The big leagues: the electronics recycling industry moves from emerging to established, according to an in-depth report.

The electronics recycling industry has been defined as "emerging" for the past several years, but a study conducted by the International Association of Electronics Recyclers (IAER), Albany, N.Y., may cause that adjective to change to "established."

According to the survey and study, some 7,000 people in the U.S. are now employed in this recycling segment, working for about 400 companies with a combined annual revenue figure of $700 million.

"I don't think we were surprised by that," says IAER President Peter Muscanelli. "I have been involved in this business a long time, and I have seen the volumes increase," he remarks.

THROUGH THE TURNSTILES. Americans are avid consumers of electronic products, induding both household electronics and workplace computer equipment. A desire for the latest and greatest has helped push this trend. "Volume increased in part based on the life expectancy of electronic products," Muscanelli notes.

The IAER report tries to define the electronics stream as it is encountered by its members, and ends up with a very broad definition. The full list ranges from the obvious--corporate computers and peripherals and household TVs and VCRs--to the more specialized, including aerospace navigation systems, industrial process control systems and military encryption systems.

Among the items that seem to be most heavily contributing to the boom in obsolete electronics volumes are the proliferation of home and office computer systems and cell phones. "The pervasiveness of electronics in both the business and consumer sectors is already significant and continuing to expand," the report notes.

The IAER report attempts to quntify the potential future stream of material by looking at recent original equipment manufacturer (OEM) production numbers and life cycle durations.

In what it calls a "basic analysis" of these numbers, the report's authors conclude that of some 200 million televisions used by Americans each year, some 20 million will become obsolete annually. A similar number of personal computers and peripheral items (printers, monitors, scanners, etc.) are in use, with some 30 million of those reaching obsolescence each year. "Based on the projected growth and obsolescence rates of these various categories of consumer electronics, it can he estimated that somewhere in the neighborhood of 3 billion units will be scrapped during the rest of this decade," the report estimates.

"The outlook and general magnitude of the growth leads to the question of how is the industry going to prepare itself for this growth," says John Powers, a consultant to the IAER who edited and compiled the report.

Muscanelli notes that electronics manufacturers have done "an excellent job of minimizing the cost of electronics." This beneficial low-cost availability of computers, printers and DVD players also means the items will be regarded as easily replaceable when they have a service problem.

PENCILING IN THE LINEUP. While at least 400 companies in the U.S. are engaged in some form of electronics recycling, these participants do not all approach the recycling task in the same way.

The report outlines a process that has emerged where companies are engaged in one or more of seven segments of the electronics recycling process: asset management, brokering, re-use, demanufacturing, recovery of components, materials recovery/recycling and materials processing/refining.

Many of the earliest electronics recycling firms were engaged in the re-use and components-recovery stages, although soon after firms with scrap recycling and smelting backgrounds began to take an interest from that angle.

The report finds that, "collectively, these segments work together to provide a hierarchical recycling process that supports a supply chain from multiple industry sectors.

Re-use and component resale remain an important part of the electronics recycling industry, says Muscanelli. "I think the best opportunity is always to re-deploy that equipment to someone who could not afford a new device. It's extremely important," he comments.

He notes, though, that the low prices of new equipment are pinching this segment of the industry. "There is going to be a point for some items where the re-use side of the equation will have to be seriously considered as to whether resale is viable."

Currently, though, Muscanelli points to high-end items like $1,000 office printers as portions of the stream where refurbishing and reuse remain key profit centers for electronics recyclers specializing in this segment of the business.

Powers also sees the "triage" process of assessing reconditioning and resale prospects as applying to a narrower segment of the stream. "As you get into a broader base with consumer items and smaller items like cell phones, the apparent resale value is not as great, so it's not clear the traditional triage process is going to work for that," he remarks.

Whether post-triage or whether the assessment stage is skipped, an increasingly higher volume of obsolete electronics items are heading for mechanized shredders.

"Shredding will be an important part of the process," says Powers, who notes that higher-volume electronics processors (those handing 20 million pounds or greater annually) now "all have shredding operations to supplement their demanufacturing."

The report does not detail how many electronics shredding operations are currently in business, and Powers says it remains to be seen "how many shredders can be supported."

But equipment manufacturers are definitely seeing more activity in this segment, and enough shredder operators responded to the survey to give the IAER a good handle on what types of materials are being recycled at these plants: metals making up the highest percentage by weight, followed by glass and plastics.

Traditionally, recycled metals will yield the most stable and (depending on the type of metal) lucrative market, while leaded glass and engineered plastics recycling markets are fairly specialized. "The shredders are good way of mining that material back out so they can get the ferrous and nonferrous metals out as a commodity," notes Muscanelli.

Powers agrees, saying, "The metals content is certainly a motivator for companies in the business; it always has been."

But both Powers and Muscanelli predict that the currently high metals percentage might fall off significantly, as laptop computers and flat big-screen TVs replace tower PCs and monitors and bulkier televisions. "The metal percentage of that market will probably decrease because the plastic resins are making electronic items lighter without compromising durability," says Muscanelli.

Another issue to watch with shredders is the environmental precautions of dealing with a stream that can include heavy metals and other toxins. "Anyone who has a shredder should be doing the due diligence on what they're shredding," says Muscanelli. "Avoiding environmental and health problems is always the first step."

RULES AND ROSTER CHANGES. The upfront investment it takes to install a shredder and the ongoing management infrastructure to conduct environmental due diligence are two of the factors pushing consolidation in the electronics recycling industry.

"I think we've already seen that. Like any other industry, there are natural forces that tend toward consolidation because of economies of scale," says Powers.

"The demand of customers for full service also drives this," he continues. "More and more companies want regional and even national solutions."

As calculated within the IAER report, the largest 15 percent or so of electronics recycling companies are handling between 50 percent and 60 percent of the material being processed.

"I would say that the larger companies will become larger still and there may not be as many small companies in the future," says Muscanelli. "The smaller firms will either consolidate their efforts or will be strategically aligned with the larger corporations."

Larger recyclers have had particular success working with the largest generators of obsolete equipment--Fortune 500 companies, federal mad state agencies and educational institutions.

These larger generators want assurances that they are dealing with vendors who do their environmental and logistical homework. "These large-scale generators don't want to get in trouble," says Powers. "They want material handled properly for data destruction reasons, and they don't want it dumped in landfills if it has their name on it. They've been paying electronics recyclers to handle it properly."

Powers believes smaller companies can continue to play a role outside of metropolitan areas in particular. "Small companies can continue to serve the outlying areas," he notes.

Companies large mid small are attempting to solve one of the biggest dilemmas still facing the industry: how to most efficiently capture and recycle obsolete electronics generated and sured by individual consumers.

Methods to efficiently collect the computers and TVs stored in household basements and garages are an additional matter studied by the IAER report and will be the focus of the second feature of this series, appearing in the October 2003 issue of Recycling Today.

THE FULL STORY

Checking in at more than 170 pages, the International Association of Electronics Recyclers (IAER) "Electronics Recycling Industry Report" offers a wealth of information.

The report is divided into several segments, consisting of an overview of the size and scope of the industry, including data on how much electronic equipment is sold annually in the U.S., how much is estimated to become obsolete, how many companies are involved in recycling electronics and what types of components and materials they resell and recycle in the course of their operations.

Additionally, the report offers an overview of IAER activities and benefits followed by a 90-page directory of electronics recycling companies in the U.S. The directory is an alphabetical listing of companies offering contact information for each company.

The report can be ordered using major credit cards through the Recycling Today.com Online Store at www.RecyclingToday.com/store/.

It can also be ordered directly from the IAER at its Web site, www.iaer.org.

EUROPEAN ASSOCIATION

A group of European electronic recyclers has started a trade association. Read more about it in the headline news section of www.RecyclingToday.com.

The author is editor of Recycling Today and can be contacted via e-mail at btaylor@ Recycling Today.com.