"Free Free Free" The cost of Free E-Waste Recycling Events

In the public management / MBA program (BU School of Management, Boston) I graduated from in 1990, we studied government subsidy programs. We had many courses on private sector / free market system development vs. government subsidies.

The argument against "government subsidies" was their reputation for mis-estimating the need, over delivering service, poor sustainability, and undermining gains already being achieved by the private sector. Government, it was pointed out, could almost wind up playing the role of "Standard Oil" in the beginning of the last century, but there was no "anti-trust" laws or Sherman Act to protect businesses from government.

All of this is old hat. My observation, however, is that OEM subsidy programs are actually playing the role of "government" today.

Yesterday I had a long phone call with a friend, one of our original 3 clients. He sounded unhappy, because some other municipalities had taken part in a "free collection event". Why hadn't I offered free collection events to his district?

Sounds like a normal request. Who can blame him for asking for his clients what my competitors were offering ... er, actually, my clients?

I tried to make the following points:

1) Vermont had achieved 85% access to e-waste recycling six days per week, much higher than that for fewer days per week, TVs as well as computers. Our diversion rates were in the top ten of all states, despite not having a large commercial business clientelle.

2) Repeated studies had shown that (like free ice cream or free coffee) that the majority of participants were already buyers, responding to a "deal". They are predominantly not people who refuse to use the regular system. Increasingly, however, they are learning that free events pop up now and then, and a segment now hoards ewaste until the next event comes up.

3) Most OEM subsidy programs have a "splash" budget, targeted to run for a certain amount of time, then the fall off. Like free food in Africa (which can destroy local farming economies), the OEM gets buzz but the local infrastructure gets the hangover. Cities will not allow "free" payment of parking meters on an "event" basis, because they know they pass a quarter to their residents, but have the headache of enforcement and complaints afterwards. Under the Sherman Act, big corporations have to document that they are not running subsidies in a targeted fashion to subterfuge competitors... more below.

4) My own company's experience running free events, from Berkely to Austin to Western MA, is that the budgets are based on marketing/advertising. Once the story runs, the budget goes away. In the worst possible case, we held a very large free event, the sponsor reaped huge press, and then stiffed us nearly $25k. We offered to discount $15k of it, but rather than compromise, the client began telling all our clients we had not actually recycled the material (the disputed amount was not for running the event, it was the CRT processing cost!). The costs of the default get passed on down to our clients, a further burden on the regular system.

5) The OEM subsidy programs which are contracted out to national recycling companies are frequently used to damage competitors like me. They PREFER to run their free event in cities with long-established, stable and sustainable recycling programs. Given the choice of Plattsburgh (with no heavy participation) or Chittenden County, they will hold the free event (fees charged to the OEM) wherever it will hurt Good Point Recycling the most... by definition, in cities with the most established programs. We tried as a compromise to collect the material directly from our towns and deliver it to the competitor facility for 1 penny (to cover our transport). No, the national firm will only deal directly with our clients, once our truck driver is represented, the offer is no longer there. They even refused our offer to provide trucks and staff at the events for free.

6) When the event is ongoing, they go for cheap profitable material. Goodwill Industries advertises heavily they take Computers for free, they will not touch a TV. We are going to have to respond by taking computers for free, and raise our costs of TV recycling from $10 to $20. I don't think that does residents a service.

7) When the OEM is legislated into the system (vs. the retail system in CA), they cut deals which novice recycling stewardship advocates miss the impact of. In MN, WA, OR, ME and other "Stewardship Legislation" states, reuse rates fall 90%. The OEMs get "obsolescence in hindsight" and pass the extra costs right back to the consumer. The stewardship people say we need to have "One model". But it cannot be CA, MA, or FL or TX. It has to be MN. When I write or speak about it, it seems like I'm the grinch who stole "free recycling".

It's a dog-eat-dog world in the environmental business, just like any other. We are treading water, knowing that the OEM budgets are usually run out of PR. We are carefully working with OEMs, like Sony, who are trying to support common sense shared-responsibility systems. But even if we survive the onslaught of "free events" targeted at our core markets (which will burn out), we have to deal with the scavenging of high value items (computers) by other "free" events. My point is that the entire argument, debate and noise is over a system that charges under $500,000 per year in fees. NO proposed national system has gotten our infrastructure and end-market results for this price.
It gets frustrating, and when I get frustrated, I get grouchy. That fits the Grinch image. We have to just keep our Vermont company in good spirits, take the hits from non-paying sponsors and ill-intended free events and cherry picking opportunists with a grain of salt and a sense of humor. To apply for this position, please send your resume to us at PO 1010 in Middlebury, VT.

No comments: