I.R. has generated their own income since at
least 1920. In 1920 they generated just over $63 thousand dollars in earnings
and have increased their earnings every year of their existence except in years
where they were touched by outside influences. Earnings grew to over $1 million
dollars by the depression years in 1929. In 1930 earnings dropped to just under
$800,000 and continued to decline to a low of about $287,000 in 1933, a 10 year
low that hadn't been seen since 1924.
By 1937 earnings had again reached the
million dollar mark and continued to grow until the 2nd World War reaching over
$2 million dollars in 1941/1942. Earnings then declined through the war years
not to reach $2 million again until 1947. During this time, in 1943, League of
Goodwill came onboard in Investment Recovery, or Salvage as it was formerly
known.
By 1950 a new earnings milestone was reached
of over $3 million. Earnings reached $5 million in 1955, $10 million in 1970,
$15 million in 1982, $20 million in 1983 and $25 million in 1990. 1994 was
probably the record year, reaching almost $26.9 million.
I say 'probable' because right after
downsizing during re-org, (1994) earnings information was not captured for 1995
& 1996, likely because little or no knowledge transfer took place. In I.R.’s 85 year history there are no other dates where
earnings information were not captured. From there, the represented Stores
members and the office staff began declining in numbers and the operation
started becoming more of a contracting process through on site League Of
Goodwill, which became Goodwill Industries Of Greater Detroit in 1985.
Earnings also started moving downward in
1997, leveling off and floating around $10 million a year through the first half
of this decade, except in 2001 when earnings dropped under $10 million for only
the second time since 1970.
Since 2002, the amount of material leaving
W-100 to the Service Centers has dropped somewhat, which explains the drop in
material returning to I.R. from the secondary warehouses. However the drop in
earnings is multifaceted, brought about by fewer returns from D.O, inadequate
onsite storage space, not enough knowledgeable represented personnel to sort
and identify material nor enough office staff to find and leverage buyers.
Because of these reasons, I.R. has also been unable to grow through new venture
work as they have been accustomed to doing in the past, nor are they able to
continue expanding current programs into areas of the company not yet engaged
in deploying all their salvageable and scrap resources back to I.R.
Represented staff reductions on the floor
dropped from roughly 13 to15 employees in 1994 to the 8 we have today. These
reductions of represented personnel on the floor has compromised I.R.'s ability to adequately sort, identify and direct
material to it's most profitable distribution/redistribution point, and the
reduced office staff has been similarly affected, compromising their ability to
find and leverage buyers.
At one
time Investment Recovery sorted, identified and/or cleaned and refurbished
stock, tools and equipment which they returned to the system eliminating the
need to buy new stock, tools and equipment from vendors. This process saved the
Company untold millions. The near cessation of this process has brought about
tremendous additional costs to the company. Items are getting scrapped because
of insufficient resources rather than being returned to the system. The
achievable savings from re-implementing this process isn’t even factored in
this opportunity, but it amounts to millions yearly.
The demolition of storage buildings in
2001/2002 seriously compromised I.R.'s ability to
store material. (reduced storage/work space from about 300,000 square feet to
30,000 square feet) Floor space is key for a several reasons, (1) provides
storage space for material awaiting sorting, (2) provides space to sort and
identify material, and (3) provides storage area for sorted material while
seeking and leveraging buyers, which is significant when selling items that
bring their best price when sold in bulk.
MichCon, who we
merged with in 2000/2001, didn't have a salvage process, thus increasing
potential for salvageable material and increased earnings for I.R. To this
point, we haven’t been able to take full advantage of their salvageable
material. In 2001-2002 MichCon scrap returned just
under $12,000.00, almost $37,000.00 in 2003, over $165,000.00 in 2004, and
almost reaching the half million dollar mark in 2005. ($485,370.21)
Thus far all we’ve done is scratch the
surface. Little else has been done to take advantage of the salvageable
material on the MichCon side of the house. There's
little urgency at this time to pursue that avenue much beyond current efforts
due to inadequate personnel resources and storage space.
Goodwill Industries employees are a good
value especially when you factor in the Public Relations DTE receives for
having them in their employ. DTE has had a long association with Goodwill Industries,
(60+ years) which in a limited capacity can be a good thing, filling peaks and
valleys as is done in Material Transportation with Kennie
Annex. As the contractor role expanded and DTE employee roles have diminished,
it has affected the efficiency and profitability of the unit, primarily because
of inadequate experience and skills to identify salvageable stock and tools
from scrap materials and direct proper distribution and disposal of same.
If we outsource I.R. as has been suggested,
several things are likely to occur.
-
Not having inside personnel with intimate knowledge of the material, some of the
salvageable material will become scrap material, eroding profits.
-
Once we lose control of the product, abuses are likely to occur which will
further erode profits and the process will likely produce less and less profit each year
instead of more and more as I.R. has had a long history of doing.
-
There's a major problem in Distribution Operations that generates a large amount
of salvageable material. Right now it's a problem we have the ability see and
identify. Many resolutions have been offered but none as of yet have
successfully stopped the flow of good material back to IR, but it's continually being looked at. If outsourcing is allowed to continue
to grow through Goodwill Industries or by any
other means, especially by taking it offsite, we'll eventually lose sight of
our own internal waste and inefficiencies as
well our ability to try and solve the problem.
Unknown to a lot of people inside and
outside the company, there are a lot of projects I. R. is involved with, like,
selling vehicles via the Investment Recovery web site as well as at outside
auctions. They disburse and monitor brochures for Corporate Communications via
the brochure web site, sell corporate commodities through the I.R. web site
(www.Materialplus.com) thus providing a wide customer base, they manufacture
products for Purchasing through the internal order process, manufacture
wire-down material and tool bags for storm center dispatching.
I.R. cleaned out MichCons
Guardian building and salvaged the materials, they sold locomotives recently to
Ohio Central RR, and locomotive switcher units to
Mineral Range.
I.R. does lead abatement in the Power Plants & shops. I.R. dismantled the
coal conveyor system at River Rouge Power Plant, removed stock inventory at
Marysville PP when it closed, established paper recycling at Southfield Center,
they do all the material write off's for the entire Company. I.R. cleaned &
removed & stored insulation from Monroe Power Plant & re-staged it at
Dixie Warehouse for future jobs, they remove transformers and breakers from
Substations and dismantled a 300,000 pound power transformer at Wabash Station.
On Jan, 26th of this year, I.R. did last
minute clean up downtown around Ford Field for the Super Bowl project. The work
was originally contracted out but the contractor either failed to deliver or
failed to meet expectations.
Investment Recovery is also a member of the
Investment Recovery Association based in
Kansas
City, Missouri where
they are held in high regard as best in class and are used as the ideal example
for others to follow. People come from all over the country and the world to
view DTE’s salvage operation. People have come from
nearby Canada, and as far
away as Pakistan, China and Japan.
DTE and their consultants keep touting their
current efforts will make DTE best in class, yet they are ignoring their most shining
example and even considering I.R's demise.
Early in the PEP process, I was in meetings
with Distribution Operations and Supply Chain, both of whom had people who
wanted to diminish I.R. in size, outsource or eliminate them. I think following
through with any of the 3 proposals would be a mistake. Maybe DTE doesn't
consider I.R. core business, but then what is? Detroit Edison has splintered
into about a dozen company's, so who knows what's core anymore? Depends on who
you talk to. Maybe we should splinter again and make I.R. another stand alone
company to assure their survival.
I.R.’s contract
work force sometimes challenges Management with attendance problems and other
reliability issues as a result of their large manpower turnover. Anytime
something is contracted, reliability is always the first thing to boomerang
back. Reliability issues are significant concerns in an industry such as ours,
which I heard was relayed to DTE management last year by PA Consultants who did
DTE's bench marking efforts.
A. If
material were to be transferred to and sorted by a contractor or other vendor
off site, there would be a need to establish
audit trails to show receipts and sales
were accurate.
B. We would
need to have people in place to assure all revenues are reported and
appropriate percentages were returned to
DTE Energy.
C. We would
have to maintain a staffing level to monitor the above as well as to make
vendor site visits to assure reportings
were accurate and to assure scrap material is
scrapped and salvageable material is salvaged and not lost, stolen or
misappropriated.
The end result is we're losing about $20
million or more a year in potential salvageable and scrap materials at DTE
enterprises for want of 1 million dollars or less a year in additional office
and floor staff plus storage facilities. The vacated area at
Warren Service
Center where the old
buildings stood, offers adequate space to build. There are many metal building
manufacturers that sell inexpensive buildings. A building, or series of
buildings like these could easily provide the indoor storage and work space
needed at very reasonable pricing. It wouldn't be necessary to spend millions
of dollars for a state of the art facility solve this problem.
If we stopped ignoring the $20+ million in
capitol that’s lost each year, and initiated an offensive to capture it
instead, it could easily make a difference of 40+ million a year to DTE's bottom line. ($200 million over 5 years)