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Business Opportunities in the Electronics Recycling Sector

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Electronics Scrap Recycling
Sean Gallup /Getty Images News

Over the last few decades, wood pallet recycling had been the fastest growing segment of the U.S. recycling business, but the recycling world is shifting. The huge growth of consumer electronics has led to an ever-expanding surge of end-of-life electronics that must be recycled. More than just trash, this material can be an environmental and health hazard as well as offer value in terms of scrap rare earth metals, recycled plastics and spare parts. With the average life of a computer being 18 to 24 months and new digital products being developed seemingly by the nanosecond, electronics recycling is now the fastest growing segment of the recycling industry.

Approximately two million tons of electronic scrap are processed every year in the United States according to ISRI - the Institute of Recycling Industries. Among its 1,600 total members, this association represents the interests of about 350 e-recyclers around the country. Bigger picture, the global e-recycling industry was worth $5.4 billion in 2009 according to ABI Research, which charts it to reach $14.7 billion by the end of 2014.

Electronics recycling “is absolutely a growth industry,” according to Lauren Roman, Business Director for e-Stewards, a recycler certification program launched in 2010 by the Seattle-based Basel Action Network, and backed by business and environmental groups alike. While it is still an exciting business to enter, Roman explained, today it is much more challenging to enter because of regulatory and certification hurdles that e-recyclers must now face.

Increasing Regulation Adds to Entry Hurdles

In the past, Roman explained, a business could just hang up its shingle, begin collecting electronics, and start separating it into separate bins by material. Offers would come in for various metals and plastics, and over time the business might take steps to improve its processes and expand its volume of incoming end-of-life electronics in order to turn a bigger profit. Little thought was given to what happened with materials once they were shipped away. The outcome of such an approach resulted in some participants in the electronics recycling industry taking unethical shortcuts. This included electronics being improperly dumped offshore in destinations such as Asia and Africa, and materials ending in landfills where heavy metals could potentially leach out.

“Now with e-certification programs,” Roman stated, “you know that the recycler has gone through a rigid certification process. It is a pretty good indication that they are doing the right thing.” There are currently two voluntary certification programs in the United States. One is the R2/RIOS Certified Electronics Recycler program, supported by ISRI, and the other is e-Stewards.

The e-Stewards standard, for example, calls for recyclers to eliminate exports of hazardous e-wastes to developing countries; to halt the dumping of such wastes in municipal landfills or incinerators, and to cease the use of captive prison populations to manage toxic e- wastes. It also calls for strict protection of private information on recycled devices and occupational health safeguards to ensure that workers in recycling plants are not exposed to toxic dusts and fumes.

There are also mandatory programs created by several jurisdictions which the entrepreneur must come to understand, where applicable. As for electronics recycling in British Columbia, for example, the Electronics Recycling Standard is enforced by Encorp, which is a not-for-profit organization contracted by the Electronics Stewardship Association of British Columbia, and funded through environmental handling fees paid by retail consumers when they purchase affected electronics products. Certification audits are handled by 3rd party inspection companies.

Other Considerations

Level of Investment. There are various types of businesses in the e-recycling sector, with typical operations ranging anywhere from a few million dollars in annual sales up to $50 to $60 million, according to ISRI. Investment can be quite low for businesses that simply collect, palletize and ship end of life electronics, up to several million for companies that install sophisticated shredding and separation technologies.

Time and Expense of Certification. Roman commented that depending on the type of operation, the cost of a certification program could be in the $5,000 to $50,000 range, and take over six months to achieve. For someone serious about entering the business, It is usually a good idea to be working towards compliance in the early stages of creating the enterprise.

Site Security. Restricted access and monitoring of the facility are hugely important considerations at most e-scrap facilities, due to the issue of information privacy. Such restrictions are important to a recycler’s appeal to customers, and may be written into contracts.

Health and Safety. Yet another consideration is the health and safety impact of handling hazardous products. Because of potential exposure to heavy metals, brominated fire retardants and other concerns during the recycling process, recyclers must take care to have such features as adequate dust collection systems, uniform and shower facilities, and other managed safety practices.

Legislation. Increasingly, state and federal legislation is impacting the recycling industry, and increasing the level of red tape. This, however, may be positive for the industry in terms of promoting a higher recovery rate where landfill bans are enacted, and it may allow for increased processing where offshore export to developing countries can be curtailed.

Business Opportunities Within E-Recycling

Collection Depots: Keeping with the British Columbia example, the physical flow of electronics scrap starts with authorized collection depots. Encorp contracts over 100 sites in B.C. to accept authorized items, where they are typically palletized according to type (computers, televisions, etc.) and wrapped, for shipment to a consolidation center. Many of the B.C. collection centers also act as bottle and beverage can return centers, which generate much more business than the e-scrap side of the operation. For this reason, Roman suggested that one low-cost way to potentially get into e-recycling might be as a collection site, if the prospective entrepreneur has an appropriate location and available space for such an activity.

Consolidation Points: Consolidation points are a common tactic in the world of logistics. They allow less than load (LTL) accumulations to be combined into full load to provide transportation efficiencies. In the B.C. model, the next stop after the collection center is the consolidation center. Encorp runs six such contracted sites in the province. At these locations, palletized products are scaled and cross-docked to create full, uniform loads to send to the recycler. Collectors are paid for their services by Encorp, based on that scaled weight. For a company interested in this type of consolidation business, dock doors to facilitate unloading and loading of trailers handling equipment, and a secure storage area for product to accumulate are required. In other jurisdictions, consolidation opportunities also exist.

Primary Recycling: At recycling operations such as Intercon Solutions, an Illinois-based e-recycler with over 100 employees at its 25,000 sq. foot main facility, incoming scrap is removed from pallets and de-manufactured by operators who take equipment apart at work stations and sort material into the appropriate pallet bin, including such categories as circuit boards, steel, plastic and glass. At Intercon Solutions, 100% of incoming material is recovered, with zero material sent to the landfill. The result is the liberation of clean material that is subsequently sent to other approved processors. Brian Brundage, CEO of Intercon Solutions, emphasizes the importance of the chain of custody in handling e-waste. For large companies, there are considerations of reputation and liability as well as the need to safeguard confidential corporate information.

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