As Henry Ford proved, the fastest way to assemble an automobile was to put it on an assembly line. Vehicle Environmental Solutions, LLC (VES) has developed a system to dismantle or take apart automobiles, using Henry Ford’s idea. They developed a disassembly line and it has turned out to be the fastest way to take a car apart. A single disassembly line has capability of processing 10-15 thousand end-of-life automobiles per annum, and producing substantial concentrations of reclaimed component materials and parts.
VES will establish state-of-the-art under-roof, environmentally benign, energy self-sufficient, semi-automated automobile reclamation facilities.
VES estimates that the processing of as few as 18 vehicles per day, during the first year of real-time operation, will produce positive cash flow, projected to be reached within eleven months of real-time operations. Cash flow increases as production increases. A controlled through-put ramp-up program will bring the number of disassembled vehicles to 18,000-20,000 in the fourth year (70 vehicles per day). Such production in the fourth year could generate over $8 million in revenues and $4 million in EBITDA, based on today’s projections and historical/empirical data gleaned from three previous and three current commercial iterations of this business.
With support from strategic alliances, VES will be put in place throughout the United States and many parts of the world. Veh-Eco estimates, conservatively, that 100 plants operating around North America could generate more than $400 million in EBITDA. Much of the financing for those plants will be non-recourse from strategic partners. Furthermore, VES will provide a one-stop source of feedstock for manufacturers of metals and other materials, automotive parts re-manufacturers and reclaimed automotive parts marketers/brokers.
VES currently has three facilities planned to go online within 24 months of the first opening and two additional plants are being planned to follow all within 3 yeVeh-eco. The first two locations are in Florida and Texas. Additional locations will be in Virginia, Oregon, and California.
Industry Overview and Competitive Analysis
In the United States approximately 15 million vehicles reach their economic end-of-life every year. While their value becomes nil, the value of the component materials and parts, as reclaimed feed stock and recycled components is significant. According to the Automobile Recyclers Association (ARA), the “Automobile Reclamation Industry” is a $5 billion market, making it the 16th largest industry in the United States.
End-of-life automobiles are removed from use at the rate of 11+ million per annum. These vehicles are being traded in, abandoned, donated to charities for tax deductions, or confiscated by government agencies. Eventually they are delivered to Junk Yards or Shredders (the Automobile Reclamation Industry). These end-of-life vehicles can be a valuable source of component materials and parts as volume feedstock to manufacturers, re-manufacturers, volume part-out specialists, volume export parts brokers, reclaimed parts retailers, and R&D companies.
The Automobile Reclamation Industry as it stands today is segmented, parochial, and ad hock in nature. Current regulations, in most States, deter the ability to expand and grow.
There are approximately 18,000 automobile Junk Yards in the United States. Of these 18,000 yards, approximately 25% are licensed automotive reclamation operations and 10% are full time members of the ARA. The ARA has awarded its “Gold Seal” standard to only 50 of these businesses, which certifies them to be of high quality in adhering to current environmental and safety requirements. ARA estimates that 86% of the yards are family owned and operated. Over 84% of these operations generate annual sales of less than $2 million. It is estimated that only 30 to 35 yards have annual sales of $4 million or more. The greater portion of the sales is to new/used car dealer shops, collision/mechanical repair shops, and off-street retail trade; only a small portion of sales is derived from bulk buyers.
VES can recover approximately 98.5% (by volume/weight) for recycling into new products.
VES has an unprecedented opportunity to become an industry leader in automobile reclamation, and will bring to the industry an economy-of-scale, continuity, reliability and volume-product availability, through its environmentally benign and high-recovery process that does not presently exist.
The Parent Company
SDH Group, Inc. is filing an SB-2 Registration with the SEC and should be listed on the OTC.BB in early 2008. |
