In my regular line of work I deal with lots of used machinery. I'm seeing more iron cut up and sent off shore than I ever care to and I'm wondering why this is so. The ore is mined in this country, manufactured into iron and steel, engineered and manufactured into all kinds of equipment. It works multiple numbers of years and at the end of that machine's useful life gets cut up and sent to China, South Korea or India??? Equipment dealers yards are filling up with used iron that really has no place to go. Labor and parts are too expensive to allow rebuilding and environmental law will sooner or later legislate non regulated engines out of existence. It seems to me we are squandering our resources. As far as I've seen, Asia is resource poor and has very little iron ore. They are manufacturing huge amounts of consumer goods and selling them back to us in non-recyclable forms. How many computers can you make from a D8 size dozer? We used to make jokes about our tin cans being made into consumer goods in Japan. It's not funny when they make our heavy iron into walkmans, televisions and fuel efficient cars. So can someone explain why the manufacturers in this country can't find the right economics to take back their old products for reprocessing? Why is it cheaper to pay for new steel than it is for old steel? How is it that the manufacturers continue to push new equipment out without ever providing a solution for the old? To me it is logical to think that new machines won't sell especially now if there is no way to take the old ones out of the production pool. I have to think that iron ore is a finite resource and probably more so than oil. I don't understand why we are not leveraging our resources as well as some other nations are their oil. Any other thoughts?
I was trying to figure this out myself. LOTS of iron for sale here, yet what I don't understand to no end is the amount of equipment importing that goes on. Take Darlingson's International right off 522 in Woodinville, they have more excavators on their lot for sale than ever before. I'm sure this is due to the lack of sales right now, but those machines are coming straight out of Japan. Wouldn't they just keep the iron there if they needed it so badly? Some things I suppose I just won't understand, I guess that's why I move dirt. :usa
When I worked for Safeway we sent our cardboard off to China rather than recycle it in the US. Reason? They paid more and covered the shipping costs, we just put it in the container.
This is partly simple shipping economics. Lets be honest, when ships make the trip from China, getting here loading is no big deal. But shipping things back is an issue. We only have so many things to ship back. Rather than send just a few things back on a ship, they might as well get it as full as they can. Weather its scrap metal, that will be destined to return to our shores in the form of something like a walkman etc. Or a big thing in the "far east" is pulp. Weather its whole logs, or cardboard/paper to recycle. They always seem to be demanding more. As for equipment. Sometimes it just reaches the end of its use full life. Other times, it has lots of life left in it. A common one I have been seeing is older Cat equipment. Many middle eastern countries are buying up old equipment. Taking it apart, putting it in shipping containers. This is partly due to logistics, but it usually has an upside of being able to call it "parts" It is cheaper to buy a machine in the US. take it apart, put it in a CONEX box, Ship it to country xyz in the devolving world, reassemble it and put it back to work, than it is to buy a whole machine. One company I worked for had an auction with 200 pieces of equipment. It worked out that every 4th machine was bought by the United Arab Emrites. Boxed up, shipped out, assembled, put back to work.
So lets attempt to compare scrap metal to barrels of oil. At $300 a ton for scrap that's a little less than three barrels of oil. A D8H nets about 30 tons of scrap iron which is about $9,000 without figuring labor and materials to break it down. Oil at a $100 a barrel makes for about 90 barrels to trade straight across for the D8H. So lets tell Asia that they have to give up 90 barrels of oil to us for each D8 sent across the pond. Another side to this is where are the people who are buying the scrap getting their money from? It was not too long ago Japan was buying up real estate in this country using borrowed money. Those banks went into a tail spin when they found out it had to be paid back. It was not unlike what is happening now with our housing industry. So are we being paid for our resources with borrowed money. Even more important, are we lending that money out in the first place.
And since we import about 5 million barrels a day, we'd only have to scrap 55,000 some D-8s/day to cover our daily oil imports. Actually, the Asian people that are buying our scrap are also lending money to us . LOTS of it...