U-R-G On the Go
An informative podcast for the United Recyclers Group. Each week we will feature an entertaining guest that will share their knowledge and information with you, providing you with tips and tools to help you become a more profitable business.
U-R-G On the Go
From Crisis to Opportunity: How Education Powers Auto Recycling
Auto recycling stands at a crossroads where education and adaptation determine who thrives in tomorrow's market. In this thought-provoking conversation with industry veteran Mike Kunkel of Profit Team Consulting, we explore how the once-stigmatized "junkyard business" has transformed into a sophisticated industry attracting major investment and mainstream acceptance.
The landscape is shifting dramatically. Organizations like URG, ARA, PRP, and RCD are aligning their educational initiatives to professionalize the industry. As Kunkel notes, "If McDonald's spends $1,400 annually teaching employees to make a consistent Big Mac, we must invest similarly in our teams." This focus on education comes at a crucial time – the average age of owners has decreased significantly, bringing fresh perspectives but requiring knowledge transfer from industry veterans.
What's particularly fascinating is Kunkel's revelation about profitability: most recyclers are merely "one to two parts per vehicle short" of substantially improved financial performance. This seemingly small optimization represents the difference between struggling and thriving in today's competitive environment. With artificial intelligence transforming inventory management and customer interactions, the industry must balance technological adoption with the irreplaceable human element of relationship building.
We also explore how international expansion into markets like Australia, Canada, and Argentina offers valuable lessons for domestic operations. The expected impact of tariffs will likely increase the average vehicle age beyond today's record 12.6 years, potentially creating opportunities reminiscent of the 1950s-60s era when customer-pay used parts were more common.
Whether you're an industry veteran or newcomer, this episode reveals why now is the time to invest in your team's development. Consider incentivizing conference attendance as Kunkel suggests for the upcoming URG/PRP Annual Conference in Denver. As he powerfully concludes, the auto recycling community offers "a shot of energy, enthusiasm, and intellect like you've never received before." Don't miss this opportunity to gain insights that could transform your operation's future.
Welcome one and all to the URG On the Go podcast. You are there and we are here. This is the URG podcast, which is the true voice of the automotive recycling industry. It was created for the pros that have a need to know that are on the go. I'm DJ Harrington, your co-host, better known as the cardiologist, but the real host of this program is the talented Amanda Morrison, who is director of member and vendor relationships for URG. Amanda, how are you this beautiful day?
Speaker 2:I'm doing great Been working like crazy. How about you about?
Speaker 1:you, DJ. Well, you've been doing a lot of traveling.
Speaker 2:Yep, I have been. I'm finally kind of in a little travel lull now, but yep, last Saturday I had my last one for Antelphi Address, so it's exciting.
Speaker 1:Yes, well, you have a guest on today that our listeners have listened to before, and if they've ever been to a URG, a PRP, an ARA convention or a state association, they've heard this guy firsthand. A lot of our listeners will hear them today and they will make sure that they're at the next convention that this guy is going to be speaking at. So I'll turn it over to you so you can do a real intro on this guy.
Speaker 2:Thank you, dj. Yes, we've got Mike Kunkel from Profit Team Consulting here and we actually just got back from Saturday. We had a meeting for RCD and Temple and he was there, and so was Jarabanta and educating salespeople on how to be a little bit more professional and utilizing tools and tips and tricks as a trade. So thank you so much, mike, for being on today.
Speaker 1:Oh, it's a pleasure being here. It's always great to spend any time with you and DJ in there. It's always a pleasure to be on and look forward to spending time with you today.
Speaker 2:Thank you so much. Yeah, so we were discussing a little bit about, you know, continuing education and getting your salespeople trained and the people at your yard trained. And getting your salespeople trained and the people at your yard trained, what kind of tools and tips are you relaying to these yards whenever you're going to these meetings, like the RCD meeting we went to on Saturday?
Speaker 1:Wow, look, if you want to look at this realistically speaking, amanda, right, I mean as kind of DJ kind of alluded to I've been around the block a time or two and you look at some of the things and a lot of this is kind of looking at what you know DJ has done in his career as far as educating, and you know some of the little things that people don't know, how DJ kind of changed, how we answered the phone in the auto recycling industry for auto parts to being a more professional and and you know and things along that line.
Speaker 1:But if you go on that same basic thought process and and and mcdonald's, I believe it was had a had a saying one one time that that everybody spends a lot of money on training. Some of it is formal and some of it is not, and so McDonald's spends on average of somewhere along the lines of $1,400 a year per employee on teaching them how to make sure that a Big Mac is a Big Mac, no matter where you go in the world for all practical purposes, but in North America, specifically in there. So if you kind of go off of that general concept, a lot of what it is that we're doing is just trying to build upon what it is that we know works in how to move an industry forward. And you have very quietly in some ways to some people it's been very well known, very organized in what they saw.
Speaker 1:But the slow but steady alignment of U-R-G-A-R-A-P-R-P-R-C-D insert alphabet soup into that right, but everybody is starting to look at this and understand a couple of things. The first thing that cannot be argued at the is the use of used auto parts is becoming more mainstream than ever before. The oes are paying close attention to what it is that we're doing. Private equity is invested heavily in the industry, lkq. While their stock may be under a bit of attack when you look at the company itself, it's still very solid in the performance and what it's doing out there. So it's an industry that is on the uptick and with anything or like any other industry at the moment, staffing is a problem. One of the historical problems with the auto recycling industry is no one, unless you grow up in a family business, grows up desiring to be in used auto parts business. I mean, when I got involved in used auto parts, I mean.
Speaker 1:my original exposure in the industry was as an installer for Auto Info, the predecessor to the Checkmate system, and my mother could understand that because I was in the computer industry, as she described it to her friends.
Speaker 2:When.
Speaker 1:I took a job as a general manager of a small foreign car operation. As a 22 or 23-year-old, I thought Vegas would be a good place to settle down.
Speaker 1:It didn't exactly turn out that way for me, but when I called my mother and told her that I was going to become a GM of a foreign car auto recycler, she came up with one of the most classic lines ever of four years of college for this and haven't even been to prison for this who haven't even been to prison. That was her mindset about what it was right. And so now what you have is, over the course of time, found that this is a great industry to be involved in. The education is important but not necessary. Lots of ways to plug in lots of different business models that make it work. And by having all of these organizations now kind of working towards that advancement of it, bringing in fresh new people, understanding that if McDonald's spends $1,400 to teach you how to make Big Mac and say, do you want fries with that, that we better start to do some of the things that we're doing.
Speaker 1:And with URG, kind of getting back to that grassroots movement of pushing it back, looking back in combining with PRP in order to have the sales people and production staff attending the conference, people and production staff attending the conference.
Speaker 1:Looking at what ARA is doing with the help of URG on the certification, cleaning up the ARA university so that everybody has value in that, then kind of putting them into the environments where those things can be rolled out with their peers, while you have a quote-unquote so-called expert standing at the front of the room when all they're really trying to do is get the information out there, get the discussion point started so that we can start the ball moving forward.
Speaker 1:So that's a lot of what it is and really, with what PRP has gone through, with the rapid expansion of membership creating an overall dilution in the overall quality of products being put out, they are very much looking at how do they get their feedback on the ground back to the basics. So I find it very interesting that a point in time that URG and PRP are both simultaneously aligned with ARA in moving forward in educational peace happens to bode really well for a guy like me that's got a million words a day they've got to use and loves to stand in front of people and act like they know what they're talking about I love that and and with that, you know if you guys, if if the yard is uh, on the profit team consulting, if you guys are doing the training with them.
Speaker 2:They get access to you too, right, you guys have messengers and are able to kind of consult with you.
Speaker 1:There's a lot of different things that Profit Team has.
Speaker 1:You know the Profit Team YouTube channel is out there.
Speaker 1:You know there's a lot of different ways that we work and engage in mentoring, whether it be with the Profit Team groups, with the individual sales groups, the weekly calls that are taking place with the sales people there, some of the individual mentoring that each of us are doing with facilities, the sales manager, peer groups.
Speaker 1:I mean, all we're really trying to do from a profit team standpoint with me, rob, jer and Rich, is try to find a way to integrate into the auto recyclers in a way that helps move the ball forward, understanding that for people like me and DJ kind of the old geezers of the crowd at this point, we remember when the world was flat and the world today is very round compared to what we were used to, and we need to understand that the more round it's continually becoming, the more the business model is going to change and adapt and the more we need to be light and nimble on our feet in order to react. As you know, things are coming along right. We didn't take long at the URG call first, walking around to see that the artificial intelligence was a buzz topic everywhere you know.
Speaker 1:You know, on an artificial intelligence inventory, artificial intelligence by artificial intelligence looking at data, you know things that are they're coming across, ways, sets and forms for coming back in right. I was amazed at how many of the presentations at URG were written by chat, GPT or something similar you know to that and it really does occur, of how quickly things are going to develop and that we really do need to kind of double down on our people in order to make all of those things happen. And I find it very interesting that at the time when that's happening, you look and see with the URG Educational Foundation and the amount of money that you guys hand out on an annual basis for not only the traditional university models but technical schools and things along that line really does kind of start to spark some of the things in there that really kind of say that we need to do a lot better job of pushing the educational component in our industry as we try to develop the culture. And you know the the things along that.
Speaker 1:I mean I don't think there's any real surprise that lkq university is something that's existed for decades, now that they continue to advance their internal knowledge.
Speaker 1:And URG is very similar to that. When you stop and look at the number of videos that you guys have recorded at the conference over the years, those are all archived someplace that are available for us to, you know, to go back in and and you know, I mean I got a comment from somebody who viewed one from a couple of years ago the other day. So you know those are really interesting things that go about of how we're kind of, you know, bootstrapping the industry forward as it becomes, you know, significantly larger over the next few years as to what it has been. And I do understand there's a lot of people listening to this right now that are thinking business is a bit the toilet we're coming out of. The heyday of the COVID was a high watermark and business is very challenging. But the truth of the matter is this is the time when the auto recyclers tend to shine and a significant amount of money is made during troubling times, as opposed to everybody making money during boom times.
Speaker 2:Right, right, and making sure that they're. I really liked that you went through an actual AI sales call with the RCD meeting as well. I thought that was very, very intuitive of you. You know, it's true, there's different demographics that would prefer to talk to AI and then there's a whole different demographic that would like to talk to a person. So showing them you know the differences in that and you know making sure that they're you know they feel solid with their job, especially as a salesperson. I thought that was really cool for you to bring up.
Speaker 1:Well, I mean, everybody needs to do.
Speaker 1:One of the presentations that Rob Rainwater does an outstanding job with is the DISC personality profile that walks through the four different quadrants of personality profiling. Customers, right, and you know there's a lot of components and there's a lot of different spins. You know on it the match and mirror type terminology that you go through, but how do you equate to a customer and match up to it, and what artificial intelligence is going to struggle with is personality profiling and coming back in there, and so some of the things that we really need to do to make sure that we continue to make sure to protect our investment in ourselves is continue to make ourselves more valuable to the company. Doing something for the company that can't be done otherwise is the ultimate value proposition we can deliver to the organization we work for.
Speaker 2:Makes complete sense. I totally agree with that no-transcript.
Speaker 1:My profit team gets an awful lot of credit for a lot of things that happen.
Speaker 1:The truth of the matter is, the real talent is the people attending the meeting. They're your peers. They're traveling the same highway that you are traveling. They're just at different exits along the way. The key for me is to put together the right people, the people of the same you know mindsets, the people that are of the similar volume, the people who are not opposed to change or change at the same pace. You know somebody who changes. You know business policy like they change underwear doesn't get along well with someone who is very much like an elephant turning when it comes to change in there, they find that frustrating.
Speaker 1:So I put the right group together. But when you get in there and you start talking about this and you put you know 18, 20 people together that are discussing the things, you get some really good ideas. And I will go to my grave saying that one of the coolest things about this industry is there's not a simple, clean cut way of making money. There's a lot of different business models that are out there. One of the things that has made the consultant space so small in this industry is the overwhelming of the people that have tried in the consulting space only know one way to make money. They can't adapt to the way that you do business in order to make that work. And that really becomes the value of all of this is picking out what are the golden nuggets that work for you and how you apply them into the business.
Speaker 1:And at this point in time, I would like to think that I've seen an awful lot of things. I've done an awful lot of things. Not all of them have worked. Probably more have not worked. One of the reasons I know what I know isn't because I'm smart. It's because I'm really dumb. But I try stuff. I just admit failure and move on quickly to something that is better or produces the more desired results. That come back in and do this. In the end, when you add the four of us together, we have a pretty good niche going within the industry the presentations that we do, the state associations that we're working with, trying to get some of that ground-up movement back in, reengaging the auto-recycler back into the industry.
Speaker 1:Because you know, the truth of the matter is, while I mean, look, the urg conference in ara, for that matter, the conferences and conventions are really good there are a lot of people that are there, but truthfully it's still a little embarrassing in relation to how many people there are in the industry and how many people show up.
Speaker 1:So, we still need to kind of keep pushing that out there because in the what have you done for me lately? World, the associations, the people really pushing the education, are not necessarily being embraced the way they should be, because the pain points aren't there for the recyclers. So as that changes a bit, as the pressure points start to come on, I think you start to see more and more. You know of that. You know I've been telling people that now is the time to start making your plans for the URG conference. For you know what's that? May 7th, 8th, 9th, you know, somewhere right in that vicinity of 2026.
Speaker 1:Because when you start looking at what it's going to cost to send somebody to Denver, there needs to be some criteria to earn the right to go.
Speaker 1:If they're a salesman, if they sell X amount of parts, they should earn the right or cover the cost of the right to trip A dismantler, a production person, specific goals that start to earn that right to attend that. At the same time we need to start feeding the information back to you about what are the sessions that we want to have so that you can get to work on placing those sessions with good speakers to make sure that we get the values out of the conferences that we need, and then all of a sudden, you start to get in there and then making your reservations early because we are going to max out the hotel again in there. I mean, there's no reason to expect that. We're not. We have for the last several years. So, you know, getting in there early, getting all of those things done, I think, become of the utmost importance to everybody as we really try to go through 2025, which has all the makings of a rebuilding year.
Speaker 2:Yeah, yeah, I completely agree with that and I love the fact that you mentioned incentivizing, you know getting to be able to go to the conferences because you know in the end that'll just make you more money and incentivize your employee to work harder for you.
Speaker 1:Well, you stop and think I mean, if you come to me on April the 1st, you know we're four or five weeks out in front of the conference and you tell me you to send eight people, and that's $2,000 a person, that's $16,000. That's a hard no, I don't have that kind of money. But if you put out the prize and you do that, then it's not the money that I'm coming up with, then it's the fact they paid me for that all along the way in there, and now it's just the day that the bill is coming due for doing that. And then you start to really get your culture built around it, start to be moving it forward with everything that you're doing and, like I said, this is stacking pennies right all on top of each other ara, urg, prp, rcd. You know all those folks are doing their part by continually putting out the information.
Speaker 1:But once again, you can lead the horse to water, but the horse has to decide to drink it in there and I think what we're really kind of talking about is ways that you financially justify something long-term, even though the short-term pain Because I assure you that, that you know the end of may, end of june, whenever everybody's credit card bill comes in for urg, all the yard owners, all the people that pay that bill, are going to have a bad day, aren't they?
Speaker 2:yeah right, unless they saw some change coming from it. Well, they'll see the return on it.
Speaker 1:No, this is like the prp bill probably in some ways like the urg bill the day the bill comes, it's a bad day. The other rest of the days of the month we love it, but the day we got to pay the bill is a bad day because it's expensive and that's what this is.
Speaker 1:The rest of the time'm getting a return on my investment, I'm getting the value out of doing it and it's a long-term value for coming back in. And then you start working on the camaraderie that's inside the industry, starting to build some of the support structures, start to build some of the ways through that the tribal knowledge of what we do gets shared, because there's a whole lot of this that you don't know until you know.
Speaker 2:Exactly, exactly, and I think also with new hires. That's one thing that I've run into that's been difficult is when. I'm a new hire they don't realize the benefits that we do offer at URG and that can be a training piece for yards, you know. Make sure that you have some kind of training process on all the different tools that can help them be a successful employee.
Speaker 1:Wow, you look and see it. You know, for anybody who really has been into a mechanical shop not so much the dismantling bay, because you know dismantlers the most effective dismantlers dismantle a lot of trays, not toolboxes. But when you walk into a full-blown dealership, you know thing and you see a technician's toolbox that's got 6,000 drawers in it. And all of that that's our industry, with software and technology and tools that we're bringing outsiders into and saying that we've spent a lifetime developing these workarounds and things that we do to cover the uniquenesses of how we take an assembled product and disassemble it and disperse it in there. So it's very, very confusing and very, very difficult to come back in. And there are so many things that we you know seasoned veterans take for granted that the rookies are just being exposed to for the first time that it just can be overwhelming. And then the other thing that you really don't realize in our industry is just the overall amount of negativity that we have to deal with.
Speaker 1:I mean it's wrecked cars. We don't design them, we don't manufacture them, we don't maintain them, we don't know anything about them and we put a better warranty on them than the people that do know. All of those things that come back. This is high stakes gambling and it's true as definition for doing it, and there's a tremendous amount of them. They had a 20 something percent credit rate, the problem rate with the customers before we even get the part to them in there. Those are all things that are problematic from the get-go. That takes a certain amount of thick skin that you have to be able to cover, and I think a lot of it is putting people with their peers so that they can at least understand that they're not going through this alone. So I would empathize with them Definitely Yep.
Speaker 2:All right, that is all great information. I hope you guys are taking notes. I think it's time for a break DJ.
Speaker 1:You got it. Let's take a break and we'll be right back with your great Mike Garfield.
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Speaker 1:We're back listeners and you know you're listening to the number one podcast, urg On the Go podcast, dj Harrington, amanda Morrison and Mike Conkle. I want Mike Conkle to mention two things when he talked about archive. Remember, when he talked about archive. Remember, all of these podcasts are archives. So rob rainwater, ryan falco, dan snyder, mike conkle, shannon nordstrom, matt carman, kelly from my yard, paulie d from rats they're all archives. So make sure you're there.
Speaker 1:Amanda does her very best each week to make sure you get the best information, like with a Mike Conkle, please download and listen. We're available on Spotify, itunes, pandora, stitcher, iheartmedia, amazon or wherever you get your podcasts and those of you taking notes. Amanda said it right. I hope you're taking notes because Mike Conkle's idea of incentivizing your team members to come to May 7th through the 9th in Denver, colorado, for the URG Team PRP Annual Conference is the way to do it and start this month. Ara. Two years ago, they gave away one award for the person who did the most for ARA and they picked on a consultant named Mike Conkle who you have the privilege of listening to today, so I'll turn it back over to Amanda.
Speaker 2:Thank you, dj. Yes, he's been such an inspiration and a pillar in this industry for so long and thank you so much for being on again today. I wanted to say DJ was talking about all my travels, but I think you have maybe twice or three times the amount of travel that I have. What kind of trips are you looking at here coming up?
Speaker 1:Wow, I'm kind of in a. I've been on the dead run since March. I've spent over half the year on the road so far.
Speaker 2:Oh my goodness.
Speaker 1:So it's been a pretty hectic run for the last couple of months. So the month of June has a. It sees me on just a couple of personal things with my wife travel. But the first five, five weeks of each quarter are pretty well filled with peer groups. So so it kind of starts next month with I think July has Minneapolis, tampa, new Jersey, colorado, utah, boom, boom, boom, boom, boom back-to-backs in there. So kind of running around and doing some of that stuff.
Speaker 1:But you know, what we're really kind of running into is, uh, and look, you got to go back to just prior to the real onslaught of consolidation, when the prp original prp was kind of at what would be, you know, a high watermark for that era and the average age of the owners of PRP was in the mid-60s at that point in time.
Speaker 1:So you kind of knew that there was going to be a big cycling of the industry occurring and so the consolidation did nothing but accelerate that. But you do see, and you've seen a lot in your travels and a lot of the people that you're dealing with are the next generation taking over the business and coming, you know, coming back in. So what you're kind of seeing is, with this transition from one generation to the next generation, the overall averaging down of the age of the owners has ultimately caused an averaging down in the age of all of the different departments. Just a straight numbers meeting has evolved into going back, showing next generation of up-and-comers some of the things in the recycling industry so that they can see it from a different perspective.
Speaker 1:You know that's in there right. When you sit in a corporate boardroom type structure, all wrecking yards look the same, they're all, they're all perfectly square and they all drain within 15 minutes of inclement weather. When you actually go see the yard and see that there's mountains and trees and ditches and bad weather, that takes forever to get through. And I mean, my goodness, in Syracuse, New York, they had eight foot of snow in the ground this winter for various stretches. Hard to pull parts in those circumstances and things along that line of what you really challenge. So it's been very fun and interesting to get back out on the road and start to see a bunch of yards again and while the travel sometimes is a bit of a bear, most of the time it's pretty good. I'm a lot smarter these days than I was when I was 21, 22 years old doing this.
Speaker 2:Got a few more years and consulting under your belt.
Speaker 1:Yeah, I travel better now I'm smarter, I understand signing up for the rewards and taking the perks and and all of those things, so things. So it is what it is and I really am having fun. I mean, you have to stop and think you know, and DJ can vouch for some of this stuff right. Ever since I met DJ he's the guy at the front of the room that's been talking. I started off with the guy who didn't even buy a pass to get in the room. I snuck in and hid in the back and worked my way from the very back of the room to the front of the room to the point where I'm turning around and facing the audience now. But then you can see that a lot of the things that we are doing as standard operating practices today we were told 30 years ago could never be done.
Speaker 2:Yeah, complete turnaround of the industry, for sure. Yeah, I didn't know that the age was that high whenever PRP was getting started. That makes a lot of sense, though, because there are a lot of the new age people people around my age 30s, 40s that are digging in and trying to operate these businesses, and they are completely different than they were 30 years ago. You know all the different technology and things implemented, as well as just sales training and different ways of getting to your consumers. It's completely changed.
Speaker 1:Oh shoot, oh shoot. I could paint a picture that says PRP ultimately was the proving ground that private equity consolidation could actually work in this industry by showing what the synergies could be of, as you could have without violating franchise law to maintain independent businesses. So it's been very much herding cats, but it's herding cats in a way that has had a dramatic increase in the overall acceptability, viability and sales numbers of the industry in its entirety.
Speaker 2:Yep, that makes complete sense, and you're going international too. Weren't you in Australia not too long ago?
Speaker 1:I spent a couple weeks in Australia in March. That seems to be an annual trick these days, and yeah, so we're getting stronger in Canada in there we have our fingers. In the UK in there we have our fingers. In a couple of other countries Argentina is one that we've just recently touched out into learning some things about selling of used auto parts in a very, very different high inflationary model with heavy governmental restrictions and things along that line. So, yes, we are really kind of working diligently in broadening our horizons as we continue to peel back layers in the ending to see what is possible.
Speaker 2:Yeah, that's incredible. That's really cool that you guys are getting out there and traveling there. I would love to go to Australia. I know Chris in Georgia wanted us to go out there too. Yeah, it's completely different models and completely different structures over there and all the technology is a little bit different as well. Getting over those hurdles are a little difficult.
Speaker 1:Yep, and it's also transitioning too. The Australian recyclers have transitioned out to a young, new, younger breed that is coming along in that market also. So you know it really is. I mean, and you'll see, there's a lot of people that'll tell you that this business isn't any fun anymore. There's a lot of people that'll tell you this is still a really good, fun business to be. And I fall into the the fun category because I happen to like hard work and difficult challenges, because the rewards tend to be worth it, and I still really truly believe that to be true in the auto recycling industry.
Speaker 2:Definitely, Definitely. All right, DJ, I think do you have any other questions for Mike that we want to?
Speaker 1:ask him. Well, if I was asking Mike a question, I think it's the future of our industry.
Speaker 2:Oh, I was going to ask about tariffs as well how you feel about impacting it.
Speaker 1:Well, why don't we take a commercial? And when we come back, that'll be a lure to get our listeners to hang with us, and we'll ask Mike Conco that same question.
Speaker 3:The URG Scholarship Foundation was founded in 2014 in honor of individuals who give their talent, time and, very often, their own finances, to ensure the growth and success of the automotive recycling industry. We understand college is not for everyone, so each year the foundation offers substantial financial scholarships to auto recycling employees and the children of employees that are attending four-year and technical or trade schools, to assist with their education. Don't leave money on the table. If you have a child or if you're interested in attending continuing education, this money is available to you. Go to u-r-gcom and click on the Scholarship Foundation tab. Urg keeping our industry strong through education.
Speaker 1:Welcome back listeners. I can't thank you enough. We are shooting for 10,000 listeners, so please tell your friends to like and review and share everywhere If you'd like to hear a guest an industry expert like a micro-analyst let a man know, we have a hotline number right here at the BlackBerry Center, 706-409-5603, and let us know who you'd like to see on the next URG On the Go podcast. Now, without further ado, amanda, I'll pass it over to you so you can ask our very talented Mike Conkle.
Speaker 2:Yeah. So before the break, dj had asked where you see the future of the industry going, and I also kind of wanted to know what your take on tariffs are and how that's going to affect the industry well look, historically speaking, things like tariffs make part availability more difficult to come by, which tends to play into the auto recyclers wheelhouse right.
Speaker 1:So some of the things we start talking about, you know, in there is pricing. Prices have really shot up on used auto parts during the height of the pandemic, when they started falling with tariffs. The questions around tariffs, the uncertainty around part availability, in a lot of ways has created more uncertainty around pricing, which has slowed down some of the downward descent on pricing, adding some stability to what is going on. And, as everybody knows, the price of parts may have fallen, but the price of salvage has not per se. So that in and of itself, puts margin compression into play. Margin compression coming into play to when you start looking at what the future is. That's what drives independent businesses out. If there is no margin, if you're forced to live on a quarter percent profit, the only way to do that is run $50 billion in revenue and then the dollars work, even though the percentage is embarrassing For independent businesses. We need a certain amount of percentage in order to provide the dollar amount, in order to justify the amount of capital investment that is truly required.
Speaker 1:You're going to run into a number of different things. As some people become more proactive in investing in their business and people working on training their people, they're going to have an aggression level that goes up. Do they cannibalize some of other people's business because of that? Do with tight margins, that could end up shrinking the overall number of facilities that are out there selling used auto parts, especially when you start looking at some of the land values versus the margins that are being produced, starts to become a tad bit tighter. So I think what you're going to see is the continual march of big facilities becoming bigger. Prp uses big, bigger, biggest vernacular for yards that big is under $20,000 a day and revenue bigger is under $40,000 a day and biggest is over $40,000 a day in revenue.
Speaker 1:But I think you're going to continue to see pressure on all of those categories or or volume ranges in order to stay viably profitable in the mix and Bill and I think the well-run organizations the ones that are that are investing in their people, putting forth the work, truly Understanding their, their, their KPIs doubt in on what the numbers are are going to continue to be successful and still be really, really well, and some others who are not willing to put forth the effort, are going to think that this business is too hard, not worth the overall aggravation that comes with it, because there is a tremendous amount of aggravation that comes with it. And the bottom line is this I think you're going to see, the overall rate of consolidation is going to slow. The number of facilities that couldn't find a buyer, that closed, will go on the slight uptick. The tariff mess is going to be the tariff mess for a period of time. That's in there.
Speaker 1:I think the one point that's being not discussed is the tariffs are ultimately going to cause the age of the North American fleet of vehicles to age. We're already in the United States at 12.6 years, the oldest it's ever been. As that number hits the 13, 13 and a half year old range, that opens up a window of customer pay used auto parts that hasn't really existed since the 50s and 60s era of the auto recycling industry.
Speaker 1:So I think that there are some things to really kind of look forward to and as I get done saying that you know there's half a dozen people that are probably shooting emails saying you know what exactly are you drinking for breakfast today?
Speaker 2:Well, I would agree with that wholeheartedly, you know, as other materials are harder to source you know auto parts or recycled auto parts are going to be the key to where they're going to be sourcing these parts. I have a feeling, you know, precious metals and materials are going to be depleted eventually as well. So that's, you know, just another avenue for us to kind of fail as well.
Speaker 1:Yep, yep. Most people don't want the precious metals mined out of their country. So, the amount of places you can get them from happen to coincide with the amount of places that we seem to have on our.
Speaker 1:Let's make them as mad as we can make them so in the end, the auto recycler is going to have some ups and downs, as is always the case. The scrap metal component of it is going to be volatile. Uh, in there for you know somebody like a dj's, but after this for a while he's thinking, hey, nothing's changed on that. It's been volatile from the day that that started, from the point that we didn't used to always get paid for our material. We used to pay to get rid of it. But from the time that we started to get paid for it, there's been volatility associated with that. That's not really going to change Converters up, converters down. That's been volatility associated with that. That's not really going to change Converters up, converters down. That's been a free-flowing thing. We're in there Now. The information, james, that the amount of materials needed for converters is going to be through the roof, which is going to cause prices to bounce back some All of those things are just what we have to continue to work our way through by continually moving the product.
Speaker 1:Don't hedge Buy today, sell tomorrow. That's still the way that model works. Continue on that same path. Focus on the sale of auto parts. Focus on taking care of your customers. Focus on taking care of your staff. Remember happy staff doesn't apply for other jobs. Happy staff isn't always looking for more money. Take care of your people so they take care of you, investing in them when appropriate. You know the training components of it. You know taking advantage of some of the trips. You know denver's a nice location. Florida was a great time with the disney. You know taking advantage of those things to build the culture the way you need that's.
Speaker 2:That's where the money's at I completely agree and I love the the idea of incentivizing your employees now for that.
Speaker 1:The conference here coming up in well, not coming up, but in may in denver, so that's very key, I think, and could be implemented in a lot of these facilities as well well, you just look and see every every year, the month after the conference is over, you hear a tremendous amount of pushback about how many people I should have sent, how many people I wished I would have sent that didn't want to go, and the number of people that are griping because they weren't given the opportunity to go that wanted to go. So it just seems to make sense to put out some carrots, put out some parameters in order to make it happen, and that way everybody wins and no one loses, which is the idea of how you build a good culture.
Speaker 2:Yep, completely agree. I love that Awesome. All right, dj. Did you have any other comments that you wanted to say?
Speaker 1:I wanted to ask Mike Mike and I, two years ago, ate dinner with his nieces at a convention and it was a great time and I had shared with Mike, while we were eating dessert, that URG asked me to call these people who have never attended a URG conference. So for GPRP, this, mike, this was the first year a guy walks over when I'm doing the podcast. He sits down Mike, and he says DJ, two years ago you got me on the phone and told me I need to come. Well, I didn't come that year, but I came last year and he was talking about St Louis. He said I learned so much at St Louis. I only took one guy to St Louis and I said well, how many do you have here today?
Speaker 1:He said I have five today, wow, here in Florida, and I want to say thank you because I'll never, ever miss another URG PRP conference. So he was telling me at dinner that night that all we got to do is get them to the first one and they'll be back. Yeah, they've learned so much. So, mike, while we have you on this podcast and you're a dear friend to the industry, a good friend of both Amanda and myself what would you say to somebody who's never been to a URG, never been to a PRP, never been to an ARA? What would you tell them how important it is for you to go out and network with fellow recyclers?
Speaker 1:You know, there really is another industry that I'm aware of that has a conference, that there are no topics that are off limits.
Speaker 1:There's an expert on everything there and they're more than willing to stand in front of you for as long as it takes to have a discussion with you about that. So when you start coming in to really understand that, for auto recyclers, by auto recyclers, is not just the slogan that URG was originated with. It's a thought process that is truly ingrained throughout the industry and how we have made it through the handful of times that we have been written off as not a sustainable model anymore, and every time that's happened, we've been bigger and better and stronger than when we were written off for dead to start with, and there is no doubt that, even with the deck being stacked against us in a lot of different ways, the auto recycling industry is as resourceful as you can imagine and the entrepreneurial spirit is overwhelmingly strong, and when you come into that environment and you're exposed to it, it's just a shot of energy, enthusiasm and intellect like you've never received before that's perfect.
Speaker 2:I love that. We need to snippet that last part and put that on our social media. Like you've never received before. That's perfect. I love that we need to snippet that last part and put that on our social media.
Speaker 1:That was perfect, right, amanda? The only other thing I would ask, mike, is we have a lot of listeners and, of course, once we get to 10,000, mike, we're just over 9,000 listeners every week tune in to URG on the go.
Speaker 1:But what I wanted to ask you, and this is kind of one of these things where, as we progress, there has to be something where you can give us a tip that says, DJ, if it was me now, I watched you at a car park convention and you were filling in for somebody and when it was over we learned more from you than we did from the supposedly person that was supposed to be there that day. But you've gone through the ranks to be where you are today, so could you share a little bit of that before we end this podcast? Oh sure, DJ. My big thing that we've been really pushing on right now is when you dig down into the numbers as deeply as I dig into the numbers, what it boils down to is very, very.
Speaker 1:You know the problem is very, very simple. The solution not so much. But the problem is very simple. We're one to two parts per vehicle short in what we need to sell. It's just that simple per vehicle short in what we need to sell. It's just that simple. Down to take two parts times the number of vehicles that you buy at your average part price that you sell. If you calculate all that in and restate your P&L with those numbers in there, what you'll find is that cures all of your problems and makes the world much, much better in coming back in. So it's a very simple thing.
Speaker 1:I'm on the dead search for one to two more parts per car and now the the real devil in the details is how you go about that, whether it's inventory expansion, getting deeper into the car, digging deeper into the cars, and always the end-all be-all.
Speaker 1:Because you got to have demand for the parts, you got to hit the right price point. There's a certain amount of this, this aggression level of the sales people and that is really where I'm kind of attacking at is the sales people seem to be slowing and realizing that the COVID high is over. The engine selling like hotcakes is coming to a halt. The price going up dramatically is coming to a halt. The price going up dramatically is coming to a halt. The price is dropping and the quantity being sold dropping simultaneously is going to lead to less in sales, which is going to lead to less commissions.
Speaker 1:So the way to counteract that is by hunting more, which just is as simple as aggressive outbound phone call campaign Understanding your electronic placement of it. I mean, if you haven't talked to Amanda about your data and what she does with your data, what she can do with your data versus what your data is being done with, you're probably missing the boat on that pretty dramatically there. But really, just being dialed in to how do you roll your sleeves up and push the aggression level to come out of the corner swinging to make sure that, while we may feel pain, that it's going to be nothing compared to what I do to the other fellows that are coming after me.
Speaker 1:Hey Amanda, let me ask one more question. I'm turning it over to you, I'm done. Here's my question, mike. We me ask one more question. I'm turning it over to you, I'm done. Here's my question, mike.
Speaker 1:We have a lot of listeners. What size do you have to be to belong to a profit team 20 group? Well, you really don't have a size limit there. I mean, we put you with people that are up the same size as you to come in now. Nobody wants to be the biggest. Everybody would rather be the smallest in the group than the biggest in the group, because you have the opportunity to learn from everybody that's bigger.
Speaker 1:What the the 20 group concept really does is allows you to move at a much faster pace because, first of the accountability aspect of it, second the planning aspect of it, and then the third thing of it is uh, it is.
Speaker 1:You know from what people tell me, I have a way of really simplifying how to run a wrecking yard down into very bite-sized, manageable pieces, and what we end up doing is having some very logical discussions about each of the different product lines, each of the different departments in the company, and, in the end, when we add up what we agreed we could get done, this comes up with a very illogical sales increase or production increase in order to make it all happen, because, at the end of the day, we need to never lose track of the fact that there's only one reason that we do this, and one reason only, and that is to make money, and the only thing that's better than making some money is making more money.
Speaker 1:Yeah, and Amanda, you know every time you ask the question to what's one of the best things that happened, just like when Dan snyder said best thing to happen is when I joined a 20 group. Yep, I completely agree, told us. He told our listeners one of the best things he ever did was to join a 20 group and I've heard that for multiple yards as well.
Speaker 2:You know just yep, if they're, if they're in it, it and if you're interested in it, definitely look into it and reach out to Mike or anyone on the profit team consulting team and they'll definitely get you set up and teach you all the things you're going to need to know. Like I said before, continuing education is just so key, especially when you're wanting to invest in your employees and invest in your business. It's the way that you're going to be able to be successful in the future. So thank you so much, mike, for being on today. Do you have any final words that you'd like to say?
Speaker 1:No, I really do appreciate y'all and everything that y'all are doing. That's in there. We're getting a lot of things out and publicly documented. That's in there. We're getting a lot of things out and publicly documented, which I think is of the utmost importance as our industry becomes much more mainstream. So thank you all very much for your efforts and everything that you're doing to enhance the industry. Hey, mike, for one of our listeners, if they want to get a hold of you, what's the best way for you? What do you? You prefer text and email or what? I'm universal there. You can get me at Mike at ProfiteamConsultingcom. You can come through the ProfiteamConsultingcom website or you can call or text me at 817-713 3148 and all of those get responded to, probably not as timely as I should, but at the same token, they all get responded to, that's all that matters.
Speaker 2:We just want to thank you guys for listening and I hope you guys were taking notes today. There's lots of tips and tricks to follow up with, so these are all archived as well. So we hope that you guys are listening and follow us on the podcast. We want to get up to 10,000., so we'll see you on the next podcast.