Jim Taggart |
Much has changed since Jim and Ken Taggart established ECS Refining and United Datatech Distributors in California’s Silicon Valley to serve the destruction and remarketing needs of the area’s high-tech manufacturers. While manufacturing in the area has declined, the companies’ reputations for integrity remain constant.
BETWEEN BROTHERS. Jim bought ECS Refining, an electronic scrap and solder dross recycling company based in Santa Clara, Calif., in 1980 for the modest sum of $15,000, which he paid in 15 installments of $1,000. He had been working as a salesman for a precious metals refining company since graduating from college five years earlier and was already familiar with the industry.
Ken Taggart |
Ken joined his older brother as a partner in the business in October of 1980, and they incorporated the company as All Metals Inc., which today consists of ECS, with locations in Santa Clara, Dallas and Terrell, Texas; United Datatech of Santa Clara; Canadus Power Systems of Warrensville, Ohio; and UDT Aviation of Houston. All Metals has sales offices in five states and in Tijuana, Mexico. The Tijuana location also collects material from electronics firms in Mexico, shipping it to Santa Clara for processing.
Guiding Principles |
According to ECS Refining’s business philosophy, which is posted on the company’s Web site at www.ecsrefining.com, the company "has always been committed to the following principles and will continue to spread this philosophy to its new ventures." These values include: • Integrity in processing and paying for scrap materials; • An open invitation to witness processing; • A policy that dictates 100-percent recycling, ensuring that its clients will not incur any long-term liability for hazardous waste disposal; • A flexible approach to business, putting the client’s needs at the forefront; • A proactive approach to environmental management and a commitment to maintaining the cleanest and most environmentally sound facilities in its industries; • An open-door policy that invites potential and existing clients to visit and audit its operations; • Sound financial decisions that provide profitable growth, promote integrity and ensure stability; and • A sense of pride that comes from having assembled a family of experts dedicated to servicing the metal, |
Dr. Nelson Mossholder, a hazardous waste industry veteran, and Dr. Jack Scott, a veteran of the smelting industry, own 25 percent of ECS and 50 percent of Canadus. Jim says Mossholder and Scott add an additional dimension to the businesses by developing proprietary environmental technology.
Jim serves as president, and Ken serves as vice president of All Metals Inc. Jim says the brothers’ skill sets are very different, which lends to the success of their partnership. Ken, who has a bachelor’s degree in accounting and is a licensed CPA, has an eye for detail, Jim says. "Ken, being more of the accounting personality, is more about detail and procedure, and I find that great support so that I can do the sales and marketing and the outside work."
California Diversions |
California began implementing its Electronics Waste Recycling Act in 2005. The law charges an advance recovery fee on the sale of CRT and LCD devices in the state and provides payments of 48 cents per pound to recyclers, who pass at least 20 cents per pound on to the collectors who provide them with material. This part of the chain seems to have the most kinks, according to one company that operates as an approved collector and recycler of the covered devices.
Brothers Ken and Jim Taggart own Santa Clara-based United DataTech Distributors, a remarketer of electronic components, and ECS Refining, an electronics recycler and refiner of precious metals and tin/lead solder. The state of California has approved United DataTech as a collector and ECS Refining as a collector and recycler of electronics covered under California’s Electronic Waste Recycling Act of 2003.
Under the law, approved recyclers are required to pay approved collectors for material within 60 days of receiving the material. However, payments from the state to the recycler are taking upwards of three months, according to the Taggarts.
“I think California actually has done a pretty good job of getting the program set up so that it functions well and I think they got the numbers pretty close to right,” Jim says. “They certainly created a cottage industry of collectors, and a lot more stuff is getting recycled as a result of that, at least in California.
"However, Jim says there are “some issues with the program that become challenges for us.”
One such challenge is documentation. “If you don’t have all of your documentation from your collectors, then you don’t get paid by the state,” Jim says. Collecting this information from their suppliers and presenting it to the state in an acceptable form has proved challenging for many recyclers, he adds.
Ken manages the paperwork required by the state for United DataTech and ECS Refining and he says the paperwork “is significant. That is probably one of the biggest drawbacks of the program.” According to Ken, the claim review process can be very slow, which affects how quickly the recyclers get paid. “They tend to be short staffed. They say that they are going to get a bigger budget for staffing and improve that, but they have actually lost staff, and it’s gotten worse in the last three or four months than it was in the latter part of 2005.”
Ken adds, “The state actually designed the program to have recyclers be the policemen or the enforcers to a certain extent because they didn’t have the staffing to do it because of the budget, so they forced the recyclers to educate and actually manage the collectors.”
Jim says ECS will pay its collectors for material in as few as seven days, though the state requires payments to be made within 60 days, but that the company often doesn’t get paid from the state for three months or more. “Now we are financing that material until we get paid by the state. That really becomes a significant part of the business, and I think it is a challenge to a lot of people who stepped into the business and were relying on income from this business to cover their overhead and expenses didn’t anticipate.” He adds, “If we hadn’t had other parts to our business that we could just add this into, it would have been very challenging to build that business and make it work.”
While Jim says he feels the program works, he also questions the need for mandated recovery. “The question really becomes, should we have a program or not? Would the market take care of it if the program wasn’t in place? To a large extent, I think it would,” he says. |
The brothers share a level of trust that is unique to family, they say. "One of the things you have going for you with family members is you almost don’t have to communicate to know what they are thinking or what the expectations are," Jim says.
This trust coupled with the brothers’ business sense have contributed to their success. "Jim and Ken are innovators," Tom Hogye, who serves as general manager and vice president of United Data-tech, says. "They are successful because they are not looking at this business as it is today. They are looking at what the business will be like tomorrow."
Just as Jim and Ken rely on one another to compliment their individual strengths and weaknesses, ECS Refining and United Datatech also work together to provide their customers with comprehensive, complimentary services.
COMPREHENSIVE APPROACH. Jim and Ken established United Datatech Distributors in 1988. "We actually bought two other companies that were involved in the recycling of electronics," Ken says. "One was more involved in the recycling of electronic scrap, and the other was involved in reuse and resale." The company offers asset recovery services and remarkets peripherals and components through eBay, third-party maintenance firms and other resellers.
ECS Refining and United Datatech share synergies. "One of the things that ties the two businesses nicely together is that companies generate a lot of different kinds of waste materials, and we try to be full service," Jim says.
For instance, if United Datatech cannot remarket incoming material, the company can pass the devices onto ECS for precious metals recovery.
ECS shreds the electronics and processes their precious metals and tin/lead solder constituents as well as materials from dentists, jewelers, other refiners, electronics manufacturers and dealers and other end-of-life electronics processors. The company sells the resulting materials to solder alloyers, smelters and manufacturers.
ECS’s Santa Clara location also processes photographic materials. The company puts treatment units into stores that offer photo processing and also picks up photo solution to process at its plant.
While ECS Refining’s Terrell, Texas, plant does not process photographic materials, it has capabilities that the Santa Clara plant does not. "One of the things that makes the Texas operation somewhat unique is that not only is it a pyro facility, which uses melting and smelting and so forth, but we also have hydro capability," Jim says. "We are able to move materials back and forth between the smelting line and the chemical processing side. Typically, you don’t see that in most operations." The Terrell plant also has shredding and mechanical separation capabilities.
Because the Terrell plant uses chemical separation, the facility can process high-temp alloys from the aircraft industry, extracting precious metals from high-temp alloys. This dovetails with UDT Aviation in Houston, which Jim and Ken are also involved in. The company recovers aircraft parts and components.
PRIORITIZING BEST USE. United Datatech prioritizes reuse when possible, followed by component recovery and then raw material recovery, which occurs at ECS.
ECS recycles everything that enters its doors, according to Jim. "We don’t take materials that we can’t recycle. That has always been the policy of the company so that we don’t have these potential hanging liabilities from Superfund sites and so forth."
Tom Hogye |
Since California enacted its Electronics Waste Recycling Act and a landfill ban on electronics, the Santa Clara plant has seen an influx of end-of-life electronics.
Jim says, "The company has doubled in size in terms of volume of product that it handles in the last year, and I expect that to happen again in the next year."
But this growth potential is accompanied by concerns.
"The perception of new entrants into the industry is that there is a lot of money to be made and to be made quickly," Tom says. When reality sets in, it can be disasterous for the environment, he adds.
Jim says balancing the costs associated with proper environmental management against the competitive aspect of the electronics recycling industry is a challenge, but ECS is committed to environmentally sound practices, but not at the expense of its bottom line.
"We are a for-profit company," Tom says. "Our philosophy is to be of the utmost integrity, to provide the customer with the services they require and to do so in the most environmentally and economically sound way."
Providing a variety of services is part of the Taggarts’ approach, but they also value integrity. "It is particularly important in the kind of business that we are in because you are dealing with people’s liability, you are dealing with their data and so forth," Jim says. "So when you tell someone that you are going to destroy something, you better destroy it, because there are potential downstream consequences to not doing so."
He continues, "People who are buying the services need to be aware of that, but also the people who are providing the services need to have a longer view of it and see that what they do today affects them tomorrow."
The author is managing editor of Recycling Today and can be contacted at dtoto@gie.net.
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