eWaste: Which Electronics Recycling Model Fits Your Business?

Electronics recycling comprises several end of life (EOL) processes, from disassembly to data destruction to metals salvage and other steps. Some companies are one-stop-shops, smelting, grinding plastics, recovering useable components, and reselling raw materials. Others partner with recyclers, perhaps performing data protection and initial disassembly then handing over waste to dedicated processing centers. Beyond this are a myriad of brokers, specialists, and other processing/resale points that can make the reverse logistics of EOL more complicated than the traditional assembly supply chain. It is through this multi-tiered network that broken computer parts become flower pots, for example.

Celestica is an EMS provider entrenched in the design, assembly, ship, and after-market support of electronics. However, as Mike Andrade, senior VP and GM, North America, Celestica, points out, the company is not a major physical recycler. Instead, they use their experience with supply chains to design a network of reverse supply chain partners. Today, Celestica handles initial breakdown of waste electronics for some customers and then sends the eWaste to certified recycling partners in the U.S. and Canada. As customer interest and the company's EOL management program grows, Celestica will work to expand with a secondary network of partners globally. “We’re in the middle, orchestrating sustainability, from design for environment (DfE) to EOL,” explains Andrade. Kimball Electronics, also an EMS provider, has a repair depot, which incorporates its recycling operations. The Kimball employees are especially trained in their products, more than a recycling partner can be, so they are uniquely able to manage eWaste components, including repairing parts to avoid recycling entirely.

Li Tong Group is a dedicated recycler based in Hong Kong. The company partners with EMS providers like Elcoteq and Foxconn globally. Electronics recycling can be done correctly and make money, if you have a long-term business model, say Li Tong’s Phil Cruickshan, director, ICT. The company generally buys waste electronic products, processes them down to the raw components, and resells these metals, plastics, etc. This is different than the traditional model of charging a rate or fee for electronics recycling services. Another key to their business model is global, long-term partnerships. Much like the long-term EMS/OEM partnership, this is based on trust, total costs, traceability, and a good track record.

For those about to enter the recycling field, either as a supervising partner or as an involved recycling company, the waters can be murky. Not only are there an estimated 1,100 small recyclers in the U.S., selling to a range of brokers, but the regulatory environment is fragmented and vague. While the Waste Electrical and Electronic Equipment (WEEE) directive gives EU recycling rules, these are still unclear in some areas and unenforced, or enforced without uniformity, across Europe. In other regions the laws are even less standardized and enforced. Regulations differ from state to state, says Ed Grimes of Kimball Electronics, and many of these regulations are changing. Without security and enforcement, “recycled” electronics end up in dumps in places like China and Pakistan, creating human-safety violations, fueling the counterfeit components trade, and damaging brand reputations. With electronics infiltrating new sectors, from children’s toys to displays on washing machines, eWaste recapture requires a wider net and serious supply chain management capabilities. Every piece of eWaste should, ideally, be accounted for and traced. Recyclers like Li Tong combine Social Accountability 8000 (SA8000) and OSHA compliance with extreme traceability and quality (IS0 9001) regulation to avoid these pitfalls.

Next week, the eWaste series concludes with a look at one OEM that is nearly 2 years into their environmental program. The company used internal (employee) and external (customer) input, along with green-program consulting from TFI to shape their program, and shares their perspective on starting the green program and where they plan to take it.

Meredith Courtemanche, managing editor

Read the rest of the series:
eWaste: Turning the EOL Burden into Profitable Revenue Streams
eWaste: Is Recycling a Value-add EMS?

eWaste: Is Recycling a Value-add EMS?

Electronics manufacturers differentiate themselves in the marketplace and for contract customers with value-added services, traditionally design, final assembly and ship, or quality testing. As end of life (EOL) management gains importance — poor EOL control takes on a specter similar to that of an in-field recall — EMS providers and OEMs are considering recycling and environmental programs when signing contracts.

Ted Gardham, director, sales and business development for EMS provider Elcoteq, notes a 10× increase in OEM interest in electronics recycling. “This will spike coming out of the recession, as environmental programs will meet government and consumer demand,” he adds. A recent survey of manufacturers by the Society of Manufacturing Engineers (SME) reveals that nearly 20% have been asked to provide “environmental footprint” information to their OEM. As far as end markets go, Celestica’s Mike Andrade, senior VP and GM, North America, notes that while consumer demand/awareness and non-government organizations (NGO) pressure has led consumer electronics manufacturers to be the first companies heavily focused on green, other electronics companies such as those in the server, storage, and communications space are quickly catching up. Regional differences are also prominent. For European OEMs in particular, electronics recycling is an expected service, not necessarily a value-add. Therefore, the quality of your recycling program is evaluated against peers’. Elcoteq partners with Li Tong, a recycling company based in Hong Kong. I’ll cover the various recycling models, and what to look for when partnering with a dedicated recycler, in next week’s segment.

For an EMS provider managing the EOL process, traceability on the back end mirrors the look of a front-end supply chain. Customers are demanding this level of visibility to avoid damaging PR after botched recycling jobs and also to closely monitor costs and resources. The damage poor disposal does to a brand is yet to be fully understood, but the EMS providers I spoke with all saw it as comparable to a product recall: bad press, negative brand recognition, and a destroyed EMS/OEM relationship. Kimball Electronics pays special attention to the recycling of cathode ray tubes (CRTs) due to the high lead content, and cold cathode fluorescent tubes used in LCD displays. Celestica also focuses on data protection when products they manufactured enter the waste stream.

“A recycling strategy is not a stand-alone,” notes Andrade of Celestica. Design for the environment (DfE), modular products that can be upgraded rather than replaced, use of less toxic materials in product build, and limiting the transport involved in the supply chain are all environmental initiatives that should be promoted along with EOL disposal. An environmental management service was a “natural outgrowth of RoHS” for Celestica. The knowledge that EMS providers have built up through lean initiatives is easily transferable to environmental programs, such as eliminating waste (this time, carbon or energy waste) in operations. “A lot of suppliers need to understand that implementing lean to green practices can also help with the bottom line by eliminating waste,” says Mark C. Tomlinson, executive director and general manager of SME. The Society runs the Lean to Green Manufacturing Conference, September 28 to 30 in Austin, TX.

Reduce, re-use, recycle programs are consistently cited by OEMs as a service either expected or desired from their contract electronics manufacturing partners. Environmental initiatives are on many OEMs’ roadmaps, though it will not become a buying criterion for a few more years, Andrade says. “It’s clear that being a green manufacturer will be the entrance fee for suppliers in the years to come,” agrees Tomlinson, SME. Since OEMs face internal and outside pressure to implement green initiatives, they are turning to those partners with a demonstrable skill at managing supply chains, tracing multiple products through multiple use stages, and controlling costs. In many ways, the supply chain overhaul that started with RoHS ideally prepared EMS providers to take this next step and add EOL to their offerings. Once you have a sound, functional system in place, be sure to promote your program and the benefits it can provide for the customer. If you are competing in a market where the other EMS providers also have green programs, note the differentiators in your system, whether that be global reach, monetary returns, data protection, etc. Avoid “green washing,” where the client doesn’t get any tangible data on the benefits of your environmental program.

In the next segment of this eWaste series, I’ll look at different electronics recycling business models and the reverse supply chains involved. Finally, we’ll examine the environmental program one OEM implemented, and how they involved the internal workforce in shaping their green initiatives.

Meredith Courtemanche, managing editor

Miss the first post? Read it here: eWaste: Turning the EOL Burden into Profitable Revenue Streams

Adjusting to the Market: Merix Repositions for Mil/Aero Growth

It’s remarkable how some companies can adjust quickly to take advantage of a changing environment. In 2007, Merix Corp. (Beaverton, OR), saw an opportunity to expand from an under-diversified PCB manufacturer working mainly in networked communications to a company providing high-volume military and aerospace PCB manufacturing. Now, the company, which has been in operation for more than 40 years, has completed the transition to mil/aero PCB manufacturing house.

Michael Burger joined Merix as president and CEO in 2007, bringing with him the experience of many years with Flextronics. “We committed to a strategic realignment with a focus on expanding our technology and manufacturing capability to increase market share in the defense and aerospace sector,” said Burger. Now, the company has completed that phase, which Burger says will position it for long-term growth and profitability.

The military market has remained strong compared to the rest of the PCB market space. Nine percent of overall sales at Merix today come from military contractors, up from two percent in the past. One reason for the deluge in defense/aerospace business is that 16 new and potential clients have pushed the company to get qualifications going in the mil/aero space in just the last quarter. Merix San Jose is MIL-PRF-55110F certified and applying for MIL-PRF-31032 certification. Customer demands and increased business in this area have prompted growth in this market.

Read more about the transition to military/aerospace products in this news story: Merix Strengthens Defense and Aerospace Capability

Merix started as a board house for Tektronix more than 40 years ago. In 2004, the company expanded, buying Data Circuits, a quick-turn (10 days or less) operation in San Jose. Today, quick-turn prototyping of standard and advanced PCB technologies can be performed in 24 hours at Merix’s San Jose facility. A fully reconfigured 250,000-sq.ft. facility in Forest Grove, OR, also offers quick-turn prototyping to full-volume production, handling advanced technology options as high layer counts and high density interconnect (HDI) solutions. The company has always been a PCB manufacturer with a lot of prototyping business around communications (about 40% of sales) with the remainder in auto, computer and peripherals, medical and telecom.

Merix has two Asian facilities. A Huiyang, a 450,000-sq.ft. facility designated for high volume, low-mix PCB assembly and one in Huizhou, at 135,000 square feet. Approximately 40% of its business comes out of the North American customer base, starting out in quick-turn prototypes and then moving to high-volume production in the Asian facilities as designs prove robust enough for high-volumes. “Helping customers go from prototype in North America to volume production in Asia works well for us,” said Mike Zelman, VP of marketing.

Electronics manufacturing suppliers have to listen to what the market demands, relate to a variety of customer concerns, and keep in touch with technology trends to grow larger, no matter the market sector.

Gail Flower, editor-at-large