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More on maximising your return

Powerhand VRS
Are you throwing away money? Latest costings for Powerhand's VRS suggests you might Be!
A couple of months back, we looked into the financial benefits of breaking your own engines to separate the aluminium and the steel. This month we take a close look at the potential benefits of using a Powerhand VRS in the current market. With many commodity prices on the floor do the returns add up?

It’s always tricky to figure out if an investment will make a bigger return than it’s going to cost you. After all, there are always added costs such as labour, storage, ancillary plant and equipment, to name but a few. And when prices are high, it’s easier to believe you’ll get a good return because you naturally feel more positive. Using excavator mounted systems to separate ELVs into more refined material streams is now quite common, but we wanted to know if the sums still add up. After all, shells today are more likely to bring in £25 pet tonne rather than closer to £200 per tonne a few years ago; can this possibly still make sense?

To answer this, we asked Powerhand who manufacture the VRS to analyse the returns from using their equipment. Please bear in mind that prices are a couple of months out of date now and may have changed slightly. The rates used for the analysis and the separation categories applied were as follows.
  • Front & rear axle components (clean No.1&2 steel) - £60/tonne
  • Wiring Looms - £1500/tonne
  • Alloy/steel gearboxes (irony ali) - £280/tonne
  • Alloy/steel cylinder heads (dense irony ali) - £480/tonne
  • Engine blocks (ferrous) - £170/tonne
  • Alloy radiators - £550/tonne
  • Electric motors - £330/tonne
  • Stripped vehicle shells - £25/tonne
The analysis was carried out in a user’s yard and focussed on four different vehicles; a Ford Fiesta diesel, an Audi 80 TDI diesel, a Vauxhall Corsa petrol and a Vauxhaul Vectra petrol. This, it was felt should give a reasonable spread of vehicles coming into the yard.

Before we go any further, for those who aren’t fully aware of what a Powerhand VRS is and what it does, we covered the machine back in 2013 and you can read the article here. We are aware that the machine has been revised and improved since then and the latest version will no doubt be on show at CARS in July for us all to take a close look at. When you’re acquainted with the product, you will be able to appreciate how the above categories have come about.

Once the weights of the fractions were known, it was an easy sum to calculate the benefit from each of the four vehicles. The weight of the original vehicle (less fluids, battery, cat and alloy wheels) was deducted from the total return, which left the additional profit for each vehicle as follows:
  • Ford Fiesta diesel - £54.24
  • Audi 80 TDI diesel - £66.56
  • Vauxhall Corsa petrol - £51.32
  • Vauxhaul Vectra petrol - £73.65
We were surprised at the returns still on offer, but when you think about it, this does make sense. The metal that has by far been hit hardest in the current commodities downturn is steel, which means the differential between the ferrous and non-ferrous elements is very much in favour of the non ferrous, hence the benefit from this level of separation prior to the shredder.

We asked Richard Stewart, who has been using the Powerhand VRS since its launch for his thoughts. Richard said, “We have been using the VRS for some time now and are more than pleased with the machines ability to segregate the wheat from the chaff – the difference in value between all the grades on a vehicle is quite staggering, and to simply bale it as one, is to overlook much needed profit. Yes, labour costs and machine costs have to be considered, but with a potential difference in the region of £200 on four cars every hour, it’s not a difficult calculation. The most interesting aspect of this recent trial was that the figures in a relatively good market, 2-3 years ago and the test that took place late last year show surprisingly similar benefits, and this in such a depressed market makes the case for VRS even stronger. The natural reaction of running for cover and not investing in a downturn can be proved to be the wrong reaction.” What we found interesting here was that Richard has operated the VRS in both good and bad times for commodities, so his view should carry weight.

As we mentioned earlier though, you do have to also consider the cost of the processing that isn’t included here. For example, do you have the room to carry out this process, do you have staff available to train, do have an excavator you can use? One thing is for sure, if you handle a reasonable volume of ELVs then it has to be worth looking into as an average return of £50-60 per vehicle soon adds up.

This is only a report on the analysis and Powerhand have an acrobat file which breaks it down further. You can easily substitute the rates that you receive, as prices do vary from area to area. Powerhand can also put you in touch with existing users who can talk you through any specific operational question you may have.

There are now 25 units operating in the UK with additional VRS's working in Poland, Germany, France and Holland. If you would like a copy of the full breakdown in acrobat format, then email Powerhand here. Alternatively, you can contact them on 01387 860241 or visit their website.

March 2016

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