Electronics recycling in the U.S. is increasing as the industry consolidates and matures. The future of electronics recycling – at least within the U.S., and perhaps globally – will be driven by electronics technology, precious metals, and industry structure, in particular. Although there are more things that can influence the industry – such as consumer electronics collections, legislation and regulations and export issues – I think these 3 factors will have a more profound impact on the way ahead for electronics recycling.
The newest data on the industry – from a survey conducted through the International Data Corporation (IDC) and sponsored by the Institute of Scrap Recycling Industries (ISRI) – found that this industry (in 2010) handled approximately 3.5 million a lot of electronics with revenues of $5 billion and directly employed 30,000 people – which this has been growing at about 20% annually within the last decade. And can this growth continue?
Computer equipment has dominated volumes handled from 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 notebooks have declined by more than 10% and this the shipments of smartphones and tablets now each exceed that of PCs. About 1 billion smart phones is going to be shipped in 2013 – and the first time exceed the volumes of conventional cell phones. And shipments of ultra-light laptops and laptop-tablet hybrids are increasing rapidly. So, our company is entering the “Post-PC Era”.
Additionally, CRT TVs and monitors have already been a significant area of the input volumes (by weight) inside the recycling stream – as much as 75% of the “consumer electronics” stream. As well as the demise in the CRT means that fewer CRT TVs and monitors is going to be entering the recycling stream – replaced by smaller/lighter flat screens.
So, what do these technology trends mean for 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 probably turn over faster – they will likely probably dominate the long run volumes entering the recycling stream. Plus they are not just much smaller, but typically cost less than PCs. And, traditional laptops are now being replaced by ultra-books as well as tablets – which means that the laptop equivalent is a lot smaller and weighs less.
So, even with continually increasing quantities of electronics, the load volume entering the recycling stream may begin decreasing. Typical computer processors weigh 15-20 lbs. Traditional laptop computers weigh 5-7 lbs. Nevertheless the new “ultra-books” weigh 3-4 lbs. So, if “computers” (including monitors) have comprised about 60% from the total industry input volume by weight and TVs have comprised a big portion of the volume of “electronic products” (about 15% from the industry input volume) – then up to 75% from the input volume may be susceptible to the weight lowering of technologies – perhaps just 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 units 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 cellular devices are anticipated to change over more rapidly than PCs (which have typically turned over in 3-five years), these modifications in the electronics recycling stream may happen within 5 years or less.
Another factor for that industry to take into consideration, as recently reported by E-Scrap News – “The entire portability trend in computing devices, including traditional form-factors, is seen as a integrated batteries, components and non-repairable parts. With repair and refurbishment increasingly difficult for these kinds of devices, e-scrap processors will face significant challenges in determining the easiest method to manage these devices responsibly, as they gradually compose an escalating share from the end-of-life management stream.” So, does that mean that this resale potential for 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? – including 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 have significant (and growing?) volumes. They are not generally visible or considered when it comes to the electronics recycling industry, but may be an increasingly important and larger share in the volumes it handles. Plus some, if not much, of the infrastructure arrives jgigrb to change in technology – resulting in a large volume turnover of equipment. GreenBiz.com reports that “… since the industry overhauls and replaces… servers, storage and networking gear to allow for massive consolidation and virtualization projects and prepare for age cloud computing… the build-from cloud computing, the inventory of physical IT assets will shift from the consumer for the data center… While the number of consumer devices is increasing, they are also getting smaller in size. Meanwhile, data centers are being upgraded and expanded, potentially creating a lot of future e-waste.”
But, outside of the U.S. – and in developing countries in particular – the input volume weight to the electronics recycling stream will increase significantly – as the utilization of electronic devices spreads to a broader market as well as 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 become “commodity grade scrap”. And more than 50 % of which had been “metals”. Precious metals represent a little portion of the volume – the normal power of precious metals in electronics scrap is measured in grams per ton. However their recovery value is really a significant portion of the total price of commodity grade scrap from electronics.
Precious metals prices have increased significantly in recent years. The market prices for gold, silver, palladium and platinum have each a lot more than doubled in the last five years. However, precious metals have historically been very volatile since their costs are driven primarily by investors. Their prices seem to have peaked – and they 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 customarily more stable.
Telecommunications equipment and cell phones have the best precious metals content – approximately 10 times the normal of scrap electronics based on per unit weight. As technology advances, the precious metals content of electronics equipment generally decreases – because of cost reduction learning. However, the smaller, newer devices (e.g., smart phones, tablets) have higher precious metals content per unit weight than conventional electronics equipment – such as PCs. So, if the weight volume of electronics equipment handled by the electronics industry decreases, and also the market prices for precious metals decreases – or at least fails to increase – will the recovery worth of precious metals from electronics scrap decrease? Most likely the recovery value of precious metals from electronics scrap per unit weight improves since more electronics goods are getting smaller/lighter, but possess a higher power of precious metals (e.g., cell phones) than traditional e-scrap overall. So, this aspect 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 inside the U.S. can be looked at as comprising 4 tiers of companies. From your very largest – that process well greater than 20 as much as greater than 200 million lbs. each year – to medium, small, and the smallest companies – that process under 1 million lbs. annually. The top 2 tiers (which represent about 35% in the companies) process approximately 75% in the industry volume. The quantity of companies in “Tier 1” has already decreased because of consolidation – and continued industry consolidation will probably drive it more to the familiar 80/20 model. Even though there have ended 1000 companies operating inside the electronics recycling industry within the U.S., I estimate that this “Top 50” companies process up to 50 % of the total industry volume.
What will happen to the lesser companies? The mid-size companies will either merge, acquire, get acquired or partner to contend with the greater companies. The little and smallest companies will either find a niche or disappear. So, the complete number of companies inside the electronics recycling industry will most likely decrease. And more of the volumes will be handled by the largest companies. As with every maturing industry, probably the most cost efficient and profitable companies will survive and grow.