We identified an opportunity to develop a company that turns up on time every time, and that provides friendly and personable, cost effective and reliable electrician Brisbane Southside services. Electronics recycling in the U.S. is growing as the industry consolidates and matures. The future of electronics recycling – at least in the U.S., and perhaps globally – will be driven by electronics technology, precious metals, and industry structure, in particular. Although there are other things that can influence the industry – 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 future of electronics recycling.
The most recent data on the industry – from
a survey conducted by the International Data Corporation (IDC) and
sponsored by the Institute of Scrap Recycling Industries (ISRI) – found
that the industry (in 2010) handled approximately 3.5 million tons of
electronics with revenues of $5 billion and directly employed 30,000
people – and that it has been growing at about 20% annually for the past
decade. But will this growth continue?
Electronics Technology
Personal computer equipment has dominated volumes handled by 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 that the shipments of smartphones and tablets now each exceed that of PCs. About 1 billion smart phones will be shipped in 2013 – and for 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”.
In
addition, CRT TVs and monitors have been a significant portion of the
input volumes (by weight) in the recycling stream – up to 75% of the
“consumer electronics” stream. And the demise of the CRT means that
fewer CRT TVs and monitors will be entering the recycling stream –
replaced by smaller/lighter flat screens.
So, 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 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 only much smaller, but typically cost less than PCs. And,
traditional laptops are 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 weight volume entering the recycling stream may begin
decreasing. Typical desktop 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 large portion of the volume of “consumer electronics” (about
15% of the industry input volume) – then up to 75% of the input volume
may be subject to the weight reduction of new technologies – perhaps 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 value 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 continue to increase (with resale, materials recovery value and
services). And, since mobile devices are expected to turn over more
rapidly than PCs (which 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 the industry to consider, as recently
reported by E-Scrap News – “The overall portability trend in computing
devices, including traditional form-factors, is characterized by
integrated batteries, components and non-repairable parts. With repair
and refurbishment increasingly difficult for these types of devices,
e-scrap processors will face significant challenges in determining the
best way to manage these devices responsibly, as they gradually compose
an increasing share of the end-of-life management stream.” So, does that
mean that the resale potential for these smaller devices may be less?
The
electronics recycling industry has traditionally focused on PCs and
consumer electronics, but what 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 have
significant (and growing?) volumes. They are not generally visible or
thought of when considering the electronics recycling industry, but may
be an increasingly important and larger share of the volumes that it
handles. And some, if not much, of this infrastructure is due 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 accommodate massive
consolidation and virtualization projects and prepare for the age of
cloud computing… the build-out of cloud computing, the inventory of
physical IT assets will shift from the consumer to 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 large amount of future e-waste.”
But,
outside the U.S. – and in developing countries in particular – the
input volume weight to the electronics recycling stream will increase
significantly – as the usage of electronic devices spreads to a broader
market and an infrastructure for recycling is developed. In addition,
developing countries will continue to be attractive markets for the
resale of used electronics.
Precious Metals
In the IDC study, over 75% by weight of industry output volumes was found to be “commodity grade scrap”. And more than half of that was “metals”. Precious metals represent a small portion of the volume – the average concentration of precious metals in electronics scrap is measured in grams per ton. But their recovery value is a significant portion of the total value 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 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 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 cell
phones generally have the highest precious metals content – up to 10
times the average of scrap electronics based on per unit weight. As
technology advances, the precious metals content of electronics
equipment generally decreases – due to 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 the market
prices for precious metals decreases – or at least does not increase –
will the recovery value of precious metals from electronics scrap
decrease? Probably the recovery value of precious metals from
electronics scrap per unit weight will increase since more electronics
products are getting smaller/lighter, but have a higher concentration of
precious metals (e.g., cell phones) than traditional e-scrap in total.
So, this aspect of the industry may actually become more cost efficient.
But the total industry revenue from commodity scrap – and especially
precious metals – may not continue to increase.
Industry Structure
The electronics recycling industry in the U.S. can be thought of as comprising 4 tiers of companies. From the very largest – that process well in excess of 20 up to more than 200 million lbs. per year – to medium, small and the very smallest companies – that process less than 1 million lbs. per year. The top 2 tiers (which represent about 35% of the companies) process approximately 75% of the industry volume. The number 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. Although there are over 1000 companies operating in the electronics recycling industry in the U.S., I estimate that the “Top 50” companies process almost half of the total industry volume.
What will happen to the smaller companies? The
mid-size companies will either merge, acquire, get acquired or partner
to compete with the larger companies. The small and smallest companies
will either find a niche or disappear. So, the total number of companies
in the electronics recycling industry will probably decrease. And more
of the volumes will be handled by the largest companies. As with any
maturing industry, the most cost efficient and profitable companies will
survive and grow.
Outlook
What are the implications of these trends?
• The total weight of input volumes will probably not continue to grow (as it has at 20% annually) – and may actually decrease in the U.S.
• The electronics recycling industry will continue to consolidate – and the largest companies will handle most of the industry volumes.
• The inherent value for resale and materials recovery will probably increase per unit volume.
• Reuse and services may become a more significant part of the total industry revenue than recycling and materials recovery.
Conclusion:
In an environment of consolidation and potentially decreasing volumes, developing additional capacity or starting a new facility for electronics recycling in the U.S. could be very risky. Acquiring the most cost efficient existing capacity available would be more prudent.
All rights reserved © 2013 John Powers
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