E-Waste Business Is Booming
Electronic Recyclers and ReCellular say they are experiencing unprecedented growth.
August 10, 2006
E-waste companies say business is booming after California and European Union laws went into effect earlier this year.
Electronic Recyclers, an electronic recycling firm in Fresno, California, said Thursday that it became the first in the United States to surpass $1 million of electronic waste in one month.
ReCellular, a cell phone recycling company based in Dexter, Michigan, said the same day that it recycled nearly 50 percent more phones in California in July, compared with June, after a state law requiring cell phones to be recycled went into effect (see Old Phones Ring Up New Profits, Phone Recycling Booming).
“There is no turning back,” said Mike Newman, vice president of ReCellular. “People have become accustomed to recycling paper, plastic, and glass, and now they are going to become accustomed to recycling electronics as well. That’s what we’re seeing—the start of that cultural change where there’s not only the expectation, but also a system in place for recycling your electronics.”
‘A lot of those electronics and cell phones sitting in drawers today will pop up in the recycling market.’
-Pat Mulvey,
eCycling Technologies
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In July, Electronics Recyclers recycled 2.3 million pounds of computer monitors, CRT screens, LCD screens, plasma screens, laptops, and televisions, with revenues totaling $1.1 million, the company said.
And that doesn’t include 2 million pounds of other e-waste, nor revenue from the sale of the plastics, metals, and glass, said Electronic Recyclers CEO John S. Shegerian.
Residents Responding
“Our business is thriving because California residents have responded to new laws making it illegal to dump e-waste into our landfills,” he said. “The amount of e-waste still uncollected is staggering, which is why we expect to grow rapidly as more Californians learn how to recycle the e-waste in their homes and businesses.”
Michael Blumberg, chief executive of consultancy DF Blumberg Associates, forecasts the worldwide e-waste and e-recycling market will grow from $19.2 billion in 2005 to $21.8 billion in 2006 and reach $30.2 billion in 2008.
“It’s really incredible so many companies are jumping on the bandwagon,” he said. “In the bigger market of reverse logistics, [companies] are now all building in, and routing around, this idea of being green and RoHS [Restriction of the Use of Certain Hazardous Substances]-compliant. Companies that don’t get that are going to be the ones that will have trouble and fall.”
Economics are also becoming more attractive for e-waste businesses as the prices of commodities—including precious metals and plastics—are growing, companies said.
Electronic Recyclers
For Electronic Recyclers, formed in 2002, the growth began in 2005.
That’s when Californians began paying electronic waste recycling fees whenever they buy certain electronic devices, and recyclers began receiving state payments of $0.48 per pound for recycling those electronics—with $0.20 paid back to e-waste collectors that bring the electronics to recyclers.
“Every month our numbers are up 15 to 20 percent,” Mr. Shegerian said.
Then in February, a new California law began requiring other electronics—including fax machines and copiers—to also be recycled, even though no recycling fees are collected for them, and no standard fee is paid by the state. Instead, recyclers collect those electronics and sell the plastic, glass, and metal to make money.
“Since that law went into place in February, we’ve seen a large uptick in non-covered e-waste,” Mr. Shegerian said. “It has grown tremendously because of new updates in the law.”
Before February, Electronic Recyclers would get 500,000 to 600,000 pounds of that type of e-waste; in July, it processed about 2 million pounds, he said.
But so-called uncovered e-waste (e-waste not covered by state payments) contributes much less to revenue, because it brings in about a dime a pound instead of $0.28, and ends up earning only $0.02 to $0.04 a pound once other costs are paid, said Mr. Shegerian.
Mr. Shegerian said he expects nothing but more growth going forward. At least 25 states, including New York, New Jersey, Pennsylvania, Florida, and Texas, are considering e-waste laws.
He is also not concerned that EU directive RoHS that began in July and bans lead, cadmium, mercury, hexavalent chromium, and two flame retardants (see EU Ban Opens E-Waste Market), or a California law mimicking the ban that will take effect in January, will eventually diminish the business.
“There’s tons and tons of legacy electronics in people’s houses and basements, so the business is only going to grow for years to come,” he said.
Pat Mulvey, chief executive of eCycling Technologies, added that even if fewer toxic materials are included in electronics, batteries—integral to nearly all electronic devices—will still require e-waste recycling services.
ReCellular
ReCellular’s Mr. Newman said the company expects to see further increases in California cell phone recycling in August because many customers send phones in postage-paid envelopes that take a long time to arrive. “We’re definitely seeing the trend for phones go up and up, which is what we want,” he said.
After California passed its cell phone recycling law in July, ReCellular saw many carriers putting in nationwide phone recycling programs, instead of just creating them for California, he said.
Because of that, the company is on track to grow nearly 50 percent in its overall business from May to August, growing from about 200,000 phones to 300,000 phones processed, he said, nothing that he expects another 20 percent growth by the end of the year.
Jon Newman, vice president of The Wireless Alliance, said the 50 percent increase in California could be due to ReCellular’s new contract with Verizon rather than just the new law.
“I talk to a lot of people around the country, and no one else has reported having a 50 percent increase,” he said. “That’s a pretty bold statement.”
The Future
Mr. Mulvey of eCycling said the news from Electronic Recyclers and ReCellular is good for the e-waste industry.
“It just tells you what the potential of the market is,” he said. “It’s such a large market that there’s so much opportunity for so many companies, and I think you’ll see a lot more of those types of releases coming out in the next 12 to 24 months—and not only in California. A lot of those electronics and cell phones sitting in drawers today will pop up in the recycling market.”
Challenges exist, however, particularly in logistics. Mr. Mulvey noted that while there are plenty of regional players, companies that want to snag accounts with large global companies, such as IBM and Citibank, will need to have a better handle on international logistics.
“They need to feel if they call and need a pickup in any location, that it’s going to be picked up, and handled securely and in an environmentally compliant manner,” he said. “There are a lot of capabilities needed to play at that level, especially in security and environmental compliance.”
Improving logistics, particularly the transportation of the e-waste, is essential to making money, he said, adding that one repair company in Europe shells out 40 percent of costs for labor and materials, and a whopping 60 percent for transportation.
Still, Mr. Mulvey said he has no doubt that innovative companies will find ways to solve the problems.
Aside from government interest in pushing the market, venture capitalists and other investors are also beginning to show an interest. His own company is lining up $10 million in financing, and has received a significant amount of interest so far, he said.
Contact the writer: JKho@RedHerring.com
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