November/December 2004
As the national pile of obsolete electronics continues to grow, partnerships between traditional scrap processors and electronics recyclers can benefit both sides, says one leading e-recycler.
By Lauren Roman
Though many scrap processors are interested in recycling electronics, they remain hesitant to embrace this new business area as a means for growth. Some attribute this resistance to concerns about managing equipment containing hazardous components. Others find it difficult to imagine charging a customer for recycling rather than paying for the scrap. With a little insight and the right partners, however, adding e-recycling to the business portfolio can be a natural formula for success.
A Good Match
In 2002, the U.S. electronics recycling, or e-recycling, industry generated roughly 333 million pounds of steel, 90 million pounds of aluminum, 135 million pounds of copper and mixed metals, and 297 million pounds of plastics for recovery. Electronics recyclers are great suppliers for scrap processors who handle these materials. Plus, e-recyclers are more than just a source of additional material—they’re potential partners in helping traditional scrap processors add electronics recycling to their list of services.
Even paper recyclers can benefit from partnering with an electronics recycling firm. That’s because companies hire e-recyclers to protect against the loss of proprietary data on hard drives—just as many companies hire paper recyclers for document destruction services. In fact, many of these document destruction companies now offer e-recycling services as a natural extension of their business.
Dispelling Fears
Many scrap recyclers recognize the growth potential in e-recycling but have reservations about managing scrap that contains hazardous components.
So long as these components are in equipment waiting to be processed, and not in the waste stream, they aren’t regulated hazardous wastes. These components (such as batteries and lead solder) pose no hazard to scrap processors who are simply accumulating electronic equipment for shipment to an e-recycler.
Another source of hesitation for scrap processors is the concept of charging a client for recycling as opposed to paying for material. This is where recycling of electronics diverges from most other scrap commodities, but scrap processors shouldn’t worry. The companies generating electronic scrap are usually more interested in avoiding the risks associated with improper management of their equipment than they are in recouping scrap value. They want to protect themselves from risks associated with improper disposal—because once in the trash, most electronics are hazardous waste—or the loss of proprietary company data contained on hard drives. Paying a small processing fee for this protection is acceptable and appreciated.
Getting Started
Partnering with one or more qualified electronics recyclers enables traditional scrap processors to capitalize on the growth e-recycling can deliver without losing focus on their core business. Once the partnerships have been established, the e-recycling partner will largely sustain the program. However, conducting due diligence on any potential e-recycling partner is fundamental to a successful and risk-free program. That’s why it’s important to know the basics.
Scrap processors who partner with an e-recycler will essentially be collecting electronic scrap as a broker. Thus, it’s important for you to choose an e-recycling partner who’s also a processor—of electronic scrap. “If you wind up brokering to a broker, your customers will be paying too much and it will be much more difficult to keep an accounting of all parties involved in the disposition process and what their practices are,” says Bob Glavin, president of United Recycling Industries Inc. (West Chicago, Ill.), who also chairs ISRI’s Electronics Recycling Council. At United Recycling, all electronic scrap is processed in-house.
Currently, there’s little if any regulatory oversight of the electronics recycling industry. As such, it’s your responsibility to make sure that materials are being handled properly. That’s why it’s absolutely essential to visit any potential e-recycling partner’s operation and collect firsthand information on how the company does business before working together.
During this audit of your potential partner, ask the following questions:
What kind of e-recycler are they? Since U.S. e-recyclers are engaged in many different types of businesses, finding out if the recycler is a broker, reseller, or processor will reduce your list of prospective partners to a manageable size. As mentioned earlier, partnering with a broker is unlikely to be cost-effective, so identifying and removing brokers from your list will quickly narrow down the field.
Likewise, if the e-recycler is a reseller, the equipment it collects is probably being triaged to sort out salable units from scrap, hard drives are being erased, and equipment is being prepared for resale. Since many resellers aren’t interested in processing scrap for recycling, they end up shipping all nonsalable scrap to other processors or brokers. Again, you should consider the cost-effectiveness of shipping scrap through another set of hands.
Now you should have a short list of e-recyclers who are also processors, which represents the smallest portion of the field. If the e-recycler is a processor, the operation will include facilities for demanufacturing or shredding of electronics. Many processors also provide resale services and ancillary electronic asset management services.
Look for demanufacturing areas, which typically consist of disassembly lines and work benches where fasteners are removed and where commodities and hazardous components are sorted. Shredding systems consist of those that simply reduce volume for transportation efficiencies and those that are also fitted with separation systems that recover different types of metallic and nonmetallic materials.
Is equipment being tested to determine viability for resale? If the e-recycler tests equipment for resale, you should find facilities for testing that equipment for viability and for erasing data storage devices. Ask them about their procedures for these activities. Is equipment that fails the testing being sold? Even if broken or obsolete equipment is sold for parts recovery, the nonusable parts are likely being disposed of, either here in the United States or overseas.
What happens to the nonsalable and/or nonworking scrap? Nonsalable scrap often includes leaded glass, plastics, broken equipment and components, and—in the case of e-recyclers with shredding and separation systems—a nonferrous mix. In most OECD countries, these materials can only be processed on a fee basis. In developing countries, however, the low labor rates and lack of regulatory restraints enable brokers and exporters to pay pennies per pound for these materials. If the e-recycler is selling these “nonsalable” materials, they could be exporting them to developing nations where they may not be properly managed.
How do I confirm that I’m getting the whole story? Ask the e-recycler how many pounds of electronics are processed on a monthly basis. Then ask to see documentation showing resale activities and scrap shipments for the previous month that approximate that amount. If documentation falls short, you aren’t getting the whole picture. Moreover, outbound documentation helps to determine if more downstream research is required.
What physical aspects should I look for at a facility? Ask to see the e-recycler’s shipping docks and containers. This may require a walk around the outside of the facility where shipping containers are stored. Check trash containers to see if any scrap electronic components are being sent to landfills. Look for shipping containers designed for export, which are quite different from typical road trailers in that they are entirely made of steel and sit on a flatbed trailer. Overseas shipping containers also have doors that seal tightly with a rubber gasket, and it is apparent that the container is detachable from the trailer.
Within the facility, look for indications of how outbound material is shipped. If you see only baled or unprocessed e-scrap, the material might be headed to developing countries since it simply isn’t economical to recover e-material prepared this way in most OECD countries.
Buyer Beware
When conducting an initial search of potential e-recyclers for evaluation, watch out for what we call the “tricks of the trade” that some e-recyclers use to boost their credibility.
The leading “trick” is for e-recyclers to advertise themselves as “EPA permitted.” The truth is that U.S. EPA has no permit process for electronics recyclers. If you ask these firms for a copy of their so-called EPA permit, what they often show you is an EPA ID number. This ID typically begins with three letters including the state initials (PAD, for example, might be the beginning of an EPA ID number for a Pennsylvania company), followed by nine numbers.
Such IDs, however, are merely EPA-issued numbers that companies need to manifest hazardous waste for shipment and disposal. Anyone who generates hazardous waste must have one to transport material for disposal. The ID number is not a permit to recycle electronics.
Additionally, be wary of state permits. Some states do provide electronics recyclers with state operating permits, but this does not necessarily mean the company holding the permit is complying with any standards. In New Jersey, for example, the Department of Environmental Protection provides permits to electronics recyclers, but there is no qualification process whatsoever.
Similarly, some recyclers tout their “EPA certified” process. Again, U.S. EPA currently has no certification process for electronics recycling.
Good Guides
Here are some guidelines for review:
• Do your homework: Develop a short list of prequalified e-recyclers. State environmental agencies may be able to provide a list of e-recyclers serving your state. Just remember that being on such lists doesn’t mean the e-recycling companies are endorsed by the state.
• Ask the right questions: Don’t be shy! This is your company and these are your customers that you’re protecting.
• Audit the facility: It’s impossible to conduct due diligence without a physical and detailed facility audit.
• Look under the covers: Get all of the downstream information you require.
• Ask for references: A picture of the e-recycler’s current satisfied clients will lend some credibility to the firm’s operations and level of service.
Lauren Roman is vice president of marketing for United Recycling Industries Inc. (West Chicago, Ill.). She can be reached at 973/584-8859 or lroman@unitedrecycling. com, or visit www.unitedrecycling.com.
As the national pile of obsolete electronics continues to grow, partnerships between traditional scrap processors and electronics recyclers can benefit both sides, says one leading e-recycler.