The Delaware Regulations For The Resale Of Scrap Metal Should Be Federally Mandated Or Rescinded

Implications: If scrap dealers were made to account for the purchase of their wares; i.e., to affirm that their seller had leagl title to the goods, then the US scrap industry's small, family type businesses, would fail.

Analysis: Scrap metal resale is a business in which profit depends on rapid inventory turns.

A scrap dealer will buy scrap in the morning, separate and consolidate it by type, and sell it the same day. This common method of doing business can bring a scrap dealer 5% and more profit on his working capital each day. so that it is possible for the scrap dealer to make huge profit margins on an annualized basis.

The problem is for the dealer to accumulate working capital and then to turn it over as many times as possible even at a relatively small margin each time.

Thus any impediment to rapid inventory turnover, such as requirement to verify the legal ownership of goods purchased from the street reduces the number of inventory turns and thus the profit margins of the dealer.

Thus Delaware will soon learn that a decrease in petty theft of copper wiring and plumbing, catalytic converters, and aluminum siding and fencing will lead to an increase in the loss of jobs, a decrease in revenues from corporate profits, and the closing of many small businesses.

The one and only way to prevent this is to make all rules mandating  who has the responsibility to prove legal title to scrap operate in all states simultaneously.

Otherwise an efficient market will simply move the scarp collection business to those states with the least rules impeding the rapid turnover of the inventory.

Elected officials in Delaware are really quite ignorant of economics. Think about that the next time that you read of politicians regulating industries.