Electronics recycling in the U.S. keeps growing because the industry consolidates and matures. The future of electronics recycling – at least within the U.S., and maybe globally – will be driven by electronics technology, precious metals, and industry structure, specifically. Although there are other things that can influence the market – including electronic products collections, legislation and regulations and export issues – I think that these particular 3 factors will have a more profound impact on the future of electronics recycling.
The most recent data on the industry – from the survey conducted by the International Data Corporation (IDC) and sponsored through the Institute of Scrap Recycling Industries (ISRI) – found the industry (in 2010) handled approximately 3.5 million tons of electronics with revenues of $5 billion and directly employed 30,000 people – which this has been growing at about 20% annually for the past decade. And definitely will this growth continue?
Personal 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 laptops have declined by a lot more than 10% and this the shipments of smartphones and tablets now each exceed those of PCs. About 1 billion smart phones will be shipped in 2013 – and the very first time exceed the volumes of conventional mobile phones. And shipments of ultra-light laptops and laptop-tablet hybrids are increasing rapidly. So, our company is entering the “Post-PC Era”.
Furthermore, CRT TVs and monitors have been a substantial part of the input volumes (by weight) within the recycling stream – as much as 75% in the “electronic products” stream. As well as the demise of the CRT means that fewer CRT TVs and monitors will likely be entering the recycling stream – replaced by smaller/lighter flat screens.
So, what exactly 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 less total volume (by weight)? Since mobile devices (e.g., smart phones, tablets) already represent larger volumes than PCs – and probably turn over faster – they will probably dominate the future volumes entering the recycling stream. And they are not just smaller, but typically cost less than PCs. And, traditional laptops are 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 desktop 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 area of the volume of “electronic products” (about 15% from the industry input volume) – then as much as 75% of the input volume may be subject to the weight lowering 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 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 carry on and 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 3-5 years), these modifications in the electronics recycling stream may happen within five years or less.
Another factor for your 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 challenging for these types of devices, e-scrap processors will face significant challenges in determining the easiest method to manage these products responsibly, as they gradually compose an increasing share in 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 centered on 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 possess significant (and growing?) volumes. They are not generally visible or thought of when it comes to the electronics recycling industry, but may be an extremely important and larger share of the volumes it handles. And a few, otherwise much, of the infrastructure is due jgigrb to change in technology – resulting in a large volume turnover of equipment. GreenBiz.com reports that “… as the industry overhauls and replaces… servers, storage and networking gear to allow for 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 from the consumer for the data center… While the quantity of consumer devices is increasing, they are also getting smaller in proportions. Meanwhile, data centers are upgraded and expanded, potentially creating a large amount of future e-waste.”
But, outside of the U.S. – and then in developing countries specifically – the input volume weight to the electronics recycling stream will increase significantly – as the utilization of gadgets spreads to your broader market plus an infrastructure for recycling is developed. In addition, developing countries will continue to be attractive markets for the resale of used electronics.
Within the IDC study, over 75% by weight of industry output volumes was found to get “commodity grade scrap”. And over one half of which was “metals”. Precious metals represent a small area 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 part of the total worth of commodity grade scrap from electronics.
Precious metals prices have increased significantly in recent years. The marketplace prices for gold, silver, palladium and platinum have each more than doubled over the past 5 years. However, precious metals have historically been very volatile since their prices 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 generally more stable.
Telecommunications equipment and cellular phones have the best precious metals content – as much as ten times the average of scrap electronics based upon 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 – including PCs. So, when the weight volume of electronics equipment handled through the electronics industry decreases, and also the market prices for precious metals decreases – or at least will not increase – will the recovery price of precious metals from electronics scrap decrease? Possibly the recovery value of precious metals from electronics scrap per unit weight will increase since more electronics goods are getting smaller/lighter, but possess a higher power of precious metals (e.g., mobile phones) than traditional e-scrap overall. So, this part of the industry may actually be a little more inexpensive. Nevertheless the total industry revenue from commodity scrap – and especially precious metals – may not still increase.
The electronics recycling industry inside the U.S. can be thought of as comprising 4 tiers of companies. From the very largest – that process well greater than 20 approximately more than 200 million lbs. per year – to medium, small, and the smallest companies – that process under 1 million lbs. each year. The top 2 tiers (which represent about 35% in the companies) process approximately 75% of the industry volume. The number of companies in “Tier 1” has already decreased because of consolidation – and continued industry consolidation will likely drive it more for the familiar 80/20 model. Though there are over 1000 companies operating within the electronics recycling industry in the U.S., I estimate that this “Top 50” companies process up to 50 % in the total industry volume.
What is going to eventually the smaller companies? The mid-size companies will either merge, acquire, get acquired or partner to contend with the larger companies. The tiny and smallest companies will either find a niche or disappear. So, the entire variety of companies in the electronics recycling industry will probably decrease. And more of the volumes is going to be handled through the largest companies. Just like any maturing industry, probably the most cost efficient and profitable companies will survive and grow.