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 maybe globally – is going to be driven by electronics technology, precious metals, and industry structure, specifically. Although there are more things that can influence the business – such as consumer electronics collections, legislation and regulations and export issues – I believe that these 3 factors will have a more profound impact on the way forward for electronics recycling.
The newest data on the industry – from the survey conducted from the International Data Corporation (IDC) and sponsored by the Institute of Scrap Recycling Industries (ISRI) – found the industry (during 2010) handled approximately 3.5 million tons of electronics with revenues of $5 billion and directly employed 30,000 people – and this it 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 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 laptops have declined by greater than 10% which the shipments of smartphones and tablets now each exceed that relating to 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, we are entering the “Post-PC Era”.
Additionally, CRT TVs and monitors happen to be a significant area of the input volumes (by weight) in the recycling stream – as much as 75% of the “consumer electronics” stream. And also the demise in the CRT implies 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 towards 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 probably turn over faster – they will likely probably dominate the future volumes entering the recycling stream. And they are generally not just smaller, but typically cost less than PCs. And, traditional laptops are being replaced by ultra-books as well as tablets – meaning 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 desktop computer processors weigh 15-20 lbs. Traditional notebooks weigh 5-7 lbs. However 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 big part of the volume of “electronic products” (about 15% from the industry input volume) – then as much as 75% of the input volume may be susceptible to the body weight reduction 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 worth of these products 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 devices are expected to turn over more rapidly than PCs (that have typically turned over in 3-five-years), these alterations in the electronics recycling stream may happen within 5 years or less.
Another factor for the industry to consider, as recently reported by E-Scrap News – “The general portability trend in computing devices, including traditional form-factors, is characterized by 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 products responsibly, as they gradually compose an escalating share from the end-of-life management stream.” So, does that mean the resale prospect of these smaller devices may be less?
The electronics recycling industry has traditionally focused on PCs and electronic products, but how 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 possess significant (and growing?) volumes. They are certainly not generally visible or looked at when considering the electronics recycling industry, but may be an extremely important and larger share in the volumes it handles. And a few, or even much, with this infrastructure is due jgigrb to change in technology – resulting in a large volume turnover of equipment. GreenBiz.com reports that “… because the industry overhauls and replaces… servers, storage and networking gear to accommodate massive consolidation and virtualization projects and prepare for age of cloud computing… the build-away from cloud computing, the inventory of physical IT assets will shift from the consumer to the data center… While the quantity of consumer devices is increasing, they are also getting smaller in size. Meanwhile, data centers are upgraded and expanded, potentially creating a lot of future e-waste.”
But, outside of the U.S. – as well as in developing countries specifically – the input volume weight towards the electronics recycling stream will increase significantly – as the usage of electronics spreads to your broader market as well as an infrastructure for recycling is developed. In addition, developing countries will continue to be attractive markets for the resale of used electronics.
Inside the IDC study, over 75% by weight of industry output volumes was found to become “commodity grade scrap”. And over one half of which was “metals”. Precious metals represent a small part of the volume – the average concentration of precious metals in electronics scrap is measured in grams per ton. However recovery value is actually 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 more than doubled within the last five years. However, precious metals have historically been very volatile since their prices are driven primarily by investors. Their prices seem 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 have the greatest precious metals content – up to ten times the typical 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 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 best fails to increase – will the recovery worth of precious metals from electronics scrap decrease? Probably the recovery worth of precious metals from electronics scrap per unit weight increases 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 a little more inexpensive. Nevertheless the total industry revenue from commodity scrap – especially precious metals – may not still increase.
The electronics recycling industry in the U.S. can be regarded as comprising 4 tiers of companies. From the very largest – that process well greater than 20 as much as more than 200 million lbs. each year – to medium, small, and the particular smallest companies – that process lower than 1 million lbs. annually. The top 2 tiers (which represent about 35% from the companies) process approximately 75% from the industry volume. The quantity of companies in “Tier 1” has already decreased due to consolidation – and continued industry consolidation will probably drive it more towards the familiar 80/20 model. Though there have ended 1000 companies operating in the electronics recycling industry in the U.S., I estimate the “Top 50” companies process nearly half in the total industry volume.
What is going to eventually smaller companies? The mid-size companies will either merge, acquire, get acquired or partner to contest with the greater companies. The small and smallest companies will either locate a niche or disappear. So, the total number of companies within the electronics recycling industry will likely decrease. And a lot of volumes will be handled from the largest companies. Just like any maturing industry, probably the most cost efficient and profitable companies will survive and grow.