Evolving Industry

Renee St. Denis has had a long career in the electronics manufacturing industry, working for nearly 20 years with Hewlett-Packard, better known as HP. She served as director of the company’s Americas product take-back group, providing her with extensive operations and policy experience related to environmental legislation, regulation and compliance. At HP, St. Denis helped to develop a corporate social-and-environmental-responsibility-program-related organization with the goal of influencing future legislation and ensuring HP’s compliance with existing and emerging laws. St. Denis’ time at HP also provided her with an initial introduction to the electronics recycling industry.

Today, St. Denis, who is based in Sacramento, Calif., works for one of the largest electronics recyclers in North America, Sims Recycling Solutions (SRS), which has its global headquarters in the U.K. and its U.S. headquarters in Chicago. At SRS St. Denis serves as a vice president with business and strategy development responsibilities.

Her past experience with HP coupled with her most recent role gives her a unique perspective on the electronics recycling industry and the roles that are best suited to each of the various stakeholders.

“I think the one thing we are missing is engagement by regulators at the national level,” St. Denis says of the current state of the electronics recycling industry. “We need national guidance on the right regulatory framework to help recyclers and states get it right. If I could have anything right now, it would be engagement by the EPA (Environmental Protection Agency) and the federal government that could help all of us.”

St. Denis discusses the evolution of the electronics recycling industry and the factors shaping the industry with Recycling Today Managing Editor DeAnne Toto.

Recycling Today (RT): How has the electronics recycling industry changed for the better since you began working with electronics recyclers while still at HP?

Renee St. Denis (St. Denis): I was at HP for 20 years before I left, just about two years ago. I was able to be part of the start of the electronics recycling industry in the U.S. And one of the big changes I’ve seen is that the industry itself has become more professional. Whereas before it was a lot of smaller recyclers who might have had great practices, those processes were never institutionalized or shared more broadly in the industry. It was very much small businesses that were kind of hit or miss. Now there are beginning to be a few large players who approach this as an industry of its own, not just an add-on to some other service they provide or a quick way to make a buck, which is the way some people have looked at it in the past. That is the big change, and certainly a change for the better. The industry is more professional and certainly becoming an industry of its own.

In addition to that, I think the technology has evolved and it will continue to evolve. But the thing that we need to watch is that the technology doesn’t become an end unto itself. We need to always remember that the technology really is a means to the end of providing a better service to the customers, which—in the very end-of-life part of this field—are typically the electronics manufacturers. It is great if we have cool technology, but if that cool technology doesn’t get you better separation and lower prices, then it’s technology for technology’s sake and not technology in service to the customer. I think the industry is going through a phase where everybody is chasing the latest technology but maybe losing sight of how that technology serves the industry and the customers.

One of the changes that I think is for the better for electronics recyclers—and this is hard, because I still have a foot in both worlds because I spent so long at HP as a manufacturer—is the involvement of the OEMs (original equipment manufacturers) in managing the recycling themselves through their service providers. As a result, they are demanding higher levels of service and higher levels of worker health and safety and environmental protection. Those are really good things, and those are things that come because the manufacturers ask for them and push the industry to improve.

Many recyclers, the smaller ones in particular, just can’t afford to invest in the kinds of things that we at Sims take for granted—our safety programs and our environmental programs. If you are doing this on a small scale and you are trying to get the best value you can and it’s you and two other people, you just can’t invest or even understand some of the complicated environmental issues that these products can present. The new kinds of additives that are being put in the products or the new chemistries of some of the plastics are the kinds of things that you probably want to understand before you start ripping these things up or grinding them.

RT: What further changes would help to solidify the industry as a whole?

St. Denis: We are going to talk about it a little bit more, but certainly having legislation take effect across the U.S. is going to help the players in the U.S. Sims is a global player, and one of the reasons we’ve been able to operate at the levels that we do in terms of our R&D programs and our health and safety and environmental programs is because we have the opportunity to operate in almost every corner of the world. We are able to identify what works in different economic environments and different environmental schemes and then take best practices and share them throughout our global operations.

Because everything happens state-by-state in the U.S., you still have a lot of state- or regional-level recyclers, and so there is not a lot of sharing of best practices from one to the other. Because the requirements of the states often vary in terms of the amount of due diligence or worker health and safety, that information doesn’t go to raise the bar for everybody. So I think as the state laws take effect and proliferate, you are going to see that bar get raised. That is going to help drive out some of the players on the fringes right now, and I think it will help to establish more legitimate operators who can meet the needs all the way down.

OEMs are used to dealing with large companies who have sophisticated programs. And right now they are dealing with small recyclers who may operate in one state but not in another and who still operate as small businesses, and that has not been great for anybody.

Another thing that would probably help is if the current laws were more fully understood and articulated, and if the EPA was clear on what is and is not allowed in terms of export. They provide a lot of clarity, but you have to dig to get to it. It isn’t a simple thing. And certainly the policing of other countries’ laws is not something EPA can do. But because other countries don’t police their laws, there is still a lot of illegal export going on in parts of the industry. Certainly, that provides for a very unlevel playing field. And some of the people who are engaged in this illegal export are pretty sophisticated in the ways that they do it, and so it makes it tough for the OEMs to really understand what is happening to the equipment that they are responsible for. That can be true for commercial and B2B customers as well. People just don’t have means to track this stuff all the way down to where it really ends up.

Again, the shipment of all the pieces and parts that come off of a product and all of the commodities that are produced is a pretty complicated thing. I think that even with R2 (Responsible Recycling) and e-Stewards audits, there is still some illegal export that is going on that no one is aware of because it is a very complex business to audit. (For a feature on the various certification programs available to electronics recyclers, see “Certification Maze” in the April 2010 issue of Recycling Today.)

I think that the emergence of the standards is a good thing. But I think that some of the manufacturers who were leading in the push for higher standards and more accountability, I get the sense that they are going to step back and say that the fact that everybody is audited is a high enough bar. I worry that the push that the manufactures can bring to making this an even cleaner, even less environmentally detrimental activity is going to be missing if they come to rely on just the standards … Sims can easily qualify for either of the standards, but our standards are higher than theirs. We want to make sure there is still some sort of commercial push to make things better and better and to raise the bar for environmental performance.

RT: What role have OEMs played in shaping the U.S. electronics recycling industry? Has that role been thrust on the OEMs because of legislation encouraging producer responsibility?

St. Denis: I think that is true. … Some of the large OEMs have been involved in this activity for a decade. Clearly, they have helped to shape the kinds of suppliers that they want to have by making their needs known and then putting RFPs out or putting things out to bid and bringing the industry along to think in bigger terms than, “I am going to pull off the things that are useful and get rid of the rest and I don’t have to worry about where it goes.” That has been very good. I think that the legislation has opened this up to a much larger set of OEMs. I think that there were hundreds of manufacturers who really didn’t have this on their radar even though take back was happening in Europe. They just hadn’t really thought through what would happen in the U.S.

In Europe, compliance for manufacturers is not very complicated. All they need to do is join one of several third-party organizations (TPOs) in each country; the TPO does everything. The collection is managed by the municipal government—primary collection is still the responsibility of the government and the consumer. Because all the manufacturers’ TPOs have to do is take it from the collection or consolidation point and have the stuff recycled, manufacturers haven’t had to do much more than write a check.

In the U.S. the primary collection responsibility is falling on the manufacturers, and that’s a huge deal. … The OEMs were caught a little bit unaware. I think it has been difficult for them to figure out what to do. That is one of the things we are working on at Sims—putting together a complete package for our customers. But OEMs really haven’t had as much opportunity to shape the whole notion of collection and consolidation as they have the recycling itself. I look at the recycling—the actual dismantling, parts harvesting, shredding and everything else that happens inside our buildings—as an easy thing to do. There are a lot of people that can do recycling now with varying levels of efficiency and environmental and worker protection. But this notion of primary collection is a huge one that no one has really figured out. I think that OEMs need to understand that the electronics recycling industry includes collection, and we need to figure out how to do that efficiently as well. And so they have done a great job of getting recyclers up to speed, but I think that it would be nice if they could use their size and leverage to really make sense of the collection obligation as an industry. ... They haven’t yet figured out how to do this as an industry or how to do this nationwide. Some of the recyclers like Sims are working on it, but we all need to work together.

RT: With the patchwork of laws, would you say it’s difficult for OEMs to achieve economies or scale or other efficiencies across the states where they are obligated to play a role in electronics recycling?

St. Denis: Yes. You know, one of the things that I find a little surprising is the weight of products being recycled is still pretty low overall; as a result, there are not good economies of scale for the recyclers, there are not necessarily good economies of scale for the collection and consolidation and transportation. If you are only picking up a few things at each municipality, you are not able to pack those trucks very full.

So the manufacturers really want to keep their costs low and they want to comply, which they should. But if the states don’t give targets, they don’t collect very much. Or if the target is everything you can collect without a weight goal attached, often the weights are pretty low. … When that happens, you don’t get much in terms of economies of scale. The kinds of programs that need to be put in place, even to work with some of the carriers to do reverse logistics, if you don’t have good volumes, then the weight ends up being pretty expensive to move around, and if it’s pretty expensive to move around, nobody wants to do it.

It’s a chicken-and-egg trap. Once the volumes get up, and some of the states have more robust programs and other states have programs that are coming online, I think you are going to find there are going to be new logistics players that will want to participate because they can do that nationwide. They can develop programs that they can leverage across the country. But that is still a little ways out.

Again, the electronics manufacturers have great relationships with these carriers, but they have been somewhat on the sidelines, waiting to see how the legislation shakes out. At the same time, someone should be investing in what we are going to do when it gets to the end point. What does the end point look like, and how are we going to manage it effectively? I don’t think anyone is spending enough time on that right now.

RT: As the industry continues to evolve, what legal or regulatory changes are anticipated and what is their potential impact on recyclers?

St. Denis: I think that it is going to be necessary for the regulators in the U.S. to take a look at what the true risks and hazards of managing this equipment are. This equipment is managed out of the Office of Solid Waste, and what we find is that often regulators at state and national level are trying to figure out how to regulate this stuff. And you look at what happens in Europe, where this material is collected and handled in bulk. It is shocking to me as a citizen of the U.S. and someone who worries about recycling that every time I go to Europe and see what the recyclers do there and what the municipalities do there, and how this stuff is in a big pile and its managed with front loaders and a big claw, just like the steel industry manages material. And you contrast that with the U.S., where we are careful to remove every single battery and every single cranium or mercury bulb, and you are at opposite ends of the spectrum in terms of the amount of care that you are taking to protect the environment.

I am not a chemist and I am not an environmentalist, so I am not the right person to figure this out, but somebody needs to. Somebody needs to decide if we are going too far to try to protect the environment in the U.S. or if we are not, how do we make sure that those rules apply to everybody. A lot of recyclers in the U.S. manage things in bulk because there are not enough regulators in all the states to track down recyclers who just shove it all in to a shredder whole. The big recyclers are often in compliance with the letter and spirit of law, but when you look at what we do, you have to wonder if some of it isn’t overkill. If the goals are to keep this stuff out of landfill, to re-use the material that it’s made of and to not harm workers or the environment while it’s being processed … is there a way to do this in bulk—do a little less hand dismantling and manage it mechanically in a way that still protects the environment?

The rules from the EPA are very clear that you cannot shred a button cell battery if it is attached to a board. And every PC has to be opened up, and every single button cell battery has to be removed. But some recyclers just manage these products whole and don’t remove batteries before shredding. Who is right? Is anyone looking at that? If the goal is to keep this material out of landfill, you have to do it at the lowest possible cost. If you find a way to do that, more manufacturers will be willing to take it on, and they will fight the legislation less. Let’s find way to do it that meets those goals.

The CRT Rule that EPA promulgated took almost a dozen years to get through. That’s a long time. We need to have a way to get laws in place faster. These are the legal changes I think we need. Instead, we see pieces of legislation that are more grandstanding. …We need to study what really should happen from processing point. Until we do, someone will be chasing holes in the system and taking advantage of the gaps in the laws and in enforcement.

The question of whether old electronics should be exported; well, it is manufactured there. The materials are required for manufacturing, yet we do all the recycling here. Is that the right way? Should we find a way to move products closer to the source? It is a policy issue no one wants to touch. … The legal frameworks need to be figured out. I hope recyclers are looking at that too.

RT: How would you characterize consumer and corporate awareness of the need to properly recycle electronics? What factors have the largest influence on these players?

St. Denis: I think that understanding of the need is pretty well developed. Two to three years ago, I would have said no. But the awareness of what to do is missing … I think that people know they need to think about it but are still not sure what to do about it. They are not sure of the care they need to take to ensure data are protected or they don’t even know how to ask the question. People are not sure how they find legitimate players—they often don’t know that there are less environmentally and security friendly processes. Consumers don’t know how to sort the wheat from the chaff. Municipalities and nonprofits don’t know how to ask these questions. There is no awareness of how to tell a good recycler from a bad one. . .

Fortune 1,000 companies are aware of the need to manage electronics. Regulations, such as the SOX (Sarbanes Oxley) and HIPPA (Health Insurance Portability and Accountability Act) requirements affect almost every company. Data security laws are helping. Small businesses still don’t know, though. They don’t have resources to understand how this thing should be managed.

RT: What will the next five years bring for the electronics recycling industry as a whole (further consolidation, national legislation)? Where does SRS see itself five years from now?

St. Denis: I think we will get more of the same. There will be more consolidation. Manufacturers don’t want to deal with 25 recyclers in 25 states. They don’t want to deal with that level of complexity when it comes to take back; they are looking for national and global solutions. As state legislation brings manufacturers more into the industry, it is going to drive out the smaller players.

I hope that in five years we will have national legislation, but I am not willing to bet you one way or another. Our country has a lot of issues to address right now … The federal government has to prioritize. As much as I think e-waste is important, I doubt it will be an issue Congress addresses.

I think Sims will continue to grow. We will be more of a presence and continue to grow globally. I think we will continue to grow geographically in the U.S. through a mix of acquisitions and greenfield sites. It is easy to buy the right company at right price. But we will also develop our own sites. That’s what it takes.

Renee St. Denis is a vice president in charge of business and strategy development with Sims Recycling Solutions and is based out of Sacramento, Calif. She can be contacted at Renee.St.Denis@simsmm.com.