After finding his niche decades ago selling affordable, quality used auto parts, Gordon “Gordy” B. Palley is getting out of the auto salvage business, despite a strong, loyal customer base in the industry.
Mr. Palley, owner of Amherst Oakham Auto Recycling in Oakham, loved putting deals together for his customers, but at 66, he said it is time to retire and travel more with his wife, and spend more time with family and friends.
His customers always trusted him to “do the right thing,” he said, by getting the “right part to the right person at the right price at the right time.”
“I feel, after 32 years here, I’ve done the right thing,” Mr. Palley said during a recent auction at the 43-acre property where he was looking to sell 57 cars and $2 million worth of auto parts. Among the items for auction were a car carrier, ice cream truck, a 1995 S600 Mercedes, a generator, lifts, pay loaders and other auto equipment. Mr. Palley said he still has about 2,500 vehicles left to pick from on a “cash and carry” basis until the gates close at 358 Coldbrook Road on July 20.
“It has been exciting and gratifying helping a lot of people save money and the auto recycling industry is great,” he said. “Car recycling is the most successful of any recycling in the world. I am going to miss it.”
Despite strong profits, Mr. Palley was unable to find a buyer for the business to continue with the same use. Instead, the property is going solar. He said the property passed 21E environmental requirements and Cypress Solar plans to install a large solar array, pending approvals.
“I couldn’t find the right person at the right price, but I am very happy about the solar deal,” Mr. Palley said. “It is a great thing for the environment.”
Mr. Palley said he plans to spend a few more months at the business liquidating inventory with three of his employees — two who have been with him more than 25 years.
“I gave my employees a good work environment and fair wages,” he said.
Sandy S. Blalock, CEO of the national Automotive Recyclers Association, said the industry, in general, is doing well but struggled when the economy went into a downturn a few years ago.
Though there has been about a 7- to 8-percent loss of recyclers in the U.S. overall in recent years, it seems to be making a rebound, Ms. Blalock said.
“This could be attributed to a normal correction of the economy as well as increased costs to comply with the sometimes onerous compliance programs that face our industry,” Ms. Blalock said.
Auto recycling, like many retail operations, she said, has a large presence online and is now a global business with recyclers buying, selling and trading with each other online more than ever in the industry’s history.
“We are still experiencing large numbers of customers actually going to recyclers and, in particular, our self-service market where people pull their own parts for a tremendous cost savings,” she explained. “Many customers do prefer to shop online as well as our wholesale customers who source their parts through the many parts-locating services that are utilized in our industry today.”
She said the practice has not been detrimental to recyclers who have fully integrated their systems to handle online transactions, but there are still many recyclers that are not fully engaged in electronic buying and selling.
“They will continue to struggle until they adapt their systems,” she said.
Small operations face a tough challenge competing against online websites and big companies, people in the industry agreed, but the market for used auto parts is strong.
Jason L. Koodess, who works at his father’s automotive business in Western Massachusetts, attended Mr. Palley’s auction conducted by auctioneers from Aaron Posnik & Co. out of West Springfield on June 20.
“With Aaron Posnik, you know it is going to be good stuff,” Mr. Koodess said. “People follow them like a rock band everywhere they go.”
Mr. Koodess, who attends several auto auctions weekly, said he was interested in the 1995 Mercedes with only 16,000 miles on it, the ice cream truck and other vehicles.
“I’m here to buy cheap cars and flip them,” he said. “My dad will fix them and I’ll detail them.”
Bob L. Holland, owner of Holland Used Auto Parts in Billerica, who does Mr. Palley’s car crushing, also attended the auction.
“I’m happy for him,” Mr. Holland said. “It is a tough industry with a lot of hours and a lot work. I wouldn’t want to take over an operation like this.”
Justin Nietsche from Worcester, who usually hits storage unit auctions, said he attended the auction for a friend looking for engines.
“This is interesting and there are good deals,” he said. “It’s cool they are turning it into a solar farm.”
Paul F. Kawolis, president of Linder’s Inc., at 211 Granite St. in Worcester, said he has a 45-acre campus with four buildings, operates a full-service yard mostly utilized by body shops, garages and dealers, for wholesale business; and also a self-service yard known as Sam’s Pull Apart across from the main location where do-it-yourselfers are charged an admission.
Mr. Kawolis has worked at Linder’s — incorporated in 1922 — for 40 years and is a member of the national association and also on the board of the state’s trade association, Automotive Recyclers of Massachusetts. Linder’s also bought Henry’s Auto Parts in Blackstone 15 years ago, increasing the number of employees from eight to 30.
Though Linder’s, which employs 90 people, has seen moderate, steady increases in revenue and earnings year-after-year, he said he believes half of the smaller businesses nationally in the industry have closed over the last four decades.
“I attended my first national conference in 1979 and have attended every one since then,” he said. “We used to have huge conferences with 1,200 to 1,500 attendees and now we have about 600 — half the attendees we used to have 40 years ago.”
Mr. Kawolis said the trend that has continued over a number of years is about an 8 percent decline year-over-year — a significant decline in any industry.
“It is kind of a Tale of Two Cities – the smaller businesses like the ‘ma and pa’ operations that have traditionally been in the auto recycling industry still operating in the ‘old junkyard’ traditions, their children haven’t taken over the business,” Mr. Kawolis explained.
Additionally, with consolidators in the industry like the multi-billion LKQ Corp. headquartered in Chicago that bought up about 160 yards in the U.S. and Canada that made the S&P 500 Index; and the new group Fenix Parts, also based just outside of Chicago, that buys existing yards, the smaller yards cannot compete, he said.
Last year, about six smaller yards in the area closed down, he said, but the large, independent yards like Linder’s are large enough to compete with the large national conglomerates.
“It is just like there are very few family-owned pharmacies,” Mr. Kawolis said. “It’s CVS and Walgreens and the same with hardware stores. For smaller facilities, it is hard to be competitive and to have the product range necessary to continue. The internet doomed them. It was their death knell.”
Previous to the internet, smaller operations would use a network of closed-circuit telephone lines and teletypes that linked all the yards together, he explained, when someone was looking for a part.
“Now, body shops and garages go right to carparts.com and other services that sort parts by location and price,” he said. “It has to be in your stock and on your shelf and the little yard didn’t have that big a selection and didn’t come up (in a search) anymore. Now, they go find where the part is. I believe we are going to continue to see the larger operations remain and the smaller ones won’t be able to compete any longer.”