Electronics recycling inside the U.S. is increasing since the industry consolidates and matures. The way forward for electronics recycling – at least in the U.S., and maybe globally – is going to be driven by electronics technology, precious metals, and industry structure, in particular. Although there are many things that can influence the business – like consumer electronics collections, legislation and regulations and export issues – In my opinion that these 3 factors will have a more profound impact on the way ahead for electronics recycling.
The latest data on the industry – from a survey conducted from the International Data Corporation (IDC) and sponsored from the Institute of Scrap Recycling Industries (ISRI) – found the industry (in 2010) handled approximately 3.5 million plenty of electronics with revenues of $5 billion and directly employed 30,000 people – and that it really has been growing at about 20% annually within the last decade. And definitely will this growth continue?
Personal computer equipment has dominated volumes handled through the electronics recycling industry. The IDC study reported that more than 60% by weight of industry input volumes was “computer equipment” (including PCs and monitors). But recent reports by IDC and Gartner show that shipments of desktop and notebooks have declined by more than 10% which the shipments of smartphones and tablets now each exceed those of PCs. About 1 billion smart phones is going to be shipped in 2013 – and the first time exceed the volumes of conventional cellular phones. And shipments of ultra-light laptops and laptop-tablet hybrids are increasing rapidly. So, we have been entering the “Post-PC Era”.
Furthermore, CRT TVs and monitors have already been a significant portion of the input volumes (by weight) within the recycling stream – as much as 75% of the “electronic products” stream. And the demise from the CRT implies that fewer CRT TVs and monitors will likely be entering the recycling stream – replaced by smaller/lighter flat screens.
So, what do these technology trends mean to the electronics recycling industry? Do these advances in technology, which lead to size reduction, result in a “smaller materials footprint” and fewer total volume (by weight)? Since mobile phones (e.g., smart phones, tablets) already represent larger volumes than PCs – and possibly turn over faster – they are going to probably dominate the long run volumes entering the recycling stream. And they are generally not just much smaller, but typically cost less than PCs. And, traditional laptops are now being replaced by ultra-books as well as tablets – meaning the laptop equivalent is significantly smaller and weighs less.
So, even with continually increasing quantities of electronics, the body weight volume entering the recycling stream may begin decreasing. Typical computer processors weigh 15-20 lbs. Traditional laptops weigh 5-7 lbs. Nevertheless the new “ultra-books” weigh 3-4 lbs. So, if “computers” (including monitors) have comprised about 60% of the total industry input volume by weight and TVs have comprised a large portion of the volume of “consumer electronics” (about 15% of the industry input volume) – then as much as 75% in the input volume may be subject to the weight lowering of technologies – perhaps as much as a 50% reduction. And, similar technology change and size reduction is occurring in other markets – e.g., telecommunications, industrial, medical, etc.
However, the inherent worth of these devices may be higher than PCs and CRTs (for resale as well as scrap – per unit weight). So, industry weight volumes may decrease, but revenues could continue to increase (with resale, materials recovery value and services). And, since mobile phones are required to change over more rapidly than PCs (that have typically turned over in 3-5 years), these changes in the electronics recycling stream may happen within five years or less.
Another factor for the industry to think about, as recently reported by E-Scrap News – “The general portability trend in computing devices, including traditional form-factors, is described as integrated batteries, components and non-repairable parts. With repair and refurbishment increasingly hard for these sorts of devices, e-scrap processors will face significant challenges in determining the best way to manage these devices responsibly, since they gradually compose an increasing share from the end-of-life management stream.” So, does that mean that the resale potential for these smaller devices may be less?
The electronics recycling industry has traditionally focused on PCs and electronic products, but how about infrastructure equipment? – such as servers/data centers/cloud computing, telecom systems, cable network systems, satellite/navigation systems, defense/military systems. These sectors generally use larger, higher value equipment and possess significant (and growing?) volumes. They are certainly not generally visible or thought of when considering the electronics recycling industry, but may be an extremely important and larger share from the volumes it handles. Plus some, otherwise much, of this infrastructure arrives jgigrb to change in technology – which will result in a large volume turnover of equipment. GreenBiz.com reports that “… because the industry overhauls and replaces… servers, storage and networking gear to support massive consolidation and virtualization projects and get ready for the age of cloud computing… the build-from cloud computing, the inventory of physical IT assets will shift from the consumer towards the data center… While the number of consumer devices is increasing, they are also getting smaller in dimensions. Meanwhile, data centers are being upgraded and expanded, potentially creating a substantial amount of future e-waste.”
But, away from U.S. – and in developing countries specifically – the input volume weight for the electronics recycling stream will increase significantly – as the usage of electronic devices spreads to your broader market plus an infrastructure for recycling is developed. Additionally, developing countries will continue to be attractive markets for your resale of used electronics.
In the IDC study, over 75% by weight of industry output volumes was found to get “commodity grade scrap”. And more than 50 % of that was “metals”. Precious metals represent a tiny area of the volume – the typical concentration of precious metals in electronics scrap is measured in grams per ton. However their recovery value is really a significant area of the total price of commodity grade scrap from electronics.
Precious metals prices have risen significantly in recent years. The market prices for gold, silver, palladium and platinum have each a lot more than doubled over the past 5 years. However, gold and silver have historically been very volatile since their costs are driven primarily by investors. Their prices appear to have peaked – and are now significantly below their high points last year. Whereas, platinum and palladium prices have traditionally been driven by demand (e.g., manufacturing – like electronics and automotive applications) and usually more stable.
Telecommunications equipment and cellular phones usually have the greatest precious metals content – as much as ten times the normal of scrap electronics based on per unit weight. As technology advances, the precious metals content of electronics equipment generally decreases – as a result of cost reduction learning. However, the lesser, newer devices (e.g., smart phones, tablets) have higher precious metals content per unit weight than conventional electronics equipment – such as PCs. So, when the weight volume of electronics equipment handled through the electronics industry decreases, and the market prices for precious metals decreases – or at least does not increase – will the recovery worth of precious metals from electronics scrap decrease? Most likely the recovery worth of precious metals from electronics scrap per unit weight increases since more electronics items are getting smaller/lighter, but possess a higher power of precious metals (e.g., cellular phones) than traditional e-scrap overall. So, this part of the industry may actually become more cost efficient. But the total industry revenue from commodity scrap – and particularly precious metals – may not still increase.
The electronics recycling industry inside the U.S. can be thought of as comprising 4 tiers of companies. Through the very largest – that process well more than 20 approximately greater than 200 million lbs. each year – to medium, small and the smallest companies – that process less than 1 million lbs. each year. The top 2 tiers (which represent about 35% in the companies) process approximately 75% in the industry volume. The amount of companies in “Tier 1” has already decreased as a result of consolidation – and continued industry consolidation will probably drive it more to the familiar 80/20 model. Though there have ended 1000 companies operating within the electronics recycling industry in the U.S., I estimate that the “Top 50” companies process almost half of the total industry volume.
What is going to occur to smaller companies? The mid-size companies will either merge, acquire, get acquired or partner to compete with the larger companies. The tiny and smallest companies will either locate a niche or disappear. So, the total variety of companies within the electronics recycling industry will probably decrease. And a lot of volumes will likely be handled from the largest companies. As with any maturing industry, probably the most affordable and profitable companies will survive and grow.