Optimization; or Patience is a Virtue

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When I first started scrapping, I was so convinced that breaking everything down was the best way to make more money. The thought of optimization wasn’t part of the equation at that point. I would strip every thing down to the last tiny wire, squeezing every last drop of money out of each load of scrap, and then I would sell it as soon as I had a chance. It wasn’t a bad way to do things…But I was trying to optimize my scrap, not optimize my time, so I was never really reaching my full earning potential.

In a standard engineering problem, every single dynamic is accounted for in some sense and then optimized using efficient computer algorithms. I don’t have that much time or resources, so I just do the best with what I know!

Lets take stripping wire by hand for example. That may or may not be worth it depending on how fast you are at it, and how much wire, what length of wire, what you get paid for insulated wire, etc.

Sometimes it’s not always better to tear materials apart. For example, I used to strip the copper out of microwave transformers and motors. I got wise after but only a few trips to the scrap yard.  Take for example a microwave transformers weighting in at close to 10 pounds. At 30 cents per pound for copper breakage, that nets me $3.00. Great!

If I break them apart, you may get ~1 pounds of copper and ~9 pounds of steel. so at maximum that is

  • 1 pound of copper @ $3.10/lbs = $3.10
  • 9 pounds of steel @  $0.10/lbs = $0.90
  • + ten minutes to rip apart the transformer
  • $4.00 per 10 pound transformer
  • So I had $3.00, I now have $4.00. That means I made $1.00 in ten minutes.If I did this for an hour, with 6 transformers, I would be making $6.00/hour.

(All of that was calculation with hypothetical prices, but that doesn’t make the process I used to come to my conclusion any less valid.) Weather or not that is worth an hour of your time is for you to decide.

In some areas, scrap yards don’t pay anything for transformer except shred price. In one of these areas, you would probably want to break down all of your transformers before selling them. In other areas, they pay up to 45¢ per pound for copper transformers. In one of those areas, you would not want to break down your transformers, because they are paying you MORE then what you get for breaking them down.

But some may be saying, “Well what is wrong with making just a few extra cents per transformer? I have nothing better to do with my time then take this stuff apart, right?”

Firstly, there are so many other ways to make money scrapping, so there is always something more useful to do. Secondly, let me answer that former question with another question, “If you were to save all of those transformers for a whole year… What would they be worth then? ”

I know that If I hold onto all the transformers I get for a year, I can easily get 1500 pounds of transformers which is roughly 150 microwave transformers. If I call up my yard and say, “I have 1500 pounds of chunky copper breakage, what can you do for me price wise?” I’ll be getting more then $.30 per pound! I could easily call various yards until one agreed to pay me $0.35/lbs, which is 17% more!

If I had broken each one of those 150 transformers down and sold each separately as copper and steel, I would have made 150 transformers *$4.00 each or $600. If I sold a large heap of 1500 pounds of copper breakage (150 transformers) without tearing them down for $.35 per pound I get 1500*$.35 = $525….. So by doing nothing at all, just saving my motors until I have a larger lot, I am making more money. Am I making $600? NO. Am I making $75 dollars more, however, for doing nothing but holding onto my scrap. ($75, to put it into perspective, is the same amount of money I would have made by tearing apart transformers for 12.5 hours.)

This type of efficiency has proven very fruitful for me in the last year and a half. I saved lots of scrap copper and such, which during the recession was worth a mere fraction of it’s value today. I plan on sticking with this type of workflow, seeing as analysts don’t see the price of copper dropping below 3.50 any time soon!

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