Source: U.S. Bureau of Census and the U.S. Department of Commerce. IV. ESTIMATED TOTAL CONSUMPTION OF AUTOMOTIVE SCRAP BY STEEL MILLS AND FOUNDRIES AND EXPORT Year: 19651964. 1963_ Thousands of short tons 6,920 6, 050 4,965. V. COMPARISON OF AUTOMOTIVE SCRAP FROM VEHICLES GOING OUT OF USE WITH TOTAL AMOUNTS OF AUTO SCRAP BEING CONSUMED Utilization of auto scrap in steel-making is affected by both economic and technological factors. High rates of steel production are generally accompanied by increased proportionate use of auto scrap. For a number of years, utilization of scrap was retarded by technological trends in the steel industry. Some of the large users were operating on as low a proportion as 30% of scrap. Moreover, because of the presence of "contaminants," under-utilization of automobile scrap has characterized the picture for the past decade. Currently, new developments in the scrap and steel industries are causing changes in the potential use of automobile scrap in steel-making. To the extent possible, these developments and other very recent information are taken into account in this report. However, no official data are available yet on which to base definitive predictions regarding the future amount of increased usage of automobile scrap. In dealing with the total problem, it will be necessary to consider two additional factors: (1) The number of vehicles going out of use each year is increasing, and (2) a substantial backlog of discarded vehicles exists in the hands of auto wreckers and scattered around urban and rural areas, as well as the auto hulks that are being processed by scrap processors. Senator MUSKIE. It seems to me there are three critical areas and questions which your testimony raises. One, what is the capacity of the scrap industry for converting automobiles to scrap? Two, what is the capacity of the steel industry to absorb the material as scrap? Third, if there is a discrepancy between these two, or if there is a difference between these two, what do we do about eliminating it so that the steel industry absorbs all that are being discarded? Mr. STORY. Yes, sir. Senator MUSKIE. It does not seem to me just from looking at the roadsides and the countryside as I drive my car and fly over it in an airplane that the number of used cars being left around in the land 64-88666 -24 scape is leveling off, but is increasing. If what you say is accurate then this is not the case. Mr. STORY. We have had in the past year at least two instances that I know of in which the raw material, the old automobile in certain given areas, was in short supply, that our people could not get enough of the raw material to process into No. 2 bundles to meet the available demand. We must understand that their inability to obtain this tonnage is due to the price which they could pay. If they could pay $5 more for a ton of the material they could reach out farther. They are limited by freight rates, and the high cost of moving scrap. They can reach only so far. When they have cleared out their own area at the price at which the auto wreckers are able to move and they still have not met their orders then they are in a short-supply position. Senator MUSKI. Of course, on that point you and Senator Douglas agree. He says it would take about another $5 per ton to make this attractive. You would provide that $5 a ton by adjustments in freight rates. It is a little difficult, I think I have found, to get an action by Congress on freight rates which are set by the ICC. I would like to see an adjustment of freight rates on grain in my State but I have not had any luck. It seems to me we would have difficulty in getting adjustment here on freight rates on scrap. So perhaps Senator Douglas' approach is the most practical and obtainable one. If it were, what would you say? Would you rather have no relief if you can't get the kind of relief you prefer on this point? Mr. STORY. That is a very difficult question to answer, Mr. Chairman. Senator MUSKIE. It is the one we have to answer. Mr. STORY. I realize that there are problems with both of the suggestions we have again made here, very serious problems. I am suggesting that first of all a study should be made of the transportation problems and that this study then be the basis of further action with the Interstate Commerce Commission and the railroads and perhaps come back to Congress or through the administration to achieve some partial solution. This is a very difficult bill for us to apply ourselves to. We are very much in favor of the assistance which the bill proposes but we just cannot see our way clear to accepting some of the specific proposals which the Senator prts forward. Senator MUSKIE. Thank you, Mr. Story. We understand. We are simply trying to understand the problem, the differences in your approach to it and that of Senator Douglas and all of the facts upon which we can make an intelligent evaluation. Senator Boggs. Senator Boces. Mr. Chairman, our distinguished colleague, Senator Cooper of Kentucky, was here for a while but it was necessary for him to leave to attend another meeting. He submitted, before he left, for the record a letter from Mr. David S. Blue of the Louisville Scrap & Material Co. Mr. Blue, in his statement which was placed in the testimony, suggested that a freight rate differential between scrap and pig iron gives a competitive position to pig iron. Of course, Mr. Story did mention that in his testimony. He commented on that. Senator Cooper has already taken up this matter with the Commerce Department and Interstate Commerce Commission for more information relative to these rates. He sug gests, Mr. Chairman, that the committee might want to explore this field further and inquire for information from the Department of Commerce and the Interstate Commerce Commission. He asked me to submit this in his absence. I would have asked Mr. Story to comment on it further. I will be glad to have any further comments you wish to make but since you referred to it in your testimony I thought that was covered. Mr. STORY. Thank you, Senator Boggs. Mr. Blue is a member of the Institute. Senator Bocos. Let me ask one other thing, Mr. Story. In this past year or two the various States have been moving rather rapidly, it seems to 1ae, legislativewise in the legislatures to try to clear up the titling probieni for scrapped automobiles along the road and to provide better legislation for clearing the ears. Has your institute compiled any information on what States have moved in this area and what States have not? That would be interesting for the record. Mr. STOPY. There is a uniform automobile titling low which was proposed I believe, by the committee on uniform laws of the bar asSociation. This has been moving relatively slowly through the States. There is quite a variance in its final application. In sone States we have no problems at all. In other States, such as Illinois, which comes to mind immediately, a scrap processor in order to scrap a car has to go back to the statehouse in Springfield and ask for a wrecking title. This takes anywhere from 2 to 3 weeks. Meanwhile he is not supposed to wreck this car. He gets a backlog. The cost is a dollar but the problem is a backlog of ears which he can't handle from the auto wreckers or if he buys them from the individuals because of this requirement. I would say that the States are moving fairly quickly Senator Boggs. Are you interested in working with the State authorities? Mr. STORY. As much as we can. We have been in touch with the Council of State Governments on this and in touch with the county officials in an effort to speed the thing along. The States have also, of course, been very active in the past year or 6 months in passing highway beautification acts which relate directly to the bill which was passed here last year. This is coming along. In 10 years' time the blight aspect of auto wrecking yards alongside the highways, I would say, will be completely handled under the terms of the Highway Beautification Act of 1965. From there we go to the problem of getting more of this scrap back to the mills more efficiently and more effectively. Senator BOGGS. May I ask one other question, Mr. Chairman? Do you know of any bills which have been introduced in the other body or in the Senate relating to the tax incentive on scrap metal? Mr. STORY. No, sir; not a bit. Senator BOGGS. I have no further questions. Senator MUSKIE. The attachment to your statement concerning the city of Reading, Pa., will be placed in the record at this point. (The document referred to follows:) [From newspaper reports of Mar. 11, 1966]: WHY READING, PA., HAS AN "ABANDONED CAR" PROBLEM Reading, Pa., is an industrial city of about 100,000 population. The problem of removing and disposing of cars abandoned on its streets prompted a meeting of city officials, state legislators, and the operator of a car-towing service, and the only scrap processor handling auto scrap in the area. The following summary shows how legal red-tape and understandable city and state regulations can almost halt clean-up efforts. The basic problem is that an increasing number of autos are being abandoned on city streets. Until this time, the towing service and others had been hauling them away free of charge to their storage lot. Now the lot is full and the tower cannot accept any more cars. The lot is full for these reasons: 1. Before disposing of the car, the tower must have title to it. A thorough search for the owner must be made by the state police. In this area, only one state policeman is assigned to this job-and he must cover three well populated counties. 2. Because there is always a possibility that the person who abandons a car might turn up to reclaim it, the tower must store the cars so that all are accessible. This takes space and the tower has no more space to use. 3. Because the lot is crowded, the health authorities are concerned about health problems caused by the accumulation of old cars. 4. Without a title, the scrap processor will not accept the car. The police estimate it takes 75 days to make the search and eventually get the state to issue a title for the abandoned car. In those 75 days, more cars are abandoned, requiring their removal and storage. The scrap processor stated he would scrap all vehicles sent to him. But1. He will not take cars without a title and will not make himself liable for legal action by doing so. 2. Because of state and local restrictions on burning in the open, he is severely limited in the number of cars he can burn to clean them of the contaminating rubber, plastics, copper, fabric, and other materials which render autos unacceptable as scrap for steel mills. 3. The processor has obtained a new site for his plant, one large enough to allow him to install a machine which can consume 300 cars a day and produce acceptable scrap. But, unless the city aids him in getting the proper zoning, he will be unable to move. The summary emphasizes the fact that the roots of the junked car problem and the unsightly conditions they create are deep. Legal, technological, and economic factors all have an effect on the problem. The "simple" solutions offered-fence all scrap yards, dump old cars in the sea, and so on-obviously do not touch the source of the current condition. Worse, they either hamper the one industry existing to solve the problem in a practical manner or they waste a valuable raw material needed by the iron and steel industries. Senator MUSKIE. Thank you very much, Mr. Story. Mr. STORY. Thank you, Mr. Chairman. (Subsequently, Mr. Story submitted the following communication:) Senator EDMUND S. MUSKIE, INSTITUTE OF SCRAP IRON & STEEL, INC., Chairman, Subcommittee on Air and Water Pollution, Senate Committee on Public Works, New Senate Office Building, Washington, D.C. DEAR SENATOR MUSKIE: Re-reading my testimony before the Subcommittee last week, I feel there should be clarification of our stand on the question of subsidy. It's obvious, as you so ably pointed out, that whether or not we favor direct subsidy, we are suggesting that some assistance of an indirect nature be considered. In suggesting that the steel mills and foundries be provided an incentive to use more scrap, it was our feeling that this would fit more effectively into the current market structure, would make it possible to handle payments within the existing tax procedures, and would then leave it up to the consumers as to whether or not individual companies wished to consume more of this material. Our alternate suggestion for the railroads and other carriers (especially the former) was to apply part of the available 1 per cent of the excise tax on automobiles to the transportation systems. When the 1 per cent was retained last year as a result of Senator Douglas' urging, it was our understanding that at least a portion of this would be applied to the problem of assisting old automobile hulks to market. The major portion, as we understand it, was to go toward financing the Highway Beautification Act of 1965, and also to covering the cost of some of the research programs. We don't believe that funds should be paid directly to our industry for handling old automobiles or for building plants. Our people are of the opinion they can work effectively if markets can be somewhat stimulated or if some of the transportation costs of moving this type of material fairly long distances can be whittled. Obviously, I have members who would rush for a subsidy either for processing or for new equipment. But the more thoughtful of our members feel this would be a grave mistake. The vast majority recognize, however, that something should be done to get more cars to processors. They feel an indirect approach, for the reasons I have cited above, is the most logical and effective means of doing this. Mr. Blue's letter, submitted by Senator Cooper, tends to bear this out. Sincerely yours, WILLIAM S. STORY, Executive Vice President. Senator MUSKIE. Our next scheduled witness is Mr. Ralph Michaels, President of the Association of Railroad Car Dismantlers, who will not be here but will submit a statement for the record. (Subsequently, the following telegram was received from Mr. Michaels:) Hon. EDMUND MUSKIE, CHICAGO, ILL., June 14, 1966. Chairman, Subcommittee on Air Pollution Control, Committee on Public Works, Senate Office Building, Washington, D.C.: Thanks for your invitation to give testimony on the Douglas bill S. 3400 but regret pressing business prevents my presence in Washington tomorrow. Meanwhile I should like to register strong opposition to S. 3400 which establishes very serious bad precedent for our industry. For instance our association with a problem similar to automobiles is working with the Research and Education Foundation of Institute of Scrap Iron & Steel and also the Office of Solid Wastes of the Department of Health, Education, and Welfare. If further research grants are felt necessary they should be directed through the already established channels. Senator Douglas' bill as written does not accomplish this objective. RALPH MICHAELS, President, Association of American Railroad Car Dismantlers. Senator MUSKIE. We also have a statement for the record by Mr. Hugo Neu of the Hugo Neu Corp., of New York City, which we will include in the record at this point. (The statement is as follows:) STATEMENT OF HUGO NEU, PRESIDENT OF HUGO NEU CORPORATION OF NEW YORK CITY My name is Hugo Neu. I am President of Hugo Neu Corporation of New York City. This statement is being submitted by me to the Senate Subcommittee on Air and Water Pollution in order to bring to its attention a major technological advance having a vital bearing on Senate bill 3400, which is now before the Subcommittee. |