FEATURE/Electronics recycling; covering your liabilities and recovering your assets.

--(BUSINESS WIRE FEATURES)--April 25, 1995--With so much recent news about the ``next generation'' of computer technology -- Pentiums, PowerPCs, PCMCIAs and all the rest -- one has to stop and wonder what's happening to the ``senior citizens'' of the desktop.

What becomes of all those displaced 286s and 386s after they're crowded out by today's newer, faster machines?

According to Chuck Malburg, asset recovery services manager for Dell Computer USA, a lot of Fortune 1000 organizations are asking themselves the same question. ``It used to be that users could absorb new technology faster than computer companies could develop it, but that kind of market gap just doesn't exist anymore,'' he said. ``Now IS managers have to find a way to move them out the door.''

Considering that more than 60 percent of all new computers are now bought as ``replacements,'' it's clear that this pile-up of old PCs is indeed a fast growing problem. In fact, according to a recent Gartner Group report, nearly 79 million PCs will be ``retired'' from use by 1996.

As part of that move, many IS and IT executives are spending valuable application and management time wading through environmental regulations or dealing with secondary market brokers in order to offload their outmoded systems.

``Some corporations are just now beginning to consider PC recycling alternatives in the context of cost of ownership,'' said Malburg, ``and most of them don't realize what a long and involved process it is. Usually, they look at the how-much value those systems have as capital assets.

``After two years, they're still carrying $1,000 on the books for what was once a $3,000 PC. But because the technology has advanced so rapidly and computer performance to price has dropped so dramatically, the actual secondary resale value may be $300 or less.

``Then they think, `Well, at least I can recover $300 apiece if I sell these systems through a broker.' But when they look at the cost of de-installing the software, removing the property tags, creating exact configuration listings, testing for useful functionality, boxing everything up and hauling it off the premises, they're lucky if they get a $10 net return.''

There's also a great amount of fear, uncertainty, doubt and risk associated with secondary market channels, especially in the wake of news about shady dealings by certain brokers. It was less than a year ago that the FBI exposed a high-tech fraud ring that was reselling $10-million worth of Tandem, IBM and Unisys componentry that was supposed to have been destroyed.

To protect against this kind of abuse, MIS and asset recovery managers need to be careful in selecting reputable brokers, said Malburg. ``They have to stop and ask themselves what might happen if that broker disappeared in six months -- or if one of their PCs showed up in a landfill,'' said Malburg. ``Unless they have an audit trail with a proof of sale or a certificate of destruction, they're still on record as the registered owner.''

Green Machines

What, exactly, are the environmental hazards of dumping PCs into landfills? Aside from the substantial amount of solid waste they create, computers contain many toxic substances that can (and have) leached into groundwater supplies. Batteries with high concentrations of lead, nickel and cadmium are the worst culprits.

After batteries, CRTs are the largest source of lead in the municipal waste stream. The lead solder on PCBs (printed circuit boards) and the mercury from certain switches also pose a serious threat

EPA regulations already forbid the landfilling of PCBs with a lead content higher than 5.0 mg/liter, and the laws governing disposal of electronic equipment are likely to get even more stringent in the coming years. Germany is leading the charge in this area with a proposed ``take-back'' policy that makes manufacturers responsible for the environmentally safe disposal of their computer products.

Anticipating that similar policies will be adopted elsewhere, most computer manufacturers have already made big changes in the way they design and support their products.

``We're certainly aware of the prospective legislation in Europe and we're trying to position ourselves for that trend by taking a proactive approach here in the U.S.,'' said Hewlett-Packard's Cliff Bast. As ``product stewardship manager,'' Bast's title is indicative of HP's cradle-to-grave commitment to environmentally conscious product design.

``For customers that are displacing a lot of equipment at once, we make every effort to move that material into a re-use stream,'' explained HP Procurement Specialist Brad True. ``Much of it goes into our Service Part Recovery program, where we can retrieve components that are no longer being manufactured.''

In addition to service parts, there are other industry-standard components such as DRAMs, SRAMs and EPROMs that can be recycled and re-sold for use in certain toys, consumer products and overseas markets.

In fact, IC recycling has become an industry unto itself with the emergence of companies that specialize in recovering, refurbishing and re-selling these board-level components. One such company is Irvine, Calif.-based Aurora Electronics (ASE:AUR) which processed more than 40 million ICs last year alone.

``Even though we lead the industry in recycled ICs, we've only scratched the surface of this market,'' said Richard Barrett, president of System Recovery Services at Aurora. ``Worldwide, there are billions of dollars worth of chips in use that could eventually be recycled.''

In addition to IC recycling, more and more users are turning to companies like Aurora for a turnkey ``take-out'' solution that includes everything from de-installing licensed and proprietary software to packaging, shipping, refurbishing and re-marketing the used PCs and/or components.

Any leftover materials, such as plastic housings or stripped-down PCBs are also disposed of in an environmentally sound manner.

``We work with EPA-certified refiners and recyclers who process these materials in the most responsible manner and provide our customers with certificates of destruction,'' said Barrett. ``The plastics are channeled into re-use streams and the PCBs are reduced to a non-toxic `slag' that can be incorporated into asphalt and other materials.''

Given the logistical dimensions of a take-out effort -- a nationwide project may involve the removal of thousands of computers from scores of different sites -- it's not surprising that companies like North American Van Lines have also begun to offer ``reverse logistics'' programs with equipment recycling services.

What OEMs Are Doing

In addition to offering take-back programs for large installations, many original equipment manufacturers have launched other programs to make their computers cleaner and greener.

Here's a partial run-down:

-- Dell Computer USA: Dell offers certain customers a comprehensive Asset Recovery Service that handles all aspects of take-out, refurbishing and re-sale, even if the equipment wasn't made by Dell. All non-functional material or older products with very low re-sale values are destroyed according to EPA standard regulations. In most cases, customers receive some amount of credit on their old systems toward the future purchase of new Dell products or services.

-- Hewlett-Packard: HP offers take-back services on a case-by- case basis worldwide. Most of the products are sent through the company's Service Parts Recovery program, which now processes about 900,000 pounds of equipment per month and recycles approximately 90 percent of the recovered material. HP also takes back printer toner cartridges from its customers for recycling and disposals.

-- IBM: IBM has implemented take-back programs in eight European countries, and is considering ways to launch a similar program in the United States. The company is also pioneering the ``design for recyclability'' (DFR) concept with a ``closed-loop'' polymer waste recycling project in Scotland that converts old computer housings and keyboards into new keyboards. IBM's environmental efforts also included the elimination of ozone- depleting CFCs and MCF from its worldwide manufacturing process.

-- Compaq: Like most OEMs, Compaq now offers ``green machines'' with low power consumption and ``design for upgradeability'' to provide longer life cycles. The company also offers a battery recycling program and, through its authorized dealers, some equipment take-backs on a case-by-case basis.

-- Apple: Apple also offers a battery recycling program through its authorized dealers as well as a toner cartridge program. Apple has also addressed other environmental concerns by eliminating the use of ozone-depleting CFCs from its PCB manufacturing and by switching from bleached white to recycled brown cardboard for its product packaging.

What You Can Do

If the manufacturers of your computers don't offer take-back programs, you may want to contact a PC recycler directly. Remember that the objective shouldn't be to recover a lot of money. (According to a Gartner Group report, ``Sixty-five percent of all 486-based PCs bought in 1992 will never yield a cash return for their owners.'')

As Aurora's Barrett pointed out: ``Even an employee equipment sale can end up costing you money in the long run because it effectively creates another user base for your MIS staff to support. The $100 or $200 you recover on a PC just isn't worth it when you look at the total maintenance and support costs.''

More important than recouping dollars for your computers, he said, is finding a disposal method that is convenient, secure and environmentally sound.

If you're an individual home user (and less concerned about long-term corporate liabilities), you may want to consider donating your system to local a school or church. There are also scores of organizations such as the East West Foundation in Boston that specialize in placing pre-owned computers with needy users.

Some Recycling Resources

Apple Clean Earth Campaign: 800/776-2333 Aurora Electronics: 800/827-0999, ext. 323 Dell Computer Asset Recovery Services: 800/955-3355 Hewlett-Packard Hardware Recycling Program: 800/535-7933 -0-

NOTE TO EDITORS: An IC recycling video is available as well as a scrap board photo.

CONTACT: Aurora Electronics, San Diego 

619/552-1213

619/552-8942 (fax)