Falling computer prices may be good for consumers, but the PC's popularity is proving to be bad for the environment. More than 900,000 tons of computers and information devices were junked in the U.S. in 2000. Most of this techno-waste is buried in landfills, where trace amounts of lead and mercury, along with other potentially hazardous agents, can leak into the ground and water. Currently, a scant 20% of dead PCs are recovered for recycling. Of these, about four-fifths are shipped to developing countries, where often-unprotected workers use heat or caustic chemicals to strip out the precious metals. In September, Chinese officials seized 450 tons of monitors, keyboards, and other electronic junk illegally inbound from the U.S.
The rising tide of tech garbage could be reversed if Ted Smith has his way. As head of the San Jose (Calif.)-based Silicon Valley Toxics Coalition, Smith is pushing PC makers and U.S. regulators to follow Europe's lead. There, and in Japan, public concern about tech waste has prompted laws forcing manufacturers to reduce the use of toxic materials in new products and to take back old computers to be recycled. It's a different story in the U.S., where regulation is still at the draft stage. This year, Congress and 20 state legislatures have taken up computer-recycling bills. In California, a measure that would levy a recycling fee on all computer purchases could become law this fall. Smith, a longtime environmental watchdog, is helping to shape these policies. He is one of a handful of activists involved in negotiating a national computer-recycling plan with electronics manufacturers.
For now, however, Smith is focusing his efforts on Dell Computer (DELL), the fastest-growing major PC company and the only one to remain profitable during the downturn. Austin (Tex.)-based Dell Computer Corp. has trailed rivals in implementing recycling options. Smith says the company, with its build-to-order business model and superefficient manufacturing and distribution scheme, is uniquely positioned to lead the industry into greener pastures. BusinessWeek Dallas correspondent Andrew Park spoke with Smith about his campaign to clean up the PC business.
Q: Given the scale of this problem, why target Dell?
A: Dell is the clear market leader in selling computers. However, they're not the leader on environmental concerns. Each year, we rank the environmental performance of major computer makers. Dell has consistently ranked as a laggard. It needs to develop the same kind of leadership on environmental issues that it has shown in sales and marketing.
Q: Dell just began taking back home computers from customers in the U.S. for a fee. Why isn't that sufficient?
A: Dell's plan still requires consumers to pay the cost of shipping old equipment. They have to package it up and send it off. As long as there's that kind of disincentive, the program is not going to be very effective. Hewlett-Packard (HPQ) and IBM (IBM) have also tried this sort of fee-for-return method, but they found there were very poor participation rates.
Another problem is that Dell is relying on prison labor to do its recycling. Disassembling old computers can be a very hazardous occupation, yet prisoners aren't entitled to the kind of environmental-health protections that people in the private sector are. The recycling infrastructure in the U.S. will have to grow if and when these new laws take effect. Yet private recyclers can't compete with low-cost prison labor.
Q: But your agenda goes beyond just Dell, right?
A: IBM and HP both already have recycling programs. So they're ahead of the game in terms of establishing the infrastructure to recycle and in terms of sending signals back to their suppliers to produce more benign materials. But in terms of setting up the new standards, there aren't many U.S. manufacturers at the negotiating table at all. In fact, the only major U.S. company that has been participating [in the talks] is HP. The rest are mostly European or Japanese companies. U.S. businesses need to step up to the plate.
Q: What about in your legislative efforts?
A: In the California legislation, the only high-tech company supporting the bill was Apple Computer (AAPL).
Q: Why are manufacturers resisting?
A: Everybody recognizes that the system simply isn't working, and they recognize that as long as it isn't working, the environmental crisis is going to continue to grow. The sticking point is how to finance a solution. All of the government, environmental, and recycling stakeholders agree we need a front-end financing system, where the recycling fee is built into the purchase price.
Yet some industry stakeholders still insist that we finance this through a back-end waste fee. After spending $1,000 or $2,000 on a piece of electronic equipment, most consumers aren't going to want to pay an additional price to get rid of it.
Q: Most discarded PCs have to be disposed of by local governments. Why can't they come up with a solution?
A: We've trained people to put their cans and bottles out at the curb and then expect the city to take care of the recycling. But it doesn't work with electronics, because the cost of recycling these products is much higher. For a city government to step into that arena means a significant economic hit. Most are unable and unwilling to do that.
Q: Dell announced it will take back PCs for a $10 or $20 fee. Is this the sort of charge that you expect to see if recycling takes off?
A: One flat fee, even if it's paid up front, doesn't make sense. The cost ranges from $10 to $40, depending on the size and complexity of the gear. PDAs are at the low end. At the high end are computer monitors, which can have four to eight pounds of lead in them--and larger TVs, which have even more. Ironically, the lead is in there for health reasons--to protect users from radiation.
Q: What would an ideal system look like?
A: I'd like to see rules that would make manufacturers responsible for the full life cycle of their products. So they're responsible for taking them back at the end of life, and they're responsible for assuring that there are environmentally friendly ways of dismantling and recycling them--not just throwing them in a landfill or burning them. Then let the companies compete to see who can develop the most effective, efficient processes.
Q: It's likely that companies would begin to alter the materials and methods they use to make PCs. What do you anticipate?
A: A typical computer involves the mining, the processing, the use, and the disposal of more different toxic materials than any other technology ever developed. Companies such as Sharp, Sony (SNE), and Panasonic have a corporate goal to be lead-free in all of their products within the next year or two. We want companies to get off the toxic treadmill and start using materials that perform the same functions but don't create hazards.
Q: Are such materials available?
A: In many cases, yes. A number of Japanese companies have developed circuit boards with lead-free solder. Virtually all flat panels have a small amount of mercury, which is extremely toxic, but some companies are making it easier to remove it before you recycle. And there has been progress in phasing out brominated flame retardants, which are mixed in with the plastic housing. These are endocrine disrupters, and burning them creates dioxins. There are alternatives ranging from phosphate-based flame retardants to different kinds of plastics to metal substitutes.
Q: Are there ways to improve on the physical design of consumer electronics to make them easier to dispose of?
A: Dell is using fewer screws to assemble its computers, making them not only easier to put together but also easier to take apart. Some companies have already learned that by developing effective take-back systems, they can effectively reuse parts and components and thereby gain a competitive advantage. There's a larger industrywide discussion emerging about moving to scaled-down computer terminals connected to a central network. That would produce less dependence on materials.
Q: Will consumers pay for greener PCs?
A: Quite a few products are already on the market. NEC (NIPNY) recently released a green computer that's completely lead free and is very energy efficient. Other companies are taking note. Outside of the U.S., you're seeing growing demand for greener products reflected in consumers' interest in environmental labels.
Q: Can manufacturers get their huge networks of suppliers on board?
A: Yes. Because of the new [Restrictions on Hazardous Substances] laws in Europe that require the phaseout of certain toxic materials, some of the [equipment makers] are putting forward strict requirements for their entire supply chain. They have to make sure their suppliers aren't cutting corners. But there are so many different companies involved in making each of the components, it presents a difficult challenge.
Q: What happens to computer waste that gets shipped abroad?
A: In China, we documented the burning of plastics, the use of acid baths to retrieve gold and other precious metals, the dumping of acid into the rivers, and the smashing of CRT monitors into pieces that are dumped into irrigation ditches. And very young children are taking apart some of this dangerous equipment. Following our report, the Associated Press learned that a number of these workers' children had gotten leukemia. And their groundwater is undrinkable.
Q: What makes you think Dell could help make the industry more environmentally friendly?
A: Dell has a direct relationship with its customers, and it has the logistics down to a fine science. If it can use the same skills to develop reverse logistics, it could quickly get out in front of the pack. At some point, the light's going to go off in Michael S. Dell's head. A simple mail-back program is not going to drive design changes and materials substitutions.