the typical installation period, taking it from three or four months down to fewer than 35 days.

Based on the level of interest, current demand and primary factors driving buying decisions, we expect as many as 90 percent of the shredders sold during the next few years will be a 60x90 or equivalent. However, every opportunity is different, each buyer is unique and the challenges they face require personalized attention.

If you are thinking about buying an automobile shredder for your operation and need some assistance, assemble your list of information and contact a shredder manufacturer today.

The author is the Northeast regional sales manager for Wendt Corp., Buffalo, New York, and can be contacted via email at ridall@wendtcorp.com.