Old as New: Fixing E-Waste Instead of Scrapping It
May 8 (Bloomberg BusinessWeek) -- E-waste recyclers have eked out profits for decades by collecting discarded electronics, dismantling them, and then selling the components and raw materials. Electronic waste is the fastest-growing waste stream in the world, according to the United Nations. In the European Union alone, 10 million tonnes (about 11 million U.S. tons) are tossed each year.
One big challenge for e-waste recyclers is competition: About 150 registered operators in the U.K. are permitted to treat e-waste. One of them, EnvironCom, hopes that fixing some of the 60,000 tonnes of junk it handles per year might give it an advantage. So in addition to recycling, it’s also repairing broken washers, TVs, and refrigerators, and then reselling them. Reuse “makes very good business sense and it’s great for the environment,” explains Chief Executive Officer Sean Feeney (in the photo above).
The 200-person company, headquartered in Grantham, 100 miles north of London, began its refurbishing operations in earnest two years ago, sparked by Feeney’s experience working as the supply-chain director at DSG International, now Dixons Retail, the largest seller of consumer electronics in the U.K. Unlike small refurbishers that typically buy used products directly from individuals and small businesses, EnvironCom gets its refuse in bulk from large companies and recycling centers.
Today, EnvironCom fixes about 15 percent of the products it handles, and aims to resell 30 percent of large appliances by the end of 2014, says Feeney. In October 2011 it opened a new 50,000-square-foot facility in London to expand its repairing capability. Feeney plans to open a new plant in Dublin this summer and is considering setting up additional locations in Europe and the U.S. over the next 18 months.
In January the European Parliament endorsed raising the target of e-waste to be collected and recycled or reused to 85 percent by 2020, from 20 percent now. The U.K. government in March estimated almost a quarter of all the electronic items discarded at municipal recycling centers could be repaired, with an annual resale value of £200 million ($323 million). “Reuse is certainly a growth area” for recyclers, though it is currently small, says Phil Conran, a director at consulting firm 360 Environmental near Leicester in central England.
EnvironCom’s motivation is as much about profits as it is about environmentalism. The nine-year-old business struggled after its main processing plant was destroyed by a fire in 2007. Feeney says after the fire it lost money every year until 2011, when it turned a profit on revenue of £13.5 million. He credits the reuse business with the turnaround and says the company expects £22 million in revenue in 2012. Feeney says EnvironCom can make more profit fixing and reselling refrigerators than breaking them down into parts, even though it takes an engineer about an hour to fix up one refrigerator, while the company’s plant in Grantham can take apart 100 of them in the same time.
EnvironCom, which has received equity investments totaling £12 million from Aloe Private Equity, sells the majority of its refurbished electrical products outside the U.K. It sends about 80,000 used refrigerators and freezers to Africa annually, with the majority sold in Ghana, according to Feeney, and it sells about 50,000 refurbished items annually to central European countries such as Latvia and Poland. The fanciest goods, such as Dyson cleaners and flat-screen TVs, go to U.K. nonprofits, including the British Heart Foundation.
EnvironCom “is a good source of refurbished stock” that complements the donated items, says Mike Lucas, head of retail at the BHF, which has 144 stores selling preowned consumer electronics. EnvironCom was the first recycling company to supply it two years ago, because “it had the scale to do so,” says Lucas.
Competitors are paying attention to EnvironCom’s reuse push. Appliance Care Recycling, which launched in Thorrington in southeast England in February 2011, refurbishes and sells nearly half of the 180 to 200 tonnes of washers, refrigerators, and other goods it processes per month, says Alex James, a director at the company. SIMS Recycling Solutions, one of the largest e-waste recyclers in the world, also repairs and resells consumer goods. “We now see the very large multinational recyclers as our competition, frankly, because they see us as their competition,” says Feeney.
Peter Calliafas, former chairman of the Waste Electrical and Electronic Equipment Advisory Body in London, notes the economic situation in the U.K. and other European countries is improving the market for refurbished gadgets and appliances. It’s “making people think twice about merely throwing away items and buying new,” he says. “The reuse agenda is gaining more traction.”
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