Non-exporting of electronics proves profitable

To date, the federal government has done little to curb the export of electronic wastes beyond the Environmental Protection Agency’s (EPA) cathode ray tubes (CRT) rule that requires American companies to notify EPA before exporting them. While well intentioned, the rule is easily circumvented by declaring CRTs as used equipment for resale rather than as electronic waste.

Since CRT manufacture is rapidly being supplanted by new display technologies, and that the majority of CRT production will have vanished before EPA gets to any serious enforcement, the CRT disposal problem will largely solve itself. However, there is still a huge backlog of CRTs to be processed.

While the federal government is stalled on e-waste exports, private interests have stepped up to fill the legislative void. Whether motivated by purist environmental concerns or potential exposure to bad publicity, there is a small but growing trend among American consumers, businesses and institutions not wanting to be associated with irresponsible export of hazardous e-wastes.

The dilemma is that it is more costly to responsibly recycle e-waste domestically than it is to profitably export it for overseas processing by cheap labor and questionable practices.

As a result of state and local regulations, and public awareness, landfills have and are banning electronics – funneling even greater volume to export markets. At the same time, the need for domestic plants capable of processing e-waste has increased substantially, yet the volume being processed by them today is estimated at only 15 to 20 percent of the total volume generated by the American economy.

ECS Refining is the largest e-Stewards certified electronic recycler in the United States.

Realizing that electronics is a large stream of solid waste with a budding demand for responsible domestic recycling, a new cadre of processors are emerging with business plans promising non-export, non-landfill, responsible disposal.

More than just an appealing marketing gimmick, responsible domestic disposal is also proving to be a profitable business model.

Case in point is All Green Electronics Recycling. Arman Sadeghi, company founder and CEO, shows how media influence and entrepreneurial spirit combined to create a thriving new business that is helping control electronic waste in California.

After earning a neuroscience degree from the University of California at Berkeley, Sadeghi dropped out of Harvard Medical School to pursue a business idea. On November 17, 2008 he watched “The Electronic Wasteland” on CBS’s 60 Minutes along with millions of Americans and saw the problem of unethical dumping of American e-waste in China. He also saw an opportunity to combine his knowledge of computers with his environmental interests.

Sadeghi created a business plan that promises customers that e-waste will not go into landfills, nor dumped on developing countries.

Between January and May of 2009, using a borrowed van and a rented storage unit, Sadeghi collected about 10,000 lbs. of electronic waste. By November, All Green had collected 280,000 lbs. and made its first profit. Six months later the company moved to a 50,000 sq. ft. facility in Tustin to service southern California, and opened a 30,000 sq. ft. operation in Sacramento to cover the northern part of the state. By the end of 2010, the company was collecting over 2,000,000 lbs. of e-waste per month and employed nearly 100 people.

“All Green did about $5 million in sales in 2010, our second year in business, and we are on track to do about $10 million for 2011,” said Sadeghi. “While we do business nation wide, very soon we plan on opening processing facilities in Las Vegas and New York and hiring more people.”

Like the most reputable e-waste recycling companies, All Green has achieved e-Stewards status. This program is designed to assure the integrity of recycling operations through an independent audit process and operates under the framework of the Basel Convention and the Basel Ban that prohibits the export of toxic e-waste to developing nations.

All Green is also in the process of obtaining an R2/RIOS certification as an electronic recycler, the other industry standard.

Many e-recyclers are adopting both certifications as well as achieving the ISO 14001 standard status that implements best practices and procedures for an environmental management system.

All Green routinely hosts community e-waste collections around the state and provides e-waste solutions to corporations, government entities and large and small businesses and has formed a partnership with California State University campuses.

For entertainment companies like Ticketmaster and Live Nation, All Green provides national IT assent management and recycling services. For Fox Entertainment it does asset management, hard drive destruction and electronics recycling. The company also holds various government contracts to destroy government owned electronics and counterfeits.

As most legitimate e-recyclers have realized, businesses and consumers have heightened data security concerns. All Green erases all data at no charge in accordance with Department of Defense standards. For a small fee, customers can also receive documented certification verifying the secure process.

When asked about the challenges of doing business as a non-exporting e-recycler, Sadeghi replied, “There is a good amount of competition when it comes to the large enterprise accounts and fortune 500 companies. On the local level, however, most of the competition is with small recyclers who ship overseas. The government should certainly be doing more to ban illegal exportation of electronic waste. Too many unscrupulous recyclers are getting away with shipping their product overseas. As more laws are passed and people become more aware of the export problem, recyclers like All Green will be better able to compete for that business.”

Another well established California electronics recycler has proved the viability of implementing a non-export, non-landfill policy. ECS Refining, headquartered in Santa Clara, processes more than 10 million lbs. of electronics per month. ECS holds the distinction of being one of the oldest and the largest United States processor in the e-Stewards program, and the second largest recycler of electronics in the country following Sims Metal Management.

Founded in 1980, ECS started out handling post-manufacturing scrap residues for Silicon Valley high-tech companies. “When we started out we didn’t call it e-waste processing – we called it precious metal refining from electronics. Precious metal recovery is still one of our core competencies, but 95 percent of what comes in is electronics,” said Jim Taggart, company founder and president.

Today ECS is one of only a handful of e-Steward Certified recyclers in California. It has another processing plant in Texas which was recently e-Stewards Certified with their Environmental Management System being registered to ISO14001:2004 making it one of the few in that state to hold the certification. The company is undergoing expansion with plans over the coming months to open new processing plants on the east coast and in the mid-west. “We now employ approximately 280 and are privately-held. We did over $60 million last year. We will do over $90 million in the electronics processing part of our business this year,” Taggart said.

With processing plants in Stockton, California and Terrell, Texas, ECS does business nationally, but its primary collection area of electronic goods covers the western states. It operates collection and transfer stations in northern and southern California and has an established a network of over 300 collection points throughout the state. In early 2012, ECS will have national processing facilities in the mid-west and east coast.

Taggart explained how his collection system works and differs from most drop-off locations, “Post-consumer electrics are our big supply category followed by corporate and manufacturers’ discards. We’ve found that non-profit organizations are natural collection points, but we require all our collectors – which include municipalities – to maintain certain standards and verification requirements that align with our e-Stewards certification. We audit the collectors to make sure they do what they say they are doing. That way people dropping off items are assured that their products are being handled properly, their data is being destroyed, the items are processed domestically in an environmentally-sound manner and all of the material is recycled properly.”

To encourage people to drop off obsolete or unwanted electronics, ECS Refining set up its “ecollective™” organization of drop-off locations and a website, www.myecollective.com. A consumer can go to the site, enter their zip code and get a list of the five nearest ecollective locations. “We kicked off this program about a year ago and we do advertising to drive people to the website and collection points,” said Taggart.

Drop-offs are free for consumers, businesses and institutions, and many ecollective members will do pickups. In turn, ECS picks up bulk loads from collectors or has them shipped to its processing plants.

“When we talk about no-landfill, we mean we don’t landfill anything that comes from customers and we don’t landfill any hazardous materials,” Taggart emphasized. “Besides being an electronics recycler, we are also a hazardous waste treatment facility, and virtually 100 percent of what comes in essentially gets recycled. That includes pallets, plastic wrap, foam rubber, wood and fabric. It all gets recycled.”

ECS makes money on recovered precious metals, recycled commodities and from the State of California under the Electronic Waste Recycling Act of 2003. Taggart explained, “In California it’s a consumer-paid program. The state collects a fee when the consumer buys a display device and disperses payments to recyclers for processing CRT and flat screens. It’s a fixed price of 39 cents per pound for qualifying devices and we have to provide the name and address for each device.”

Taggart gave the following rough commodity yield breakdown on the typical mix of electronics his company receives: 25 percent glass, primarily from CRTs and display screens; 25 percent steel, 15 percent plastics, 7 percent aluminum, 5 percent copper, 1 to 2 percent precious metals and the balance miscellaneous materials such as wood and fabric.

He has found ready markets for all commodities with glass being the weakest. Unleaded CRT glass goes into manufacture of fiberglass and structural products and leaded CRT glass with 20 to 30 percent lead content goes to smelters for recovery.

“With a qualified ‘yes,’ I would say increased recovery of materials is helping offset the high cost of recycling electronics. There are fairly high commodity markets right now for metals and plastics. Those things are helping subsidize the recycling. If we were to eliminate the export of these materials there would be a lot more materials to process and the economics would improve allowing more automated processes and more of a domestic market for these materials.”

“There are an infinite number of people out there, who will collect electronics, but most are brokers, not processors and to a large extent they sell to exporters. The more responsible customers know the difference. There is also a growing awareness that there is a difference between the two certification bodies, however, e-Stewards is considered the “Cadillac” – the most environmentally safe standard. Informed customers appreciate that distinction and are moving in our direction.”