How a Great Power Falls Apart
Decline Is Invisible From the Inside
That scrapyard smell is strong, even when you’re driving in an air-conditioned pickup. I’m seated next to Dave Stage, the affable manager of OmniSource’s immense scrapyard in Fort Wayne, Indiana, and he’s giving me a brief driving tour of the facility, along with my soon-to-be wife, Christine, in the jump seat. This is a first for me: I don’t usually take anyone on reporting trips. But if we’re going to marry, then Christine needs to know why I like all this scrap so much.
Dave slows to point out stacks of junked Coke and Pepsi vending machines. There must be hundreds. “Most of them still have fluorescent bulbs and refrigerator compressors that we have to pull out,” he says. Both items contain hazardous materials that need to be recycled elsewhere. “After that, we shred them.”
I look back at Christine. “In the automobile shredder.”
She flashes me an annoyed look meant to convey that, yes, she knows.
But I know she doesn’t: until you’ve seen your first auto shredder, you can’t.
Dave parks the truck at the office, and we step into a hot, yellow brass sun. All around me I hear the groan and crunch of scrap-processing equipment at work, turning ordinary objects into raw materials. “You’ll need these.” Dave hands us hard hats, safety glasses, and orange vests.
There are two piles of scrap steel in front of us, both roughly two stories tall. The one on the left is rusty in color, made up mostly of unrecognizable pieces of metal cut into short lengths that can be managed -- and melted -- by a steel mill. In industry parlance, that’s “prepared steel.”
The pile to the right, meanwhile, is a multicolored crush of everything from fences to old machine tools, scaffolding, pipes, a few bicycles, at least one swing set, and lots of shelving. This is known as “unprepared steel,” meaning that it needs to be cut down to size and cleaned of anything that isn’t steel before it can be sent off to a mill. Some of that work is done by hand and tool, and some of that work is done by dinosaur-like cranes outfitted with giant beaklike pincers that cut thick pieces of pipe like it’s pasta.
There is another way to handle that steel, and it rises three stories above the scrapyard, casting a long shadow. From here, we can’t see much except the car-wide conveyor that’s currently lifting a crushed auto body skyward. But from the side it looks like a contained carnival ride -- it goes up, and then it goes down. At the top, steam rises, along with an otherworldly screech and groan -- that’s the sound of an automobile being reduced to fragments the size of my reporter’s notebook.
We’re walking beside a wall of cars, six cars high and perhaps fifty cars long. They’re a sad, deflated sight, emptied of engines, radiators, transmissions, wheels, tires, and anything else worth the trouble of extracting by hand. As we draw closer to the machine, the sound drowns thoughts, and Dave’s voice rises. “We do one hundred and thirty tons per hour in the shredder,” he yells in my ear.
“How many cars is that?” I yell in return.
“Seven to nine thousand cars per month. Depends on time of year, market.” OmniSource’s shredder is really big, but what’s most remarkable about it is that it’s not remarkable at all. North America is home to more than 300 metal shredders. Another 500, at least, are located in dozens of other countries from Brazil to China. The shredder stands as the singularly most important piece of recycling equipment ever developed. It is, among other things, the best and really only solution to managing the biggest source of consumer waste in the world today: the roughly 14 million American automobiles that are junked annually.
In 1969, upwards of 70,000 automobiles and trucks were abandoned by their owners on the streets of New York City. Some leaked gas and oil; some provided habitat for rats and mosquitos; most were unsightly. And the problem was not exclusive to gritty New York. Across the United States, experts estimated, between 17 and 30 million cars had been abandoned since 1955.
Abandoned automobiles were not a new problem. In the 1920s, just a couple of decades into the American automobile era, Americans were retiring as many as one million cars per year. World War II slowed down the growth in auto buying, and forced Americans to repair what they’d otherwise retire, but by the early 1950s they’d returned to their car-buying and -abandoning ways. In 1951, the United States was home to an estimated 25,000 auto junkyards, and every last one was necessary: that year, 3.7 million cars and 600,000 light trucks were sold to scrapyards.
In general, the scrapyards were able to recycle those vehicles, with much of the work accomplished by hand. Workers would use axes and other hand tools to rip out the copper, the aluminum, the fabric, and the wood. Steel was the major leftover, easily marketed to American steel mills eager for raw materials to power midcentury American growth.
Two blows hit the American autojunking business in the mid-1950s. First, the price of American labor began to rise, making it increasingly difficult for U.S. scrapyards to pay teams of workers to tear down cars. Meanwhile, American steel mills began to upgrade their technologies, and by the early 1950s many were no longer interested in melting down old automobile bodies procured from scrapyards, which were often contaminated with copper. As American steel mills stopped buying cars from scrapyards, those same scrapyards stopped buying cars from Americans, and Americans began abandoning their cars by the millions.
By 1960, the abandoned automobile problem was a massive environmental crisis. Across the Unted States, streams, creeks, and fields were polluted by cars and their leaking oil, gas, and other fluids; junkyards with stacks of old automobiles destroyed views of the country's once-pristine countryside. In 1970, President Richard Nixon told the U.S. Congress, “Few of America’s eyesores are so unsightly as its millions of junked automobiles.” More likely than not, he was unaware that a solution to the problem was starting to grind away. It would take decades to catch up on the backlog, but the problem -- more or less -- was being solved by the first automobile shredders. The principle is simple: obliterate a car into small enough pieces that large, strong magnets can pull the steel almost completely free of whatever copper and other materials are left in it. On a pound-for-pound basis, it’s a far cheaper and quicker way to recycle a car.
The shredder booth, were I am standing with Dave and Christine, shakes. I lean to look out the window, but there’s only steam. We follow Dave down the stairs and behind the shredder, where shiny pieces of steel crumpled like sheets of paper are speeding by on conveyors. You don’t want to get too close, though: they’re sharp and hot. Above us, a thin conveyor lifts the stream of crumpled steel twenty feet into the air until it falls into a ten-foot-high pile, the pieces ringing like a wind chime in a breeze. It doesn’t remain there long: a crane outfitted with a kitchen-table-size magnet is transferring the shredded metal, dip by magnetic dip, into a trailer bound for a steel mill.
For those who don’t want to obtain their steelmaking materials from expensive, environmentally destructive iron ore mines, this is a windfall. Conservatively estimated, each ton of shredded metal loaded into that trailer is equal to 2,500 pounds of iron ore that won’t be mined in northern Minnesota (or elsewhere), and 1,400 pounds of coal that won’t be dug up in Kentucky to power the steel furnace. In 2012, the U.S. scrap industry processed 75.19 million tons of iron and steel, roughly half of which was shredded. And that shredded scrap metal, when remelted, accounted for roughly 30 percent of the new steel manufactured in the United States.
The scrap does not all stay in the United States. Early summer 2008, the global economy is flush with cash but ready to collapse. At the direction of Scrap magazine, I travel to Bangkok to figure out why a small country like Thailand has become -- in very short order -- a major importer of American shredded scrap metal. In a sense, I already know before I get there: Southeast Asia, in the shadow of China, is undergoing a construction boom that requires more and more steel to build more and more buildings and cars, and Americans generate an excess of scrap metal.
Over the course of several days, I visit a handful of major steel mills in the Bangkok area. They are flush with scrap, much of it imported. At GJ Steel, one of Thailand’s biggest steel companies, a manager tells me that they have 120,000 tons of steel just lying on the ground. Then, after a beat, he asks me:
“Is that a lot?”
It is, I assure him. That’s equivalent to the weight of a very large oil tanker, or perhaps 15 percent of the total American steel scrap exported to Thailand that year. We are in the mill, watching as a stream of imported shredded scrap as wide as a creek flows into one of the largest furnaces in Asia. That furnace looks like a science fiction nightmare: a flying saucer covered in dust and piping and shooting sparks. The heat is unbearable -- we can’t draw too close -- and I’m led instead into a control room where a group of technicians is looking at a monitor that displays the precise recipe for the steel that they’ll be making over the next few minutes.
• 20 ton -- PIG IRON (an iron ore product used in steelmaking)
• 30 ton -- HMS MIX (iron and steel scrap)
• 20 ton -- BUNDLE NO. 1 (steel sheets in a bundle)
• 60 ton -- BUSHELING (free, clean steel scrap)
• 60 ton -- SHREDDED IMP (IMP, as in imported)
Why imported? Because Americans and Europeans don’t use their metal goods -- like cars -- long enough to let them rust, they generally produce higher-quality scrap metal, including shredded metal, that melts better than local scrap. But even if Thai shredded scrap were equal in quality to American shredded scrap, there simply isn’t enough of it in the market to fully supply all of the steel mills rushing to meet these boom times.
I leave the control room and walk around a scaffolding to where new sheets of steel are flowing out of machines, silver and clean, until they’re rolled up into giant shiny tubes and left to cool. In coming days they’ll be shipped to manufacturers of cars, washing machines, and other makers of middle-class comforts across Thailand.
Later that night, I’m in the back seat of a taxi in Bangkok. Outside the car, there’s a skinny man with a pushcart walking along the sidewalk, carrying what looks to me like pieces of spindly rebar pulled from a demolition site. I suspect that the peddler will make a nice profit. Earlier in the morning, several traders had told me that they expected steel prices to break through the once unthinkable $1,000-per-metric-ton barrier, and never turning back.
I forget about this taxi ride until three years later, the summer of 2012, when I find myself and Christine in the office of Dave Stage, Omni-Source’s Fort Wayne scrapyard manager. We’ve just finished our shredder tour, and now we’re chatting about how hot the scrap markets were -- even for low-quality scrap -- right before everything crashed in the fall of 2008. I tell Dave about Thailand.
He laughs. “Sure, the summer of 2008 we had a line to drop scrap at the shredder that stretched all the way to downtown Fort Wayne. Two miles.” He continued, “That’s what happens when the prices get real high. People start pulling stuff out of the garage, out of the woods, out of the fields, that they wouldn’t touch otherwise.” As Dennis Ross, a senior vice president at Huron Valley Steel, noted, it wasn’t until the early 1990s that the pent-up stockpile of abandoned automobiles began to be whittled down, and not until the 2008 that the U.S. scrap industry finally caught up and just recycled what was entering the junkyards.
Sitting across from Dave, I ask if he agrees. Was 2008 the year that the last of the scrap cars came out of the woods?
“Tell you what. One day in the summer of 2008 we had an old farm tractor come into the yard for the shredder. It had a tree sticking out of it, with a trunk with a circumference the size of a baseball. That’s how long it’d been sitting there. So yeah, I think it probably was 2008.”
I look at Christine, and she’s laughing with Dave as he tells the story. It’s funny, for sure. But it’s also astonishing, when you think about it: eighty years after the first Model T rolled off Henry Ford’s assembly line, Americans finally managed to clean up a backlog of junked vehicles -- and they did so in part because steel mills in Bangkok needed raw materials to make new cars and refrigerators for people in Southeast Asia.
The end of the automobile backlog should’ve been occasion for a television documentary, a presidential speech, and perhaps a commemorative postage stamp. Instead, there were daily orders of pan pizzas and barbecues in the long shadow of one of North America’s biggest shredders. I just wish I’d been invited.
Instead, I was in China -- the fastest-growing market in the world for shredders. It’s after midnight, midwinter 2010, and I’m drunk in the back seat of a car headed to a new shredder on the outskirts of Lianyungang, 270 miles north of Shanghai, owned by Armco Renewable Metals. Joining us is Song Yanzhao, deputy general manager of the Shandong Yuxi Group, a big-time steel recycling company in Shandong Province. By the look of his baby face, he’s maybe 22, but by the look in his eyes he’s losing his youth to the cold cynicism characteristic of anyone who grows too close to China’s politically sensitive state-run steel industry. Earlier, before the drinking, he told me that his family started out simply, cleaning metal using hand tools and torch cutters, then cutting it into sizes that could be accepted by China’s steel mills. They were successful: by 2005, using hand tools, cutting torches, and large alligator-like shears, they were able to process between two and three thousand tons per month -- roughly, the weight of ten to fifteen blue whales.
That was pretty good, but the company aimed higher. By 2005, China’s economy was one of the fastest-growing in the world, and its people and companies were beginning to throw away steel -- buildings, cars, signs -- at a pace that simply couldn’t be processed by manpower alone. A scrapping company needed horsepower -- specifically, the very modest 1,000-horsepower Chinese-built metal shredder that Shandong Yuxi Group purchased. Now the firm scraps about 50 blue whales a month.
Still, Song knows there are much bigger opportunities in the company’s future. In 2009 China surpassed the United States to become the world’s largest automobile market, with 18 million vehicles sold. Already plenty of older vehicles are being retired, but the bigger wave is due at the end of the decade, when the Chinese start junking the decade-old cars that constituted this latest boom. That’s why Song is in the car: his father has entrusted him with finding a high-quality foreign-made shredder to handle the coming wave. The fact that the price of steel crashed in 2008 is no matter. Like most successful Chinese scrap processors, the Songs are pathological optimists with an unerring belief that China’s long-term demand for raw materials all but guarantees future profits. Even if the cars aren’t available yet, they will be, and so will the cash flow.
Frank Huang, a Beijing-based sales representative for Metso Lindemann, a major Finnish supplier of equipment to the recycling industry, tells me, “They plan to import American cars and start shredding them, too.”
“There aren’t enough Chinese cars yet.” Walking together, we emerge from behind the piles, and the shredder looms above us, three stories high. Two orange cranes work beneath the sodium lights, grasping motorcycle frames in claw-like grapples and adding them to the mix moving up the conveyor.
Frank, who can clearly handle his liquor better than I can, is waving at me from the stairs, and I follow him into a stairwell that leads up to the control room atop the shredder. The exertion makes me want to vomit. But I can’t, because now I’m in the tiny control room, and it’s crowded up here.
A big window overlooks the tangled motorcycle frames as they drop into the shredder. Seated in front of it, on a raised platform that gives him a better view, is a man in his early thirties, perched in a chair that reminds me of the captain’s seat on the deck of the Starship Enterprise. His hands hang loosely over two joysticks that he uses to control the flow of the scrap, while his eyes move between the conveyor and a computer monitor that gives him a detailed readout of what’s happening inside the machine. In the darkness, it feels very sci-fi, as if I’m dropping in on the future.
This article is excerpted from Junkyard Planet: Travels in the Billion Dollar Trash Trade. Published by Bloomsbury Press. Copyright in the name of Adam Minter 2013. Excerpt published by permission of the author.