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Stealing Steel
By Jim Stavis
With the high cost of metals these days it is no wonder that certain products have become extremely valuable and thus targets for theft. The Barclays base metal index, which is an easy gauge for the price of copper, aluminum, lead, tin and zinc, is up over 95 percent since 2005 alone. This has made these products desirable targets for theft and crime. In 2006 more than 24,000 manhole covers were stolen from the streets of Shanghai. In Fort Worth last June bronze memory urns were stolen from graveyards. The following month, at a high school football field in Washington D.C., 750 pounds of aluminum bleachers went missing. Verizon claims it has lost $300,000 worth of copper wiring from cell towers in California in the past year. And AT&T claims to have lost nearly $3 million since January in Michigan alone. We were just notified by one of our customers at the writing of this article that their aluminum flag pole was cut down and stolen from the front of their facility. Even Anheuser-Busch has noticed the disappearance of many stainless steel beer kegs and has decided to take action. They have tripled the required security deposits to insure that the kegs are returned to them. So what is driving this sudden black market in metals?
Unlike previous metal theft booms, this one is being driven not just by the enormous run up of raw material prices, but because of an unprecedented surge of the global demand for scrap metal. Developing countries like China, India and Russia now consume more metal than they can produce and have become net importers. As a result the U.S. scrap metal industry has grown from $40 billion in 1995 to $61 billion today. Domestic prices have shot up accordingly. This has fueled the crime surge where a truckload of copper can generate some significant fortunes. Last year we received an order for copper sheet that was paid for upon delivery with a bogus bank money order. Then we heard reports that other metal distributors were stung by the same group of thieves. They were taking brand new sheets of copper, cutting them up and selling them off for scrap. After several metals companies were burned, a sting was set up by the FBI, which finally busted the group for grand larceny. Needless to say, we never got the copper back.
A clampdown on this illegal economy is definitely in the works. Lobbyists for AT&T, Verizon, as well as other utility companies have joined police departments across the
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country to push for tougher regulation of scrap yards. Thirty states are considering the passing of new regulations which would require scrap yards to check material origination and to document each sale. Soon steel distributors will have to arm their drivers to prevent the hijacking of their steel loads. It sounds far fetched now, but we never thought this day would come either.
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The Rich Get Richer
This is a story of a very clever man in New York City. This man walked into a bank in downtown Manhattan and asked for a loan officer. He told the loan officer he was going out of town for business for two weeks and needed to borrow $5,000. The bank officer told him the bank would need some type of security for the loan. The man handed over the keys to a new Ferrari parked on the street in front of the bank. He produced the title for the car and everything checked out. The loan officer had accepted the car as collateral for the $5,000 loan. The bank's president and its officers all had a good laugh at the man for using a $250,000 Ferrari as collateral against a $5,000 loan. An employee of the bank then drove the car into the bank's underground garage and parked it there.
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Two weeks later, the man returned, repaid the $5,000 and the interest, which came to $15.41. The loan officer said, "Sir we are very happy to have had your business, and this transaction has worked out very nicely, but we are a little puzzled. While you were away, we checked out your credit and found that you are a multimillionaire. What puzzled us is why you would bother to borrow $5,000?"
The man replied, "Where else in New York City can I park my car for two weeks for only $15.41 and expect it to be there when I return?"
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Quote of the Month
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"Organized crime takes in over $40 billion a year and spends very little on office supplies."
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