Metal Theft: Too Costly To Ignore
By Rory Montez
In 2007, the U.S. scrap metal business grew to a $61 billion dollar industry. High demand for scrap metal from China, India, Malaysia, Korea, and Japan continues to escalate, as economic growth feeds industrial expansion; commercial construction, factory production, and telecommunication systems require large quantities of raw metals. Scrap metals seeing the highest demand include copper, aluminum, titanium, steel, and nickel.
As the value of scrap metals increase, the rate of metal theft grows exponentially, and has become extremely lucrative due to the accessibility of items to steal and a hungry market for recycled metal. At scrap yards, copper fetches more than $3.50 per pound, aluminum $1.00, titanium $4.00, steel eighteen cents, and nickel sells for $7.00 per pound. Valuable metals are commonly found in car parts, such as catalytic converters, batteries and alternators, and in the largely unguarded and accessible areas of most commercial buildings such as rooftops where copper pipe is attached to air conditioning units.
Other common items stolen and sold as scrap include utility poles, man-hole covers, traffic signals and sprinkler heads. Often, thieves steal scrap metal from metal forging businesses and sell it to unscrupulous scrap yard dealers who do not ask for identification and fail to maintain proper purchasing documentation, as required by many state laws including California’s.
California Business and Professions Code section 21600-21609 states every scrap yard dealer is required to record the place and date of each sale, and obtain the name and driver's license or identification information for each seller, and then must obtain the vehicle license plate number of the motor vehicle used transporting the metal, a statement indicating either the seller of the metal is the owner of the metal, or the name of the person or entity from whom the metal was obtained. The dealer is obligated to maintain records of each metal purchase for at least two years.
This information can be critical in determining who specifically was involved in the sale of stolen scrap metal. While investigating cases of metal theft, our firm has often found that in many instances when scrap metal dealers were required to obtain such information, the information provided by the seller was false.
One of our clients, a Los Angeles area metal products producer, contacted us because his firm was experiencing five-thousand dollars of raw metal losses per month. “Mr. Smith” had little to go on, and was unsure if his employees were responsible for the theft. We placed an undercover operative into his workforce and soon discovered one employee who was working with a subcontractor, and on a weekly basis, the employee would purposely not account for metal that was supposed to have been returned back to the facility. Through mobile surveillance, we followed and documented via videotape as the metal was being transported offsite and sold to a local scrap yard. Working with law enforcement, we obtained the scrap yard dealer’s records and discovered the seller of the stolen metal was giving false identification to the scrap yard dealer. In fact, the identification he used belonged to someone serving ten years in prison! We recovered our client’s stolen product and facilitated the criminal prosecution of the employee and the dishonest subcontractor.
Another client, in the mining and drilling industry, contacted us when they discovered their utility poles had been vandalized and the copper wiring stolen. The utility poles were located on private acreage owned by the client; they had been cut with electric saws and stripped completely of copper wiring. The cost to replace each pole was approximately $30,000. These incidents also resulted in telephone outages that lasted several hours and negatively affected the company’s production. Attempts to solicit help from the police had fallen on deaf ears.
We recommended and performed a Security and Risk Analysis Survey, a thorough physical examination of the facility and its operation with respect to personnel practices and company assets, identified security vulnerabilities and made recommendations to mitigate risk and effectively prevented the recurrence of such incidents. Though our strong relationships in the law enforcement community, we successfully filed a police report, contacted the metal theft unit assigned to the area, and alerted them of the activity.
Our interaction with the detectives motivated them to help our client with their most diligent efforts. This quickly resulted in the criminal prosecution of a young man who was identified as a methamphetamine user with a criminal history of metal theft. We found that in removing the live copper wiring, the perpetrator was inches from being electrocuted. He came close to killing himself while receiving only a few hundred dollars for the stolen copper wiring, which, by the way, cost our client over $100,000 in losses.
Many preventive measures can be taken to protect your business from metal thieves. You may not be aware that several associations exist which strictly focus on metal theft, comprised of members from numerous law enforcement agencies and major corporations, working together.
With the huge earthquake in China on May 12, 2008, China will undoubtedly need millions of tons of metal to rebuild. Likewise, the prices of metals, along with the number of thefts, are predicted to soar.
The management team at Diversified Risk Management, Inc. has more than a hundred combined years of experience dealing with metal thefts, preventatively and reactively. We have protected billions in assets from being stolen, have recovered millions of dollars’ worth of stolen metal and have been instrumental in supplementary recoveries through the restitution process.
Our experience and skill in dealing with metal theft can lead to a quick end to that problem at your firm, and our tangible results can add significantly to your bottom line.