Asset Recovery – AssetAuctions
Buyer Details
Member Industry: Electrical Equipment Manufacturer
Revenue: $2.5 billion
Employees: 11,500
Existing Condition
In early 2003, an electrical equipment manufacturer found itself lacking the in-house expertise to most successfully capitalize on selling valuable scrap metal from its numerous divisions and subsidiaries. Not only were there locations all around the United States to reconcile, but there were also locations in Puerto Rico, Mexico, Italy, Switzerland, and the United Kingdom to coordinate. The company decided to concentrate on ten of their facilities for a 2003 scrap metal service contract bid: 7 US facilities in 7 separate states, 1 facility in Puerto Rico and 2 in Mexico.
Solution
Aware that the annual value based on current pricing would bring them around $3.4 million, the manufacturer chose to contract the services of AssetAuctions, a full-service industrial equipment auctioneer, capital asset management consultant, and surplus asset recovery firm, to investigate the opportunity to increase their take. AssetAuctions evaluated the 10 facilities with expected annual scrap metal value ranging from $50K to $520K and decided that the company’s best strategy for selling their scrap would be to put the output from the facilities up for 3 year contracts by placing them on auction.
Results
Listed as 13 separate lots on the AssetAuctions website, the company’s facilities amassed 393 bids from 43 distinct companies within a matter of hours. Instead of receiving $3.4M from their scrap sales, they collected $4,000,500. The difference translates to an annual revenue of $578,000 in incremental scrap metal and a pricing increase of 16.88%, totaling $1,734,000 over the 3 year contract.
From the value realized in their 2003 bids, the electrical equipment manufacturer decided to again partner with AssetAuctions for a similar 2006 bid. The March 2006 scrap metal service contract bid proved another successful venture. Addressing 5 facilities that were not included in the 2003 bid, this time based in 3 US states, Montreal and Tijuana, AssetAuctions provided the stage for a 19% jump in scrap metal pricing, adding $500K to the company’s bottom line over 3 years.
The manufacturer has since teamed with AssetAuctions to handle internal surplus through the supplier’s internal surplus asset redeployment website.
Thanks to the expertise and valuable resources of AssetAuctions, the electrical equipment manufacturer can focus on its core business and maintaining the superior operation, reliable performance, and dependable service that distinguish their products from others.
"An overall expenditure reduction of 15% plus improved terms and conditions with the same supplier! There is nothing like volume to get a supplier to sharpen their pencils."