Channel 11 WPIX
Kevin Gershowitz, President, Gershow Recycling, says proposed legislation in Congress that would provide financial incentives for people to get rid of their older vehicles and buy newer, more fuel-efficient ones would be an effective way to provide stimulus to the U.S. economy.
One proposed House bill would grant vouchers of $3,000 to $5,000 to those who junk their older cars and purchase a newer, American-made car that gets at least 24 miles per gallon on the highway. Another House bill and a Senate companion bill call for vouchers between $2,500 and $4,500 for people who trade in their car with 18 m.p.g. or less to buy a newer car; while the new car can be either foreign or domestic, it must exceed federal government fuel efficiency standards by at least 25%.
The legislation is supported by the Obama administration, which said the purpose of the “cash-for-clunkers” legislation is two-fold: to reduce emissions as the late-model cars meet the federal government’s fuel efficiency standards, and to boost the auto industry, which has seen a significant downturn in recent months as more people have delayed the purchase of a new vehicle or purchased a used car as a cost-saving measure. As more people buy newer cars, Mr. Gershowitz says, they will take their older vehicles that are beyond the point of repair to the local scrap yards, which, in turn, will generate more business for the scrap metal recycling industry, which is an integral part of the U.S. economy, with eighty percent of all steel produced in the country coming from the $71 billion scrap metal recycling industry. A vote on the legislation is expected to take place next month.
“I applaud Congress for proposing this unique legislation,” says Mr. Gershowitz. “This gives people more money in their pockets to purchase a newer vehicle that they might not have been able to afford otherwise. The benefits to the auto industry are obvious. However, the legislation would also benefit the scrap metal industry, along with the steel industry and all of the manufacturing, financial and related industries that benefit when people purchase new cars.”
Mr. Gershowitz noted that scrap metal recycling is one of the most cyclical businesses, having seen some of his business drop off as a result of people buying used vehicles instead of new ones. Business has also suffered as people have purchased less large-item durable goods and have not made as many home improvements with the real estate industry suffering.
“In a traditional business cycle, where you are in a prototypical demand recession, anything you do to stimulate an acceleration of the cycle will get us out of this recession,” Mr. Gershowitz said. “Gershow — and the steel recycling industry — is a bellwether industry and integral to economic recovery.”
“We have been among the hardest hit, but will be one of the first industries to see the economy recover when banks free up lines of credit and people purchase cars and durable goods and begin to make home improvements.”
“Similar to the cash-for-clunkers legislation, tax incentives to encourage home buying, home improvement and business capital expenditures will help to jumpstart the economy,” says Mr. Gershowitz.