How, you might ask? Through “repurposing”.
OLD FIREHOSES: NEW LIVES
Take for example a fire department’s decommissioned fire hose. It’s a perfect example of an asset that is obsolete to its primary industry but has value, if “repurposed”, by a 2nd, unrelated industry. These old fire hoses could be re-used in low-pressure applications like irrigation or dust suppression on a demolition site. Or, these hoses could also be “repurposed” in applications where the durable jacket material, not their ability to continue to move water, is of prime importance. Non-water “repurposes” would be using the hose for boat dock bumpers or cutting them into desired lengths to be used as protective sleeves for chains, cables, slings, cords, wires, etc.
THE NOT-SO-NEW VALUE PROPOSITION
Does unlocking the value of your company’s hard-to-sell assets through “repurposing” sound foreign? It isn’t as strange as you may think. The wine industry no longer burns their retired oak barrels. Today they sell them to lawn and garden stores who saw them in half and “repurpose” them as planters. The railroad industry sells their worn-out railroad ties to ranchers for fence posts and to landscapers to build retaining walls.
The City of Chicago’s surplus asset division is a large organization that has benefitted from “repurposing.” Consider their old street sweeper brushes. Their investment recovery department discovered that ranchers were willing to buy their old brushes to serve as scratching posts for livestock. When you consider the cost between a used sweeper brush at $100 vs. a new backscratcher for $1,500, the City of Chicago and the ranchers all came out ahead.
Otherwise, before this discovery, Chicago had just been landfilling their retired brushes – at a cost! “Repurposing” on occasion, can improve the yield for some assets that aren’t even in the hard-to-sell category. For example, steel pipe from the oil and gas industry is easy to sell. Obviously, all the oilfield pipe that no longer meets specifications for drilling could quickly besold to a scrap metal recycler for a few pennies per pound. But, if you can find a buyer who is going to “repurpose” it for structural building materials – you’ll always be compensated at a higher rate than by selling it to a scrap metal dealer.
THE GENERIC, VERSATILE, ADAPTABLE RULE
So, how do you know if some of your assets are a candidate for “repurposing?” If your asset is generic, versatile, and adaptable, then it has a strong potential for the “repurpose” market. Or, if you look at an asset and say, “I bet a farmer or a rancher could figure out something to do with this,” then it probably is a candidate for “repurposing.” Another hint; if your employees have figured out what to do with an old asset, then you have proof that it can be “repurposed.” OK, but once you know that an asset can be “repurposed,” how do you monetize it…with purpose?
HOW TO MONETIZE ASSETS
The investment recovery folks at Miller Coors have a great evolutionary tale of monetizing something that was once landfilled. In their case, they generate a few hundred filter cloths per month in the beer brewing process. Somewhere along the way, a landscaper got some of these tough, durable filter cloths and found they made excellent lawn debris tarps.
At first, MillerCoors started giving these clothes away for free as a cost avoidance measure. As word spread amongst landscapers, demand slowly began to build. The investment recovery folks finally started to charge a few bucks each for the cloths. As demand continued to exceed supply, they kept bumping up the price.
MINING FOR OBSOLETE GOLD
So, if you have obsolete assets that are generic, versatile, and adaptable, there just may be a septic tank installer in Maine, an airport manager in California, or a civil engineering contractor in Texas who could “repurpose” them.
The sequence illustrated here is indicative of the best to worst scenario of typical dispositioning financial considerations. Where Repurposing of any specific surplus item might logically fit on this continuum depends upon the item itself, an understanding of the potential intrinsic value of an item that has been used for one purpose that could be repurposed for another…and a heavy dose of imagination. (I mean, who even knew cows liked their backs scratched?)