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Export Regulations The Wider World of Electronics

Commercial and industrial electronic devices can be lucrative for refurbishers and recyclers, but the work demands specialized knowledge and skills—and it’s not without risk.

By Katie Pyzyk

When you think electronics today, you might picture a person awash in the soft blue glow of a smartphone, tablet, laptop, or TV—or maybe one wearing a trendy fitness tracker or virtual-reality headset or piloting a drone.

Yet other electronic machines have become so ubiquitous they’re nearly invisible: point-of-sale devices for swiping a credit or debit card, the check-in terminal and security scanners at the airport, the electric meters on your house. And what about all those machines behind the scenes in various professions and industries? As some have discovered, this wider world of commercial and industrial electronics has potential for electronics refurbishers and recyclers.

“Nonconsumer” electronics is a varied space that covers a wide array of items and numerous industries. The hundreds of commercial and industrial device categories include the aforementioned credit-card processing machines and utility meters, as well as office equipment, computer servers, medical imaging equipment, and lab equipment. “If it plugs in or takes a battery, we’re going to look at it,” says Adam Dumes, vice president of Cohen Recycling (Middletown, Ohio).

Nearly all electronics are made from common elements—namely, ferrous, nonferrous, and precious metals; plastics; and glass. Items like servers don’t necessarily require different recycling methods than desktop and laptop computers. “The same components are in there. … a server is no different than a big [computer] tower … . You’re still ultimately dealing with the same commodities once you’ve processed the obsolete electronics,” Dumes says. That said, some nonconsumer electronics require different, more intense processes and considerations, whether it’s to refurbish a product for resale, harvest valuable parts, capture the most value from its commodities, or properly manage its hazards. And the stakes can be high for something like medical equipment, says Tony Lively, president of ZRG (Carlsbad, Calif.), which specializes in such items. “You have to be very aware that this [equipment] can kill people” if it’s not handled properly.

A Growing Supply

The infiltration of electronics into everyday life is staggering. “We inject the intelligence of electronics into more and more aspects of our lives,” says Steven Elmore, program director of CyclePoint from SourceAmerica (Vienna, Va.). “Everything associated with our activity out in the world has become intelligent design-run,” including items from cars to refrigerators. Combine that proliferation of electronics with a shorter product life cycle, and you get a recycling sector with a rapidly growing supply.

U.S. residents produced an estimated 3.4 million tons of consumer e-scrap in 2014, according to a recently released U.S. Environmental Protection Agency report, and nearly 42 percent of that was collected for reuse or recycling. That seems like a lot of material, but electronics recyclers think it’s just the tip of the iceberg. “The consumer portion really is a small percentage of the overall e-scrap category,” says Duane Beckett, CEO of Sunnking (Brockport, N.Y.). Not a lot of people think about nonconsumer electronic devices falling under that electronics umbrella, he notes.

The overall supply of nonconsumer electronics also seems to be growing—“It’s increasing, definitely,” Lively says—but these products differ from consumer electronics in at least one important way. Consumers seem to have accepted the idea that their electronic devices will break or become obsolete in just a few years. As these products’ life spans have shortened, their prices have come down, so consumers just replace the nonworking device with a new one. “If you look at the initial cost of a computer, laptop, or cellphone, you’re in the range of a few hundred dollars,” says Corey Dehmey, R2 director at Sustainable Electronics Recycling International (Boulder, Colo.). Thus, after a few years, the resale value for those consumer devices is rather low. For nonconsumer electronics, it’s a different story. “A lot of these machines are so expensive that [customers] wait to upgrade them as long as they possibly can,” Beckett says. Further, Dehmey says, “if you’re talking about an initial cost of $10,000 or $20,000, it makes the value of reusing and refurbishing that [nonconsumer] device—the residual value that you can sell it for—much higher. … There are more opportunities for [nonconsumer] reuse because of the residual value.”

Refurbishing and resale have been part of some electronics recycling businesses from the beginning, while for others, sagging commodity prices in recent years have pushed them in that direction. “Two years ago we recognized pretty handily we were going to have to incorporate reuse and refurb, and not so much build the business model around the [recycling] and commodity value,” says CyclePoint’s Elmore. Electronics processors are likely to keep a foot in refurbishment even when commodity prices rebound, these recyclers say, because the revenue stream can be both higher and more consistent. “I don’t think [the industry is] flipping back” to focusing on disassembly and shredding in lieu of refurbishment and resale, Dumes says. “At the peak of the commodity markets, [the scrap is] still not going to come close to what a reusable product is going to be worth.”

Niche Knowledge

“In commercial and industrial electronics, usually the customers are very stringent,” says Jade Lee, president and CEO of Supply-Chain Services (Lombard, Ill.). “They demand that the service provider should have rigorous facility security [and] data sanitization and verification procedures in place, in addition to an organized and systematic process of asset audit, functionality testing, refurbishing/repairing, and detailed reporting.”

Even if your facility has all that, experts in recycling nonconsumer electronics have a caution for you: Know the niche. Refurbishing such products—or even disassembling them for parts—requires extensive research and knowledge acquisition. “With the higher-end commercial stuff, we need higher-end technicians,” says Chris Ko, managing partner at ER2 (Mesa, Ariz.). “Whenever you deal with the commercial-level material, it has to be treated far differently than a laptop.” As Dehmey points out, “fewer people can do [refurbishment] because of the specialized nature.”

Businesses report instituting rigorous training processes so employees can identify and repair these devices. Specialized training also protects the workers and the company when the products contain dangerous materials that require special handling or disposal. These focus materials may be the same as those in other electronic products—cathode-ray tubes, toner, cadmium, mercury, or lead—but they also could be oil or other fluids, glass in unexpected places, or radioactive materials that are unique to nonconsumer electronics. Trying to recycle or refurbish electronics containing any of those items without knowing about the hazards they contain could prove disastrous. Stored energy can be a safety concern as well: Many electronics can carry a powerful charge even after they’ve been unplugged.

Data destruction concerns exist in the consumer electronics space, but the stakes can be even higher with specialized equipment in highly sensitive commercial and industrial fields. Servers can hold businesses’ heavily guarded trade secrets. A medical device could have caches of patient medical records protected by the Health Insurance Portability and Accountability Act. A variety of devices could store financial information. “We’ve even received … credit-card-producing machines … and the tape in there might have residue or a punch-out from a previous credit-card number,” Ko says.

Before many refurbished items can be resold, they have to be tested and certified. Medical devices, for example, must be tested with special equipment and certified as patient-ready. “You have to have the documented proof that this piece of equipment has passed all the tests … so you know it’s not going to fail during the middle of a medical process,” Lively says. “No hospital is going to buy it if it hasn’t been tested.”

In other words, commercial and industrial electronics can be “a lot different than the consumer computer [refurbishing] business where you buy something, have your guy in the back fix it up, and you sell it on eBay,” Lively says.

The Breakdown

Eventually, upgrading a specific electronic product becomes impractical or impossible. That’s when it gets recycled for commodity value. Some nonconsumer electronics can go in the shredder right alongside consumer goods; others cannot due to their materials or construction. More robust products can take a hefty toll on typical size-reduction machinery, for example. “We use a combination of manual disassembly as well as a small shredding line that consists of … a ringmill with some magnetic sortation,” Beckett says. Recovered commodities include ferrous, nonferrous, and plastics, Lee says, just as with consumer electronics. “Once the material is … shredded, it can be very difficult to tell the difference between the two starting products,” Dumes says.

A factor boosting the commodity value of commercial and industrial electronics is that they’re “typically built better, with higher-quality and higher-value materials,” Dehmey says. “The recovery of precious metals in [their] circuitboards—gold, palladium, and silver—typically has a higher concentration than a consumer desktop or laptop or printer,” for example. And the larger items might simply house a larger volume of recoverable commodities.

But bigger isn’t always better. Large devices can be more difficult and more expensive to transport. They require “a lot more labor than consumer material,” Beckett says. “Some of that big equipment is logistically difficult on the rigging side” to ensure it does not get damaged—and that workers moving it are not harmed. Some refurbishers and recyclers have their own fleets and travel to client sites to pick up equipment, whether intact or partially dismantled. Others leave it up to customers to transport the items to the recycling facility. The third option is arranging for a shipping company to transport the equipment. Those third-party shippers have to be top-notch companies that can handle bulky—yet fragile—items and their accompanying data privacy concerns, however. “There’s a chain-of-custody protocol that we need to follow” per the certification requirements of the National Association for Information Destruction (Phoenix) “if we arrange for a pickup, especially for products (such as PCs, servers, copiers, cellphones, etc.) with a hard drive or electronic media in them,” Lee says. Such security comes at a price: “Our shipping costs are crazy,” Lively says.

Whether the equipment is being acquired for refurbishment or recycling makes a difference, too. Equipment to be scrapped is “not really that valuable, so transportation costs get high quickly” compared with value, Beckett says. On the other hand, the significantly higher resale price for refurbished equipment offsets some of the cost of shipping it. One high-value piece of refurbished equipment “makes it worth paying $150 to ship it across the country,” Dehmey says, whereas “that $150 would eat up all the proceeds of a laptop.”

Transportation costs are a factor in making this primarily a domestic business, but overseas demand for certain specialized electronics is growing. Demand for refurbished medical equipment, for example, is on the rise in certain other countries, Lively says. Newer equipment draws a better price, of course, and often can find a buyer in the United States; older items move on to other North American markets, and then perhaps down the line to Asian markets. “Depending on what age the equipment is, it has a place,” he says. As with any scrap endeavor, refurbishers and recyclers must adhere to U.S. export restrictions and other countries’ import requirements.

Risky Business

Electronics recycling involves navigating risks and regulations beyond those of processing traditional scrap metals. Recycling and refurbishing nonconsumer electronics can bring on even further business liability. “The insurance to run a company like this is much higher than it would be for a company selling just [consumer] computers,” Lively says. Some estimate those insurance costs could be up to five times higher—enough to dissuade some from entering this niche. “The large amounts of insurance and liability is probably a differentiator for a lot of people,” Ko says. One way to demonstrate a commitment to risk mitigation and business integrity, these sources say, is by investing in certification, such as through the R2/RIOS™ or e-Stewards® programs, although those certifications don’t have specific guidelines for recyclers of nonconsumer electronics. “In the eyes of the R2 standard, all electronics are treated the same,” Dehmey says.

Working in information-dense and privacy-sensitive sectors requires tenacity to maintain integrity and strong business relationships, recyclers say. “[Customers] absolutely need to have trust and confidence in what we’re doing,” Dumes says. Education and transparency are key, especially regarding data destruction. “[Customers] have to understand how your processes and procedures are in place to prevent data leakage” in order to build trust, Ko says. Some suppliers like to audit the e-scrap facilities they partner with, which isn’t a problem for those that maintain high standards. “We have stringent procedures [for] implementing programs and executing tasks,” Lee says. Corporations and original equipment manufacturers that verify excellence through audits “are the customers we love to work with, as they value the rigorous process and infrastructure that we have devoted [ourselves] to establish in the past 20 years.”

Nonconsumer electronics isn’t the easiest niche in e-scrap recycling. It requires a lot of planning, effort, and weighing cost-benefit ratios, but “at the same time, it’s extremely rewarding and beneficial,” Ko says.

Katie Pyzyk is a contributing writer for Scrap magazine ( This article originally appeared in Scrap’s March/April 2017 issue. Reprinted with permission.

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