Electronics recycling within the U.S. keeps growing as the industry consolidates and matures. The future of electronics recycling – at least within the U.S., and possibly globally – will likely be driven by electronics technology, precious metals, and industry structure, particularly. Although there are many things that can influence the industry – including electronic products collections, legislation and regulations and export issues – I think that these particular 3 factors will have a far more profound impact on the way ahead for electronics recycling.
The newest data on the industry – from the survey conducted through 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 it really has been growing at about 20% annually over the past 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 laptops have declined by a lot more than 10% and that 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, we have been entering the “Post-PC Era”.
Furthermore, CRT TVs and monitors happen to be a substantial area of the input volumes (by weight) within the recycling stream – up to 75% of the “consumer electronics” stream. And the demise in the CRT implies 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 towards the electronics recycling industry? Do these advances in technology, which lead to size reduction, result in a “smaller materials footprint” and much less total volume (by weight)? Since cellular devices (e.g., smart phones, tablets) already represent larger volumes than PCs – and possibly turn over faster – they will probably dominate the future volumes entering the recycling stream. And they are not only 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 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. But 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 sizable portion of the volume of “electronic products” (about 15% from the industry input volume) – then as much as 75% in the input volume may be susceptible to the body weight reduction of new 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 price 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 still increase (with resale, materials recovery value and services). And, since cellular devices are required to transform over more rapidly than PCs (which may have typically turned over in 3-5 years), these alterations in the electronics recycling stream may happen within five years or less.
Another factor for the industry to consider, as recently reported by E-Scrap News – “The overall portability trend in computing devices, including traditional form-factors, is described as integrated batteries, components and non-repairable parts. With repair and refurbishment increasingly challenging for these kinds of devices, e-scrap processors will face significant challenges in determining the simplest way to manage these products responsibly, since they gradually compose an increasing share in 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 centered on PCs and electronic products, but what about infrastructure equipment? – like 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 also have significant (and growing?) volumes. They are certainly not generally visible or thought of when it comes to the electronics recycling industry, but may be a progressively important and larger share from the volumes that it handles. And some, if not much, with this infrastructure is due 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 prepare for age of cloud computing… the build-from cloud computing, the inventory of physical IT assets will shift through the consumer towards 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 substantial amount of future e-waste.”
But, outside the U.S. – and then in developing countries particularly – the input volume weight for the electronics recycling stream increases significantly – as the utilization of electronics spreads to a broader market and an infrastructure for recycling is developed. Additionally, developing countries will continue being attractive markets for the 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 half of which was “metals”. Precious metals represent a little part of the volume – the normal concentration of precious metals in electronics scrap is measured in grams per ton. But their recovery value is really a significant area of the total price of commodity grade scrap from electronics.
Precious metals prices have increased significantly lately. The market prices for gold, silver, palladium and platinum have each a lot more than doubled over the past five-years. However, precious metals have historically been very volatile since their charges 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 cellular phones generally have the greatest precious metals content – up to ten times the average 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 – like PCs. So, if the weight volume of electronics equipment handled from the electronics industry decreases, and also the market prices for precious metals decreases – or at a minimum will not increase – will the recovery price of precious metals from electronics scrap decrease? Most likely the recovery price of precious metals from electronics scrap per unit weight increases since more electronics goods are getting smaller/lighter, but use a higher power of precious metals (e.g., cellular phones) than traditional e-scrap altogether. So, this part of the industry may actually be a little more cost efficient. Nevertheless the total industry revenue from commodity scrap – and especially precious metals – may not still increase.
The electronics recycling industry in the U.S. can be looked at as comprising 4 tiers of companies. Through the very largest – that process well more than 20 up to a lot more than 200 million lbs. each year – to medium, small and the very smallest companies – that process under 1 million lbs. annually. The top 2 tiers (which represent about 35% of the companies) process approximately 75% in the industry volume. The amount of companies in “Tier 1” has already decreased due to consolidation – and continued industry consolidation will most likely drive it more to the familiar 80/20 model. Although there have ended 1000 companies operating within the electronics recycling industry in the U.S., I estimate the “Top 50” companies process nearly half from the total industry volume.
What will happen to smaller companies? The mid-size companies will either merge, acquire, get acquired or partner to contest with the bigger companies. The small and smallest companies will either locate a niche or disappear. So, the entire variety of companies within the electronics recycling industry will most likely decrease. And more of the volumes will be handled through the largest companies. Just like any maturing industry, by far the most inexpensive and profitable companies will survive and grow.