Closing the Loop

September/October 2014

With a Chinese facility turning recovered electronics plastics into new plastics and a U.S. facility refining precious metals from circuitboards, electronics manufacturer Wistron has rapidly established itself as a cutting-edge electronics recycler.

By Adam Minter

Manufacturers dating back to Henry Ford have dreamt that they might one day collect and recycle their old products into new ones—cars into cars, computers into computers. For much of industrial history, this closed-loop recycling concept has remained an ideal more than a reality. But a groundbreaking initiative by Wistron Corp. (Taipei, Taiwan), a designer and manufacturer of some of the world’s most famous consumer electronics, is finally closing the loop—and doing so profitably.

In five years, Wistron has constructed and started operating two major recycling facilities. Its U.S. facility dismantles end-of-life postconsumer electronics, sorts parts and commodities, and recovers metals from circuitboards through hydrochemical refining. It ships the separated electronics plastics to its facility in China, which converts them into postconsumer recycled resins that meet the specifications of the products it manufactures. It’s literally turning old computer plastics into new ones.

The Beginning and the End

Kunshan, China, is an unlikely home for a recycling revolution. For two decades, it has been a manufacturing center for parts and products for Dell (Round Rock, Texas), Apple (Cupertino, Calif.), Lenovo Group (Beijing), and other leading electronics brands. Now it’s also home to the plastics recycling and refining operations of Wistron Advanced Materials, Wistron’s newly operational all-in-one plastics recycling and production facility.

The massive, two-story WAM facility on the edge of town blends in perfectly with the manufacturing facilities that surround it, but inside is something quite different, as I learned in June, just a few months after WAM began production. On the building’s first floor are row after neat row of baled plastics from disassembled monitors and laptop and desktop computers. The scrap comes from Dell’s decade-old take-back program, Dell Reconnect, a partnership with Goodwill Industries International (Rockville, Md.). At the far end of the warehouse, a worker unwraps one of the bales just before it heads first to a shredder, then to downstream infrared and X-ray sensors that sort acrylonitrile butadiene styrene, high-impact polystyrene, and polycarbonate/ABS fractions to 95-percent purity. From there, a proprietary gravity-based system (largely shielded from view and discussion) removes nearly all remaining fines, achieving 99-percent purity, the company says.

Anywhere else in China—or the world, for that matter—the size and sophistication of WAM’s shredding and sorting operation would be impressive. But at WAM, it’s just one part of the closed-loop process. Upstairs, scientists and engineers work out the precise formulations they need to transform WAM’s recycled plastics into new plastics suitable for the exacting standards of the global consumer electronics sector (including Dell). It’s not just theoretical work: Outside the lab, rows of extruders are producing pellets from the shredded materials I saw downstairs.

Wistron’s electronics manufacturing arm is often the customer for the plastics, which it incorporates into—among other products—the chassis (basically, a plastic panel) of the Dell 3030 Optiplex All-In-One desktop computer for business, which Dell says is one of its most important business product lines.

Of course, recycled plastics have been going into computers for years. But what makes Wistron’s partnership with Dell so important is that it all happens under one roof, and—equally important—it is the first closed-loop recycling system with third-party certification. In fact, UL Environment (Northbrook, Ill.) not only certified Dell’s (and Wistron’s) closed-loop recycling; it wrote the standard based on it. In other words, what Wistron and Dell have accomplished isn’t a mere green PR stunt. UL has audited and certified the companies’ assertion that at least 10 percent of the Optiplex 3030 is made from plastics recovered in the closed-loop process.

Needless to say, the environmental benefits are significant. According to audited documents Wistron shared with me, WAM provides customers such as Dell with a significant greenhouse gas reduction—as much as 25 to 30 percent—compared with virgin plastics. The savings isn’t just in production but also in the reduced transportation costs associated with having WAM in China, close to production facilities that use the recycled materials.

The Wistron/Dell partnership is much more than a low-carbon environmental good deed, however. It’s also very good business. During a meeting at Dell’s headquarters in Round Rock, Mike Murphy, executive director of global product compliance and environmental affairs, points to a Dell 3030 and says, “Engineers are working to save pennies inside [the computer]. The back panel saves quarters.” For an electronics company that manufactures millions of devices, those quarters add up.

But it’s also a savings Dell likely wouldn’t have realized if Wistron, one of the world’s largest consumer electronics producers, hadn’t made a strategic decision to branch out into recycling five years ago. Since then, it has not only built one of the world’s most technologically sophisticated plastics recycling businesses—in China, no less—it also has developed and begun operating an electronics processing and metals refining facility in north Texas designed to compete with circuitboard recyclers in Europe and Asia.

The Rationale for Recycling

In a conference room at WAM’s Kunshan facility, Patrick S.N. Lin, general manager of Wistron’s green recycling division (which oversees WAM), explains that Wistron’s recycling business was born in 2008, when he returned to Taipei after he had spent years running the Australian and U.S. branches of Taipei-based Acer Computer. Wistron had been Acer’s manufacturing subsidiary until it was spun off in 2001. Seven years later, Wistron’s CEO, Simon Lin (no relation to Patrick), was keen to branch out into new businesses, and he saw Patrick as the right person for the job. His orders were clear—and not so clear, Patrick recalls: “Within three years, try to develop a new business worth $3 [billion] to $5 billion. Most important, the profitability needs to be three to five times better than what we do today.”

In tech, Patrick tells me, creating a company worth $3 billion to $5 billion isn’t difficult. But profitability three to five times greater than Wistron’s core businesses? That’s difficult. Still, he took up the challenge, and after exploring several businesses (including cloud computing), he settled on electronics recycling. “It’s a new business in a very early stage, with low-grade technology and no dominant player,” he explains. But it was not, he told his boss, a $3 billion to $5 billion business with better profit margins than tech. Simon Lin’s reaction to this blunt assessment, Patrick says, was to dismiss the concerns and urge action: “It doesn’t matter! There’s no better business than this. You do something for society and make money.” Patrick formulated a business plan, and less than a year later, he received $100 million to start Wistron’s green recycling division.

Despite the impressive commitment of start-up funds, Wistron entered the recycling business with no network of e-scrap suppliers, no consumers, no facilities, no technology, and no scrap. Undaunted, Lin started small but quickly, establishing an electronic asset recovery business in space he rented from Wistron’s product-servicing business in north Texas. Lin laughs now as he recalls competing for electronics with local mom-and-pop recyclers while he spent six months putting together a global business.

From the beginning, a location in China was essential for the plastics refining operations, Lin explains, because the goal is to not only collect, sort, and compound plastics, but to reuse them in products Wistron manufactures. Getting permission to open such a facility in China was difficult, however. Chinese local governments are keen to welcome manufacturers, but many have negative perceptions about recyclers importing “foreign garbage.” Still, Lin persevered and eventually secured the land WAM needed in Kunshan.

Meanwhile, there was the matter of finding the correct technology. The optical sorters are largely from European manufacturers, Lin says. The gravity sortation system was a U.S. prototype Wistron acquired via a licensing agreement and then scaled up to its needs using Taiwanese engineers.

Creating a clean recovered plastic stream was the easy part, Lin notes. The hard part is formulating new plastics. “Incoming material has a different format and purity and quality, but when we output our postconsumer resin, the quality has to be consistent,” he explains. “That is the competence of this operation.” How difficult was it to achieve that competence in just a few years with an ever-changing scrap supply? He laughs and shakes his head. “Not easy!”

As for customers and clients, the home office ordered Lin to be ambitious, so he went looking for the best partners to work with his new, still-evolving business. That, too, was a challenge, he says. “One of the big clients said at the beginning, ‘We’re concerned about your quality, so don’t come see me until you have [other] clients,’” he recalls. “Then we have OEM clients who [said], ‘Don’t come to see me until you prove that your products can be used.’”

Dell, it turned out, was a natural fit. Wistron had worked with Dell for years, and CEO Michael Dell was friendly with Wistron’s Simon Lin. Dell also has made a commitment to sustainable design (the company received ISRI’s Design for Recycling® award this year) and to doing business in a socially and environmentally sound manner. But as wonderful as friendship, history, and high-minded commitments are, they usually aren’t enough to secure a business relationship between a recycler and supplier, much less a refiner and consumer. “If it’s not competitive from a cost standpoint, it’s not going to happen,” Dell’s Murphy explains, in a meeting at the sprawling Dell campus in Round Rock. With us are Scott O’Connell, Dell’s director of environmental affairs, and David Lear, director of sustainability and corporate responsibility. Dell partnered with Wistron for business reasons, Murphy says. In fact, the Wistron partnership (Wistron is a Dell “Environmental Partner,” a title it earned after Dell subjected it to considerable due diligence) is in part the outcome of a three-year Dell project to address “future opportunity risk of getting access to [postconsumer resin].”

Dell was already using postconsumer materials in its products, and—according to Murphy and O’Connell—it expects to use more, so it has an interest in ensuring it can secure adequate supplies. O’Connell tells me the company has been buying PET bottles for years, for example, competing against beverage makers and other consumers. So when Wistron approached Dell about setting up a closed-loop recycling system, the company was attracted to the idea. At the same time, Dell knew that a closed-loop system meant that they’d need to provide Wistron with the recyclable materials. That, too, was attractive. As Murphy puts it, the Wistron partnership offered Dell “a strategic hedge in the future for keeping costs where they are and, potentially, lowering them.” Later, he adds that working with Wistron “changes the TAM—total available market—of plastics that we’re buying, and it actually puts competitive pressures on other PCR suppliers as well as other virgin plastic suppliers.” In other words, by unleashing the recyclable resources that Dell already had access to, Dell can expand the market and potentially push down the overall price of PCR. For a business that needs a lot of plastic, that’s an awfully attractive proposition.

Ensuring a Steady Supply

Dell’s take-back program, Dell Reconnect, has been delivering huge volumes of electronics to Goodwill Industries for more than a decade. The program accepts any brand of computer, monitor, and printer as well as other select peripherals, and it commits to reuse, refurbish, or recycle the products responsibly. For an e-scrap recycler, it’s a gold mine; for a closed-loop recycler, it’s an endlessly regenerating raw material supply.

Murphy, O’Connell, and several other Dell personnel take me to the 125,000-square-foot retail store, training center, and warehouse that serves as a headquarters for Goodwill of Central Texas (Austin, Texas). Meeting us there is Sustainability Director Kelly Freeman, who gives us a brief tour. Goodwill is a nonprofit charitable organization, but to its credit, it operates like a complex, well-managed corporation. In Central Texas, more than 30 outlet stores receive donated goods, including computers. Anything they can’t sell as-is gets diverted for refurbishment or recycling. According to figures Freeman provides, Goodwill of Central Texas diverted almost 30 million pounds of material in 2013, with 3.4 million pounds of it Reconnect material, including computers and monitors.

All electronics Goodwill of Central Texas receives come to this warehouse, where they go through a quick triage. Flat-screen monitors, computers, and printers go to the Goodwill Computer Works store for testing and, if they’re working or repairable, resale. If they can’t be repaired, workers there pull any reusable components and send what’s left back to the Reconnect program at the Goodwill warehouse.

Some of the returned material goes to Dell Environmental Partners with whom the company has worked for years. But much of the material now goes to Wistron GreenTech in McKinney, Texas, just outside of Dallas, which does some processing in house, outsources other streams, and packs and ships the electronics plastics to Kunshan.

Everything leaving Goodwill gets weighed and recorded using a manifesting system Dell developed for the Reconnect program. In Austin, the system runs on an old Dell PC. The operator merely needs to input weight, type of box or pallet, and product or commodity type, selected from a list that ranges from hard drives to heat sinks, PC shells to plastics. Even before Dell worked with Wistron, it required these detailed manifests for tracking the disposition of its electronic scrap. But the partnership with Wistron means Dell now evaluates those scrap shipments for how well they fulfill Dell’s own raw material needs in terms of both quantity and quality.

Volume is a particular concern. Beth Johnson, program manager for Dell Reconnect, tells me she’s actively working to get additional Goodwill locations connected to the Reconnect program. Even though Wistron GreenTech receives
1 million pounds a month of Dell products from Goodwill facilities around the United States as well as millions of tons from other suppliers, “we need to feed the beast,” jokes O’Connell, referring to the Kunshan facility’s hunger for scrap plastic. At the same time, Wistron—and Dell engineers who work with Wistron—are constantly sending feedback on what they receive from Goodwill. “Wistron might send direction on packing LCD [monitors],” Johnson explains. “Then Dell will send that [feedback] along to Goodwill.”

Processing and Refining

Joseph Hsu, general manager of Wistron GreenTech (part of Wistron’s green recycling division), meets me in the lobby of the company’s 209,000-square-foot headquarters on nearly 21 acres in McKinney. He leads me into a conference room, where I meet J. Mark Hill, senior director of business development and—like Hsu and Patrick Lin—a veteran of the consumer electronics industry. “It’s funny,” Hill tells me. “I used to get paid to make it, and now I get paid to scrap it.” He also gets paid to explain to consumer electronics companies why they should send their scrap to Wistron. Being industry veterans certainly helps with sales. It also helped Wistron set up a recycling facility. “Environmental providers come and go,” Hill tells me. “We’re permanent.” After all, unlike other, competing service providers, Wistron is both recycler and manufacturer—as well as a publicly listed company. Likewise, both Dell and Wistron officials tell me one advantage of their closed-loop partnership is that it gives product designers and engineers the opportunity to evaluate—and improve—their products’ recyclability.

Hill takes me and a small delegation from Dell into the warehouse. Everything is in precise rows, labeled, and—when necessary—wrapped in plastic. We stop by several pallets of printers that, Hill informs me, Wistron will soon send to downstream vendors who will dismantle them by hand. They’ll send the plastics back to McKinney for Wistron to ship to Kunshan. The rest the downstream vendors get to keep, but they must recycle it in a manner consistent with Dell’s and Wistron’s standards. Dismantling is far more expensive than shredding, and Wistron has to both justify the expense internally and convince its recycling partners the system is in their interests. Ultimately, Hsu assures me, everyone understands there’s more value in whole parts than in shredded ones.

We continue into a large, airy room bordered on one end by loading docks. Above us, banners proclaim the facility is R2/RIOS™ certified. Below the banner, workers disassemble desktop PCs next to a conveyor that moves key parts toward workers who sort them into various boxes. One Gaylord box of plastics is marked for Dell and Kunshan. But not all material at this facility is coming from Dell. Wistron also competes to obtain scrap from other electronics manufacturers and utilities—it has a thriving business recycling 3G telecom equipment, for example.

Unlike the Dell material, out of which Goodwill has removed all items with reuse potential, some of this material has reusable components, so the McKinney warehouse has electronics testing stations in the middle of the sprawling work area. The company is constantly evaluating the used electronics market and moving what it calls the “cut line,” which determines which products are worth testing and repairing and which are not. “For example, [any central processing unit processor] less than an Intel Pentium Duo Core won’t even be tested,” Hill explains, because its resale value is no more than its scrap value.

Elsewhere in the warehouse, a worker sits in a secure area, sorting reusable memory chips. Just outside that room, a worker pulls circuitboards from hard drives and then places the rest of each drive into a crusher. Wistron sells the destroyed drives to an aluminum refiner, it says. In the back of the warehouse, one worker sorts batteries, filling barrels and boxes with alkaline, lithium-ion, and nickel-cadmium varieties for shipping to certified battery recyclers. Hsu tells me Wistron GreenTech receives 250,000 pounds of batteries a month, and the supply is growing 5 to 6 percent each month. The batteries come from its partnership with Call2Recycle (Atlanta), which ships them from collection sites at retailers across two-thirds of the United States. Long-term, Hsu and Patrick Lin tell me, Wistron is interested in battery recycling, though it’s too early to say what shape that interest might take.

We leave the battery area and pass several boxes of circuitboards. Most North American recyclers export those boards for processing overseas, where the quality of the facility can vary from state-of-the-art processing plants to low-tech home-workshop-style shops. Wistron GreenTech now offers a large-scale, environmentally friendly, U.S.-based alternative.

As Hsu and Hill lead me and the Dell delegation to see the refining operation, Hsu explains that the process of building it was far from easy. From the beginning, Wistron decided to avoid refining technologies that would require review by the Texas Commission on Environmental Quality (Austin), the state’s highest environmental authority. For example, many refining processes require cyanide, the use of which would have been subject to review and public comment that might have drawn out the approval process for years. Instead, Wistron sought out technology that would fall under what Texas calls “permit by rule,” a process that does not require review.

That’s not to suggest Wistron GreenTech cut corners. Though most aspects of the refining technology are proprietary, the company does reveal that it uses a water purification system running in a contained room where 40,000 cubic feet of air are exchanged per minute. (In my visit, I could detect no odor from chemicals, even though they were quite obviously present.) Right now Wistron operates two lines: one for de-soldering the circuitboards, the other for removing surface gold from the boards. Production started just a few months before our visit, and Wistron GreenTech was still fine-tuning it. Still, even at that early stage, it was refining a daily volume equivalent, roughly, to a shipping container. There is space on the production floor for doubling the production capacity—and plans to do so.

Wistron sends the gold and other metals it recovers from the circuitboards for further refining into salable metals. The fiberglass boards, still covered with copper, go to a copper smelter. It eventually would like to bring both processes in house, company officials say. It plans to start refining silver and palladium before the end of 2014, and copper refining is “the next step on the technology road map,” Hsu tells me. It even envisions using the fiberglass boards in the production of plastic lumber.

Perhaps the most important feature of Wistron’s McKinney operation is that the company designed it to be modular so it can replicate the processing and refining operations quickly and cheaply in other locations. “We want to be ready to deploy,” Hsu says. “That’s our goal.” Back in Kunshan, Patrick Lin explains his goal is to make refining a local business “so that you don’t have to go through so many hands.” This not only saves the scrap generator money, it also reduces the greenhouse gases associated with moving scrap.

Longer-term, Lin is even more ambitious. “Our goal is to invent a green plastic” to be used in circuitboards, he says. The fiberglass they are made from now can really only be downcycled into something such as plastic lumber. “Our company is called Wistron Advanced Materials,” Lin reminds me. Such a company, he suggests, should be capable of coming up with a circuitboard plastic that’s “easy to separate, and then that fiber can be used in a better application. That’s what I call a green circuitboard.” Lin is quick to acknowledge the technical difficulties in accomplishing his goal, but those don’t faze him. Gesturing at the plastics recycling line on the other side of the conference room wall, he says, “Basically, we’d like this to be a platform to become a new green material inventor.” And if Wistron invents it, it will most likely recycle it, too. 

With a Chinese facility turning recovered electronics plastics into new plastics and a U.S. facility refining precious metals from circuitboards, electronics manufacturer Wistron has rapidly established itself as a cutting-edge electronics recycler.