Electronics recycling inside the U.S. is increasing because the industry consolidates and matures. The future of electronics recycling – at least in the U.S., and possibly globally – will be driven by electronics technology, precious metals, and industry structure, specifically. Although there are more things that can influence the business – including electronic products collections, legislation and regulations and export issues – In my opinion that these particular 3 factors will have a more profound impact on the future of electronics recycling.
The latest data on the industry – from the survey conducted by the International Data Corporation (IDC) and sponsored from the Institute of Scrap Recycling Industries (ISRI) – found that this industry (during 2010) handled approximately 3.5 million tons of electronics with revenues of $5 billion and directly employed 30,000 people – and this this has been growing at about 20% annually over the past decade. And can this growth continue?
Pc equipment has dominated volumes handled through the electronics recycling industry. The IDC study reported that over 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 laptop computers have declined by more than 10% and this the shipments of smartphones and tablets now each exceed that relating to PCs. About 1 billion smart phones will 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, our company is entering the “Post-PC Era”.
In addition, CRT TVs and monitors happen to be an important portion of the input volumes (by weight) within the recycling stream – approximately 75% from the “electronic products” stream. And also the demise in the CRT signifies that fewer CRT TVs and monitors will likely be entering the recycling stream – replaced by smaller/lighter flat screens.
So, exactly 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 cellular devices (e.g., smart phones, tablets) already represent larger volumes than PCs – and in all likelihood turn over faster – they are going to probably dominate the future volumes entering the recycling stream. And they are generally not only smaller, but typically are less expensive than PCs. And, traditional laptops are being replaced by ultra-books as well as tablets – meaning that the laptop equivalent is smaller and weighs less.
So, even with continually increasing quantities of electronics, the 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% in the total industry input volume by weight and TVs have comprised a sizable area of the volume of “electronic products” (about 15% in the industry input volume) – then as much as 75% of the input volume may be subject to the load lowering of new technologies – perhaps around a 50% reduction. And, similar technology change and size reduction is occurring in other markets – e.g., telecommunications, industrial, medical, etc.
However, the inherent price of these products may be more than PCs and CRTs (for resale as well as scrap – per unit weight). So, industry weight volumes may decrease, but revenues could still increase (with resale, materials recovery value and services). And, since cellular devices are required to turn over more rapidly than PCs (that have typically turned over in 3-5 years), these changes in the electronics recycling stream may happen within 5 years or less.
Another factor for that 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 kinds of devices, e-scrap processors will face significant challenges in determining the best way to manage these units responsibly, as they gradually compose a growing share of the end-of-life management stream.” So, does that mean that this resale possibility of these smaller devices may be less?
The electronics recycling industry has traditionally dedicated to PCs and consumer electronics, but have you thought 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 looked at when it comes to the electronics recycling industry, but may be an extremely important and larger share from the volumes that it handles. And a few, otherwise much, of this infrastructure is due jgigrb to change in technology – which will result in a large volume turnover of equipment. GreenBiz.com reports that “… as the industry overhauls and replaces… servers, storage and networking gear to support massive consolidation and virtualization projects and prepare for age of cloud computing… the build-from cloud computing, the inventory of physical IT assets will shift through the consumer to the data center… While the quantity of consumer devices is increasing, also, they are getting smaller in dimensions. Meanwhile, data centers are being upgraded and expanded, potentially creating a lot of future e-waste.”
But, away from U.S. – and in developing countries in particular – the input volume weight towards the electronics recycling stream will increase significantly – as the utilization of gadgets spreads to a broader market plus an infrastructure for recycling is developed. Additionally, developing countries will continue being 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 over 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. But their recovery value is a significant area of the total value of commodity grade scrap from electronics.
Precious metals prices have increased significantly lately. The market prices for gold, silver, palladium and platinum have each more than doubled over the past five-years. However, gold and silver have historically been very volatile since their prices are driven primarily by investors. Their prices seem to have peaked – and therefore 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 cell phones usually have the best precious metals content – up to ten times the typical of scrap electronics according to per unit weight. As technology advances, the precious metals content of electronics equipment generally decreases – due to cost reduction learning. However, smaller, newer devices (e.g., smart phones, tablets) have higher precious metals content per unit weight than conventional electronics equipment – such as PCs. So, in the event the weight volume of electronics equipment handled through the electronics industry decreases, and the market prices for precious metals decreases – or at a minimum 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 will increase since more electronics products are getting smaller/lighter, but use a higher power of precious metals (e.g., mobile phones) than traditional e-scrap overall. So, this part of the industry may actually become more affordable. But the total industry revenue from commodity scrap – and particularly precious metals – may not still increase.
The electronics recycling industry within the U.S. can be regarded as comprising 4 tiers of companies. From the very largest – that process well more than 20 as much as greater than 200 million lbs. per year – to medium, small and the very smallest companies – that process under 1 million lbs. each year. The top 2 tiers (which represent about 35% in the companies) process approximately 75% from the industry volume. The amount of companies in “Tier 1” has decreased because of consolidation – and continued industry consolidation will likely drive it more for the familiar 80/20 model. Although there are over 1000 companies operating inside the electronics recycling industry inside the U.S., I estimate that this “Top 50” companies process almost half in the total industry volume.
What is going to occur to the lesser companies? The mid-size companies will either merge, acquire, get acquired or partner to compete with the greater companies. The little and smallest companies will either locate a niche or disappear. So, the entire quantity of companies in the electronics recycling industry will probably decrease. And a lot of volumes will be handled from the largest companies. Just like any maturing industry, probably the most affordable and profitable companies will survive and grow.