Clunkers still being born again at Newgate

Newgate Education Center, Minnesota's original car-donation operation, gave the federal "cash for clunkers" program a run for its money this summer.

A number of charities told the Star Tribune last week that car donations were down, thanks to the popular federal incentive that provided tax credits of as much as $4,500 to thousands of new-car buyers in return for their old beaters.

Meanwhile, 32-year-old nonprofit Newgate accepted two dozen more vehicles in July and August than it did last year. Newgate is 54 vehicles ahead of last year, with 1,194 cars to refurbish for sale through the first eight months of this year.

That's rubber meeting road in a year of federal car incentives and ever-more car-hawking charities.

Newgate was founded in 1975 by CEO Ron Severson, a onetime education professor exploring alternative training for young people, some of them high school dropouts or people who'd had brushes with the law. Newgate students restore engines and bodies to like-new condition. The instructional staff of six repair-shop veterans trains up to 30 people a year, some of them students who can't handle technical school tuition or the classroom rigor. Newgate also helps students achieve high-school equivalency degrees and jobs that start at $12 to $18 an hour in industry.

Win-win-win situation

"I used to be a special-education teacher, and we would try and try to get some of those kids into technical schools, and it was hard," said Loren Sawatsky of Brooklyn Center, whose family has donated several old vehicles to Newgate. "They do amazing things with those vehicles and training people for good jobs. And the revenue they take in just about covers the whole operation. And I get a tax deduction for the fair market value of my car."

Severson, a carpenter and guidance counselor by training, left a comfortable job at the University of Minnesota to prove the Newgate concept he developed and first ran with several $150,000 annual state appropriations.

"The average age of our students is 24," Severson said. "About 30 percent enter training with a high school or GED degree. Sixty percent are minorities and one-third are immigrants. They are all Americans. Just like my grandparents, who came not speaking English from Norway.

"And my grandparents weren't licensed to fix air conditioning."

Tens of thousands of cars

Severson's board pays him a modest $82,000 a year to run a $2 million, break-even business that generates 98 percent of revenue from wholesale auto sales to car dealers. Newgate has produced tens of thousands of refurbished cars and hundreds of new taxpayers.

"I'm an educator," Severson said. "And I'd like to do more of that. But to keep Newgate going, we have to advertise, sell, and otherwise compete for cars."

Donations sank to 2,100 last year from 2,335 in 2007, amid competition and the recession as folks hung on to old vehicles and auto sales plummeted.

Despite cash for clunkers, Newgate expects to bounce back to 2,200 donated vehicles this year. Those who donate to Newgate can deduct a higher percentage of fair market value because Newgate uses the cars rather than acting merely as a pass-through agency.

Every Newgate student starts out in the detailing department, the final cleaning of a refurbished vehicle to dealer specifications.

And not all vehicles show up as nicely as the 1991 Lexus driven to Newgate this week by Maureen Massopust of Edina. Certainly not the 1994 Jeep Cherokee I dropped off at Newgate as our family downsized our fleet.

Massopust took a pass on the cash for clunkers program because she wants to see the Lexus born again.

"Newgate is such a win because somebody learns [by] repairing the car and somebody gets the car," she said. "I want this car to be used, not destroyed."

'This job is a joy'

I'm not going to kick the clunkers program. A lot of near-death Ford Explorers and Chevy Suburbans were sent to the recycling yard. And more Americans are back on the line making more-efficient vehicles in what appears to be a welcome uptick of the decimated manufacturing sector of the economy.

I'm also glad that Newgate, a three-building plant in southeast Minneapolis, is still minting born-again cars and workers for local dealers and repair shops.

"But this job is a joy. And I can't think of anything I would rather do than work with the people who are here."