May/June 2011
With proprietary separation technology and R2/RIOS certification, Synergy Recycling is working to bring certified quality and state-of-the-art operations to the electronics recycling frontier.
By Diana Mota
When Synergy Recycling got its start nearly 11 years ago, the electronics recycling sector was in its infancy. Few e-scrap processors had procedures for recycling the electronic products they collected, and much of the material they handled ended up in landfills. “It really was the Wild West,” says one company founder. That’s an apt metaphor coming from a man named Earp.
Though Steve Earp is a lawyer, not a sheriff, and his base of operations is Madison, N.C., not Tombstone, Ariz., you could say that he and four of his friends from the metal recycling world—call them a posse—set out to bring law and order to the electronics recycling frontier. In its first 11 years, Synergy has gone through a couple of moves and the departure of three of the original five partners, but it has emerged with the backing of two scrap processing equipment manufacturers and a state-of-the-art electronics recycling facility it hopes to replicate around the country.
The heart of Synergy’s operations is a unique shredding and downstream separation system developed by MTD America (Atlanta) and SGM Magnetics Corp. (Sarasota, Fla.) that can process up to 30 tons of material an hour, turning it into very pure streams of ferrous and nonferrous metals and plastics in one pass. The system consists of two 200-hp, slow-speed shredders with Sumitomo drives, a series of SGM drum magnets and eddy-current processing equipment, and proprietary MTD sorting technologies for further nonferrous and plastic separation. “We generate a product that’s never been generated before,” Earp says. “I’m told this is the cleanest material that anybody has been able to generate” from electronics. The system will soon separate plastics by resin and by color, he adds. “Until now the market has not supported the expense of the additional equipment.”
With the new system in place, the company can recycle or reuse about 99 percent of the electronics it receives, which sets it apart from its competitors, its leaders say. “Anyone can shred,” explains Joe Clayton, who joined the company in 2003 as sales director and became an owner the following year. “It’s what you do after you shred that matters.” Notably, the company even shreds low-value electronics that other recyclers might find undesirable: printers, keyboards, computer mice, VCRs, and stereo equipment, for example. “This is the stuff that has traditionally not yielded enough value to be handled in the United States,” Clayton says.
Bringing the Pieces into Alignment
Like many companies, Synergy started with an idea. In 2000, Earp was dining with four friends who worked in metal recycling. They noted that their yards weren’t equipped to process end-of-life electronics, though they were receiving more and more of that material and expected the supply to continue to grow. They kicked around the idea of a facility dedicated to electronics recycling, making notes on a napkin to organize their thoughts. By the end of the meal, “we said, ‘Let’s try it!’” says Earp, one of two founders who remain with the company. Four of the founders kept their day jobs while the fifth, who has since departed, took on the endeavor full time.
In July 2000, the company rented its first facility, in Reidsville, N.C.—about 2,000 to 3,000 square feet of space in an old warehouse. “We didn’t do a lot there,” Earp says, just very basic demanufacturing. “We had about two rows of [telecommunications] material, and we hired a couple of guys to sort like things together” while the manager found buyers for the material. “Nothing very sophisticated—not like today.”
In search of more space and more material, the company moved about 20 miles northwest of Reidsville to Mayodan, N.C., where it leased two attached warehouses—one about 58,000 square feet and the other 14,000 square feet, Clayton says. The area had great potential: It was the epicenter of the collapse of the furniture and textile industries, Earp says. Space was plentiful, and people needed jobs. While there, Synergy lost some owners, gained others, and expanded its work force to about 25 workers. “We used a lot of temporary labor,” Earp says.
After Synergy moved to Mayodan, it began processing more traditional electronic scrap, including personal computers. With more material and more types of material coming into the plant, Synergy acquired equipment with the help of grants from North Carolina’s Division of Pollution Prevention and Environmental Assistance (Raleigh, N.C.). “It gave us seed money,” Clayton says. “We didn’t have to extend all our capital when we bought our first truck or when we bought our first shredder,” a small model used to destroy hard drives.
While in Mayodan, Synergy launched its asset recovery department, which continues to operate today. Workers test incoming components for functionality; the company sells those that work to targeted clients or donates them to nonprofits that rebuild computers. But most of the material Synergy handled in those years it processed via manual disassembly. “It was a lot of experimenting in the early years,” Earp says. The company often would take equipment and then figure out what to do with it, which was very risky from an economic perspective, he notes.
Eventually, Earp says, “it didn’t seem likely that manual disassembly would allow us to go where we wanted to go.” In 2008, he and Synergy’s other owners began serious talks with MTD and SGM about moving the company into large-scale electronics shredding and separation. The principals of all three companies, which include Didier Haegelsteen of SGM and Tom Valerio, Ashley Day, and John Camozzi of MTD, have known and worked with each other for many years, Earp says. “We knew what they could do, [and] we were delighted to get their involvement.” The two equipment companies, which are primarily known for their automobile and white-goods processing technologies, decided to take a 50-percent ownership stake in Synergy, giving them a toehold in the electronics recycling market and a stake in the company’s success.
The decision to move into shredding hit one roadblock, however: the Mayodan facility. The warehouses had ample space, Earp says, but the layout was “laughable” compared to today, leaving much of the space unusable. Further, the shredder would require higher ceilings, and to handle the greater volume the company expected to process it would need more loading bays. Thus, in May 2009, the company purchased land and buildings a few miles south, in Madison, N.C. A 135,000-square-foot warehouse and office building on a 13-acre lot houses the processing lines and Synergy’s proprietary equipment. “It was set up beautifully,” Clayton says. “We only had to cut in one overhead door.” A 106,000-square-foot building on a 9-acre lot about a quarter of a mile away serves as additional warehouse space. In addition to installing the shredding and separation system, the company added staff. The work force now consists of 85 people, including six in the office and two salespeople. “We’re on a huge growth curve,” Clayton says. “We’re one of the largest employers in the area.”
The People Behind the Processing
Leading Synergy is its board, which consists of SGM’s Haegelsteen, MTD’s Camozzi, Earp, and one other owner who prefers to remain behind the scenes. That board makes the major decisions, but some of the board members don’t have the time or inclination to become involved on the day-to-day level, Earp says. They leave those decisions to Operations Manager Rick Walters and himself. The other owners “do their part,” he notes. “They make sure this equipment runs right.”
Earp, an attorney with Smith Moore Leatherwood in Greensboro, N.C., was the only founding partner with no scrap experience, but he has had recyclers as clients since the early 1990s, he says, representing them on various environmental and regulatory issues. He still practices law full time, but he also serves as Synergy’s director of compliance: “I know the rules and regulations, and I try to make sure everyone understands them.” He tries to spend two days a week at the facility—more when the facility is going through an audit, he says—and meet weekly with supervisors. “I’m responsible for strategic planning, managing, coddling, cajoling, and firing when I have to.” His law experience helps him work with the different personalities and personnel issues that surface, he adds.
Clayton is the only owner who works solely for Synergy and draws a salary. He served previously as recycling programs manager for Orange County, N.C., and before that he taught environmental policy at West Virginia University (Morgantown, W.Va.). “I went from the academic to the practical,” he notes, though he finds his background in environmental policy analysis and economics beneficial in his work. As sales director, Clayton is responsible for finding buyers and sellers for the material and setting up recycling collection programs with suppliers. “I show [potential clients] why it’s beneficial to send their material to Synergy from state X when they’re passing hundreds of other recyclers along the way,” he says. “It’s all about integrity, honesty, proper handling of electronics, and fairness.”
The company leaders are quick to admit they’re still trying to build a company culture. “I’d love to say we’re really good at this, but we’re learning how to do it,” Earp says. “We don’t have a long list of traditions. It really changes month to month.” At one point, Earp says, he was concerned about employee turnover, so he and the other managers looked for tangible and intangible ways to show workers the company cares about them and their future. Recently, for example, the company began conducting annual reviews to let employees know how they’re performing, how they can improve, and how they can progress with the company. “A lot of them have never thought in terms of a career,” he says. When the plant recently went six months without an injury, every worker received a $10 Wal-Mart gift card, and at Thanksgiving, Synergy hosts a holiday feast.
In terms of giving back to the community, the company donates to local organizations through its employees’ volunteering efforts such as sport teams and fire departments. It also donates used, functional computers to a community center in Piedras Negras, Mexico, through Constructores Para Cristo (Birmingham, Ala.), or Builders For Christ, an organization that builds houses in Mexico, a venture to which Earp donates two weeks of his time each year. Synergy also has been involved in ISRI. Clayton currently chairs the association’s electronics division, and he previously served on the leadership committee.
As the company has matured, it has become more sophisticated and more stable, Earp says, which has reduced turnover to the point where some workers are marking their fifth anniversary. “We’re constantly tinkering with the system, constantly training employees, and always striving to make the company better and more efficient,” Clayton says. That reflects Synergy’s focus on the triple bottom line: a company that’s profitable, good for the environment, and good for its workers.
Scope of Operations
Synergy processes about 100 tons of material a day, nearly 25,000 tons a year. That’s up from just 600 tons a year when he joined the company in 2003, Clayton notes. Although the company’s separation system has the capacity to run 30 tons an hour, not everything runs through the shredder. Thus, “we actually have the capacity to grow quite a bit,” he says.
What type of material does Synergy receive? The better question, according to Clayton, is “What doesn’t come in? [We get] anything with a cord or battery operated.” That includes hair dryers, weed whackers, curling irons, and vacuum cleaners. Primarily, however, Synergy focuses on computers, printers, telecommunications equipment, monitors, televisions, VCRs, and stereos. The company can afford to process some of that lower-quality material, such as computer mice and keyboards, because shredding and separation maximizes its value and because it tightly manages the majority of its supply. “All material is preapproved by me before it arrives,” Clayton says. He reviews material at the client’s facility or requires photographs or a description of materials that fall outside the typical scope of operations, such as the items that come in through recycling drives. “We know our clients, and most of our work comes from referrals. That keeps us lean on the cost side,” he points out, because Synergy doesn’t have to spend money promoting itself. Regular suppliers include businesses—including asset recovery companies and original equipment manufacturers that want guaranteed destruction for defective or surplus products—and municipal governments and nonprofits. The latter two categories of customers hire Synergy to run about 70 recycling events a year in which they do the publicity and Synergy collects and processes the material.
The company’s suppliers are in 28 states and two Canadian provinces, though most of its business come from east of the Mississippi River or “even much closer than that: North Carolina, South Carolina, and Virginia,” Clayton says. All of the material moves via truck. The company owns one box truck and nearly 75 trailers, and it employs five commercial drivers. It leases two trucks and tractors as needed, typically having one to three tractor-trailers in operation each day. Synergy will generally pick up and deliver anything within a five-hour radius, Clayton says; it contracts with a trucking company in Mississippi to handle shipments from farther away. “For one-day [collection] events, we may send three tractor-trailers” to move about 12 trailers, Clayton says. “We had one event where we handled 240 tons,” which filled 23 trailers.
Each day, seven or eight truckloads of material arrive to be processed. Upon arrival and departure, the vehicles pass over a certified truck scale with radiation detection equipment on either side. (Synergy is the only electronics recycler in the country to use those pieces of equipment, Earp and Clayton say.) The trucks back up to loading docks, where workers remove the material and place it on pallets, which they also weigh. Each pallet receives a unique bar code that tags it with the date, customer, truck, and type of material before the pallet moves to the sorting area. Synergy reweighs and tracks each pallet as it travels throughout the building. It also tracks individual items that have serial numbers, such as laptops, desktops, and cell phones, when the client requests it. “If our clients send us 40,000 pounds of material, we can show them where 40,000 pounds went,” Clayton says. “That sticker follows the material until it becomes a commodity-grade [product].”
Sorters separate the materials by type and grade. The sorted pallets move either to disassembly areas or to the shredder. In the disassembly area, a skilled worker removes computer components such as RAM, processors, and hard drives before sending the rest of the item down the line for further demanufacturing. Another worker wipes hard drives clean and tests about 10 percent of them for data. “We’ve never found any data on them,” Clayton says. They remain locked in a room until Synergy either sells them—“We try to reuse as much as we can,” Clayton says—or shreds them per the customer’s direction. Synergy demanufactures televisions and monitors using two separate lines. Workers break down the items into their recyclable components, such as plastics, metals, glass CRTs, and circuitboards. Synergy sells the circuitboards to a European smelter because the United States no longer has copper smelters, Clayton notes, and it sends the CRTs to specialized processors. The company has purchased a lamp crusher to properly handle fluorescent bulbs from monitors, tele-visions, laptops, and large copiers.
In the end, the functional electronic products are resold domestically and internationally for reuse; everything else is disassembled and sold for parts or disassembled or shredded and separated down to commodity-grade materials, leaving very little that’s not recyclable. The shredding and separation result in a marketable commodity stream that Clayton and Earp estimate consists, by volume, of 35 percent ferrous, 20 percent nonferrous (including circuitboards), 20 percent plastics, and 25 percent glass. The company has a zero-landfill goal, Clayton notes. It even sends wood from television cabinets to a waste-to-energy facility, where it’s burned for fuel. “It was 38 percent of our waste,” Clayton says. “Our waste is now less than 1 percent” of the incoming material, and none of that is electronics. Primarily the waste consists of office and lunchroom trash, contaminated paperboard, foam packaging, and some shredded paper and plastic film that cannot be baled.
Like most electronics recyclers, Synergy’s revenue comes from the sale of commodity-grade scrap, equipment and parts for reuse, and some fees, primarily on the collection and processing of CRTs. (“Monitors and televisions still hold negative value,” Clayton says.) Half of the non-fee revenue comes from nonferrous metal scrap (including circuitboards), 32 percent from ferrous scrap, 10 percent from products sold for reuse, 6 percent from scrap plastics, and the remaining 2 percent from the sale of miscellaneous materials. Synergy’s principals hope that as consumers get accustomed to their cleaner end product, they will be able to charge more for it. “That will allow us to compete effectively on the infeed side so we can ramp up our volumes,” Earp says.
Customer Service, Quality, and Certification
Synergy’s business philosophy is simple: “We believe in customer service,” Clayton says. “We’re able to run this company with very few salespeople because we give superior service.” As Earp puts it, “our job is to figure out what [customers] want and make sure they’re getting it.” That might mean data destruction, maximizing the value of the equipment and commodities to glean the last possible dollar from them, properly managing the recycling of end-of-life equipment, or a combination of those approaches. Once Synergy gains a customer, it works hard to retain it. “The first deal is the most expensive deal,” Clayton notes. “You have to meet with prospective clients and lawyers, sign contracts, review material, and figure out whether you’re a good fit.” Then, if the client is satisfied, “the second deal is a phone call.”
To ensure client satisfaction, Synergy undergoes about 50 client audits a year. “They need to know what we’re doing with their material,” Clayton says. Synergy also provides its clients with peace of mind with its designation as a Certified Electronics Recycler®—it achieved R2/RIOS certification this spring. “For many years we have had ISO 9001 and 14001 and OHSAS 18001 certifications,” Clayton says. The company went even further to meet the R2/RIOS standard, in which an independent auditor certifies that it follows the Responsible Recycling (R2) Practices for Electronics Recyclers, developed by the U.S. Environmental Protection Agency (Washington, D.C.) and other stakeholders (including ISRI), and it also has implemented ISRI’s Recycling Industry Operating Standard, which is an integrated quality, environmental, and health and safety management system for the scrap industry. “There’s nothing magical about any of it,” Earp says. “It’s just common sense. [R2/RIOS] gives you a structure for dealing with problems and not just symptoms.” Clayton agrees. “It sets standards, it’s a [type of] branding, and it shows a commitment to the environment.”
Clayton is working at the state and local levels to get municipalities to require some level of certification or third-party auditing to ensure environmentally responsible recycling practices. Electronics are the most complex type of scrap a recycler can handle, he says, yet the barriers for entry into the industry are few. “All some people think you need is a pickup and a garage to call yourself an electronics recycler,” he says. “Few people actually understand the challenges of properly recycling and handling this material—for value and for the environment.” As the industry matures, he believes these problems will dissipate.
In the meantime, Clayton also is keen on creating an academic discipline for recycling to develop the industry’s future work force. “There is value in having a thousand graduates a year who could work in a scrapyard or run a municipal recycling program or landfill,” he says. He’s working with a university to develop a program that would provide graduates with real-life scrap processing experiences while they’re earning a bachelor’s or master’s degree in recycling or solid waste management. “We’ve got to raise the standards—raise the bar” for the industry, he says.
Through the Recession and Beyond
According to a recent industry survey, Synergy is the 10th largest electronics recycling company in the United States in terms of processing volume. “We actually grew during the economic downturn,” Clayton says. “When everyone else was dumping clients and baling out, we picked them up. We had a massive growth spurt.” The recession worked in the company’s favor in other ways, too, Earp notes. “We were able to buy equipment at a lower cost.” Further, “we had more motivated sellers.” Synergy also didn’t arbitrarily cut its prices when the economy turned, Clayton says. “We contacted every company we were under contract with, explained the situation, and honored our contracts. When times are good, we share the bounty; when times are bad, we ask them to share the pain.”
The fact that Synergy sells material as soon as it receives it also helped the company weather the downturn, Clayton notes. From when electronic products arrive at the loading dock to their processing and sale for reuse or as commodity-grade material, the entire process takes just two to three weeks. “We keep zero inventory,” he says. “As soon as I get a commodities list, I sell [the material]. We don’t speculate.” He even tries to pre-sell the material so nothing sits, he says.
In the long term, Synergy’s leaders see shredding and sophisticated downstream separation as the future of U.S. electronics recycling. “Post-shredder technology is the key to this industry,” Clayton says. “Technology is going to drive the [electronics industry’s] train. It will allow companies to grow.” Companies that invest in it can compete against exporters on price, he says. It also will improve product quality, which he sees as the best defense against export restrictions. “If companies and governments start to require that type of processing [to commodity-grade material], then companies like Synergy that have invested a lot of money in the technology will thrive.”
The company continues to look for ways to upgrade its material to expand its markets. By the end of the year, Synergy expects to use a patented process to cross-bond pieces of mixed polymer that are too small for its technology to sort, and thus are harder to market, using an injection molder to turn the material into industrial products, the details of which it’s keeping under wraps. “We’ve tested it, and we’ve had great success,” Clayton says. “We can make a product out of stuff that otherwise would be going to a landfill.” A company Synergy works with will receive another injection molder for the same purpose.
Synergy’s owners consider the Madison facility the test site for a processing system they hope to replicate elsewhere. “As soon as we work out all the bugs, get our markets really nailed down, and have a consistent product so that people know and trust what we send them, then it will be time to build another one of these,” Earp says. Within three years, they anticipate having five to six sites nationwide, a presence large enough to significantly tame the electronics recycling frontier. Earp and Clayton acknowledge that the electronics recycling industry, like the rest of the scrap recycling industry, is headed for more consolidation over the next decade. “I’m not smart enough to see whether Synergy will be prey or the aggressor,” Earp says, “but we think that we really do have something special to offer.”
Diana Mota is associate editor of Scrap.
With proprietary separation technology and R2/RIOS certification, Synergy Recycling is working to bring certified quality and state-of-the-art operations to the electronics recycling frontier.