Sacramento Bee Finds Guys: How SB20 Defrauds Reuse

Warmer, Warmer, Waarrmmmmer... Cold!

On Sunday, Sacramento Bee reporter Tom Knudson released another big story about "E-Waste" exports in California.  He is the reporter who travelled to visit Retroworks de Mexico last February, and did a good couple of stories about SB20.   Yesterday's article is titled "California recyclers find market for toxic trash" (follow link).  (2012- McClatchy has dropped links to the story, but follow ups found here).

Knudson nearly scores a home run.  However, there remain some bases to touch, or dots to connect.  The article continues to leverage value from the myth that recyclers overseas are nasty and brutish (I admit they are short).  I know Tom struggled with how to describe a fair trade operation.  Today I'll try to weave the arms and shoulders of the multi-colored dreamcoat together...



Knudson's background research last summer (he called me while I was in the woods, hiking in the Ozarks) led me to write, "E-Waste" Travel in Scrap Metal.  I thought it was too academic, but it became the 2nd or 3rd most read blogpost of this year.  Knudson took my suggestion and covered both manual disassembly and machine disassembly prior to the universal destination of the resulting raw materials - back to the manufacturers, in China.

The theme of the whole article is summed up in a single quote.

"If it gets sent to China, we don't know how they dispose of it. I don't agree with that!"

First the juicy bits.

The Sacramento Bee article is being widely snickered at because it pits Jim Puckett of BAN against one of BAN's own most fervent promoters, John Shegarian.  (Some would say that BAN is a passenger in that promotional tour).  ERI hitched its wagon to the CBS 60 Minutes story, and joined the chorus of recyclers singing "They're all bad except me!".  The Bee article says:

In California, few recyclers tout their green credentials more prominently than John Shegerian, chairman of Electronics Recyclers International in Fresno, who has invested millions in environmental improvements over the past five years.

Shegerian told The Bee that e-waste exports are deplorable. "It's the last thing we want to be known for," he said. "It's just horrible on every level."

Yet documents show that as recently as 2008 even ERI was quietly selling large volumes of e-waste to a Los Angeles exporter who shipped it to Hong Kong. While legal, the sale violated a pledge the company signed with the nation's leading e-waste watchdog group, the Basel Action Network.

"I'm not at all happy that this took place," said Jim Puckett, executive director of the group. "If we had known about it at the time, we would have taken real serious action."

Jim Taggart of ECS, a stalwart of best practices when it comes to refining printed circuit boards, and a  national leader of domestic gold refining, praises his shredder which, according to the article, makes stuff into little nice pieces.

"This is the problem," said Jim Taggart, president of ECS Refining in Santa Clara, where the e-waste was waiting to be safely recycled. "This is the material that most people are exporting. They'll get paid 5 to 10 cents a pound for shoving it in a container and shipping it overseas."

To his credit, Jim has put his money where his mouth is, and ECS has invested millions in a system to replace hand disassembly in developing world environments.  It's natural for him to promote it as a solution.  According to the Bee:

His solution is classic Silicon Valley: high tech. Truckloads of microwaves, stereos, typewriters, coffee makers and other e-waste are fed into gigantic shredders that slice and dice everything into jagged, crinkly pieces of metal and plastic the size of potato chips.

Swept along on conveyor belts, those chips shimmy, swirl and dance as they are sorted by magnets, air currents and other means into glittering flecks of aluminum, steel, copper and other raw materials.

Eventually, much of that gets exported in a form acceptable to environmentalists: as feedstock for new products.

"It's not going out as mixed material," said Taggart. "It's going out as metal and plastic commodities. There's a huge difference.

A little later, I'll talk about the huge difference between metal and plastic which are still attached by screws, vs. exported with the screws removed.   The important point here is the idea of expanding our concept of "e-waste" to include microwaves, toasters, electric tools and hand razors.  Robert Erie of E-World plays a role in the article:

"What do you do with millions and millions of pounds of hair dryers and toaster ovens and razors and vacuum cleaners?" said Bob Erie, chief executive officer of E-World Recyclers north of San Diego. "There are plenty of brokers who are buying that material and exporting it all to China.  "I don't think the state thought that out very well," Erie said.

Erie is one of the craftiest dudes in our business.   He formed a company, MITS, which brokers the material assigned to OEMs for collection in legislative states.  In a way that's the most like my approach - to emulate the Chinese brokers by making money flipping material.  If manufacturers one day invest in and approve of an overseas R2 recycling operation, Bob will be in position to surf that changing tide.

Here's the problem.  The article, and everyone in the article so far, assumes that if it goes overseas, it's being burned.  The buyer behind this is an original contract manufacturer in Semarang, Indonesia, who takes back warranty returns as well as any other modern CRT and refurbishes them for sale in "good enough markets".   The problem is that the overseas factory has been so thoroughly defamed, that the reporters and people interviewed never once pause to ask why the Indonesians paid so much $$ for the CRTs.

So the underlying assumption is that a printer or keyboard (or toaster or razor) is plastic attached to metal, and Americans in California concur that those things need to be dis-attached before they are exported.  If you do it on this side of the water, you are good.  We need those materials covered in the "command and control" state system, as they are managed in Japan... All of this hinges on the allegation that if the metal and plastic are dismantled by hand, it will result in a "river of ash", toxics, and unhappy poster children.

Business Interests, barely below surface:

Here it's useful to requote Shegarian, whose quote makes Gordon's correspondence with ERI more telling:

"Here's a dirty little secret," Shegerian said, walking through his facility. "About 10 percent of the people in the industry who say they are recycling are really recycling. About 90 percent are still packing and shipping.

"How people do it is they go, 'Oh we're selling it abroad for reuse.' Wink. Wink. The resale of these things is such hooey, is such a fraudulent excuse," Shegerian said.

This is music to the ears of Basel Action Network.  They can again rely on someone who doesn't export for reuse as a primary source that export for reuse is a sham, as they did in 2002, quoting Mike Magliaro (of non-exporters Maser and DMC) about what percentage of exports are reusable.  That's like asking a vegetarian what ham tastes like.

Contrast this with the quotes from John Chen of Tung Tai Group, one of the largest scrap metal brokers in the world.

"I don't think export is that bad," said Chen, whose company has shipped everything from copiers to computers to China over the years. "In Asia, they actually reuse more items.
"If you reuse a hard drive, that is much better than shredding it," Chen said. "A lot of the items – and I'm not saying everything – are being used in a way that is more environmentally sound than here."
And what about the contamination? "I'm sure it goes on," Chen said. "Absolutely. There is proof. There have been documentaries. But it's a small percentage and volume."

hand disassembly is not more
shameful  than hand assembly    

It's a pretty honest response, and I like it when an exporter has the guts to speak to the press.   When I first investigated electronics scrap exports, I found the Chen name and Tung Tai Group everywhere, and once told Sarah Westervelt at BAN that they should focus on them.  Today, I feel I owe John Chen an apology.  Perhaps his mistake was in not investing to clean up the business, he simply accepted the free and fair market as being more good than bad.

It seems that everyone here is covering their bets.   If you've invested in shredding, that's what's necessary.  If you've invested in calling someone a Steward, you give them another chance.  If you've invested in legislated, command-and-control programs, they should be expanded.   If you have postponed shredding investment,  waiting for the overseas market to clean up its act, you write a blog.

World Reuse, Repair and Recycling Association [WR3A] was formed to improve transactions by valuing things besides profit - offering incentives for export markets to clean up their acts.  We wanted to identify what is really toxic and avoid that, and provide trade incentives for overseas companies to do the best job they can do.  A cooperative - it's not that different from brokering.

The article has everyone agreeing that in the USA, not every e-scrap recycler is a good actor.  But the article never stops to ask whether China, like the USA (apparently) has both good and bad actors.

It reads like an internal meeting of an environmentalist "Know-Nothing Party".

We don't know how they dispose of it, but we don't agree with it. 

But for a penny of incentive, California could have an important effect on the way recycling is done overseas.  Both the 30% reuse, and the proper recycling of the other 70% could be done properly in China, eliminating the "rivers of ash", if California set fair trade conditions on reuse or disassembly of what it chooses to toss in a shredder. 

There is nothing that a shredding machine can do which cannot be done by a desperate poor person with proper tools in a well-lit, clean environment.  But shredders don't capture reuse value.

Not nameless or faceless

Now, harken back to my post in April, concerning our inspection of a facility in Indonesia, supplied with working CRTs by a certain Gordon Chiu of Advanced Global Recycling.

Gordon Chiu (who I always run into the footsteps of as I investigate the strongest reuse markets, e.g. Egypt and Peru), features prominently in the article, as a former broker for ERI material, and as an "exporter" the association with whom, ERI suggests, is "just horrible on every level."

His was one of the companies attacked by BAN in February, whom I defended in "Clubbed to Death".  Perhaps he had not done as much as WR3A has done to make his end markets verifiable and auditable (we went as far as getting ISO14001 and ISO9000 at our most regular market).  But in seeing Gordon beaten up by ETB and BAN and then shoved under a bus by Shegarian (rather than defended), I feel a pang of anger.

When the company that pays BAN money uses Gordon, it's forgivable.  When a competitor of the company that pays BAN money uses Gordon, it's a "crime".

Shegarian could have given Gordon's companies financial incentives, found out what the reuse value was, found out which, if any, products might have produced a "river of ash", and used fair trade to leverage a better outcome.  6.9 million pounds is a lot of material, and could have been used to change the priorities of the Hong Kong market.  And with the California SB20 wasteful spending to leverage, he could have made Fair Trade Recycling into a household name.  Instead, he glad-handed Jim Puckett.  Jim and I have parted company on many occasions.  But I'm counting on history to show him who his real friends in the war on poverty and pollution really are.  

BAN's position is that recycling is illegal overseas, even if done perfectly.

Let's call Ducks Ducks.

California SB20 companies are interested parties.   SB20 only goes after CRTs, the portion regulated by the Federal CRT Rule, and leaves the toasters, razors, printers, and keyboards to the free market.  They are seeing their assigned product, CRTs, declining rapidly in volume, and want to add more material to the system, somewhat like an expanded bottle bill adds juice bottles to the deposit system.  Whether or not China or India or Mexico recycles correctly, they want to restrict competition.

Exporters, meanwhile, have been operating under the table, because they are presumed guilty.  Whatever they could have done to clean up recycling processes has been compromised by forcing them to lay low.  They are like Tom Robinson in "To Kill a Mockingbird", ready to run rather than face a trial.

It's a tangled web.  But Knudson captures one thing, whether he knows it or not.  Everyone is defending the bets they have placed.  The exporters, the shredders, BAN's bet on Stewards...   Your Fair Trade Recycling advocate bets on hand-disassembly, the best and most practical and most sustainable technology for the rapidly developing world to manage it's own debris... and if they can do that well, why not ours?

The critical, opaque if not missing link, captured in the coverage of Las Chicas Bravas in Mexico, is that hand disassembly is not, in and of itself, hazardous or shameful, any more than hand assembly jobs.   

As the posts to Gordon's correspondence show, 30% reuse in a container of printer scrap is common and welcome to a hand-dismantler.  We need to make sure the remaining plastic and metals get to places that won't treat them with fire and cyanide.  Since we are re-exporting those anyway, the article never comes close to addressing the question.

Knudson contrasts the whirring shredding machines at ECS with a smaller Stockton CA company, Onsite Electronics Recycling, which practices manual disassembly.  The film at the Sacramento Bee looks a lot like film of Retroworks de Mexico.   The manual dismantling operations still exports the plastic and metal.  The operation is contrasted with the "high tech" ECS machines, making clear that both methods produce the same products.

[ECS] Eventually, much of that gets exported in a form acceptable to environmentalists: as feedstock for new products.
"It's not going out as mixed material," said Taggart. "It's going out as metal and plastic commodities. There's a huge difference.
"Most things get made overseas anyway. These are raw materials for those things." 

[OER] In a gray building on the north side of Stockton, workers at Onsite Electronics Recycling tackle the same problem the old-fashioned way.
Bam! A rubber mallet crashes into a printer, sending pieces of milky-white plastic skittering across a workbench. Crack! A laborer pries open a radio with a screwdriver, exposing a forest of yellow, green and red wires and jade-green circuit boards.

 I recognized the feeling the recycler from Onsite, quoted below, about the end markets for  hand-disassembly:

"If it gets sent to China, we don't know how they dispose of it. I don't agree with that," said Antonio Vargas,

It's a very honest, yet illogical, feeling.  It underlies the entire article.

We don't know how they dispose of it, but we don't agree with it. 

I was in exactly the same place ten years ago, looking at manual disassembly, and finding value added (parts and components) in the sorted stream - like car parts at a chop shop.

My reaction was to study the economics of the transactions, then fly to China, having brokered an official tour in return for presenting at a Chinese conference.  I saw the worst recycling I had ever seen in my life.  And I saw the best recycling I had ever seen in my life.  

China is gigantic, and I felt like a flea auditing horses and pigs.  There are restaurants in China I would not venture to eat in.  There are restaurants which made the finest plates I've ever tasted, in squeaky clean environments.  "How do you really know it's clean inside the kitchen?"  Well how do I know that in an American kitchen?

The only thing you can do is become a "regular", and when the restaurant knows you well enough, you get to meet the chefs and see the recipes.

Inspecting Overseas Kitchens:

In my "restaurant regular meets the chef" approach to the export market, I frequently encounter people who have just met Gordon Chiu of Advanced Recycling Technology.  He is the one who was buying mixed containerloads from ERI, and negotiating to get at least 30% reuse value in the mix.  His partner Michelle has called me from time to time.

I have never done business with them.  I don't know if they are following the fair trade model, which is to sacrifice payment from the end market in return for verifiable improvement and reform of the practices.  But I know they understand it.    When we finally spoke last summer, what I wanted to say was "Dr. Livingston, I presume."   But it would be in a self-mocking way, and who knows at what level, if any, the reference would be understood.

The big irony is that I believe that Gordon's USA company is the last one still preparing CRT tubes by testing them, removing the housings, and exporting them... the California Compromise method which BAN said is the best legal way to supply SKD factories under Basel Convention Annex IX.   But BAN is in bed with "no intact unit", and the Steward is running from the only exporter who strips the CRTs per BAN command (my company does not).

The hand-disassembly method of Onsite in Stockton produces the exact same "metals and plastics" as the "potato-chip" flakes from ECS or ERI shredding machines.   The fact is that the same processes are needed in developing countries, which themselves produce the most e-waste at their landfills, and where the repair, reuse and parts markets are the opposite of the "Resource Curse".   The fact is that Las Chicas Bravas in Mexico is the kind of win-win partnership which a wasteful, consumptive, poitrinaire nation like the USA can make with aspiring and emerging nations.

And the biggest danger on the horizon is that China will catch up with us, engage in the same consumption, and turn the world into Shark Fin Soup.  I would trade a hundred USA recycling jobs if China would spend the same amount of time banning import of endangered species that they spend enforcing bans on "second hand goods."

It would be refreshing if BAN should hand ERI's generous "Steward Founder" the money, given that the shipments were going overseas from ERI when the check was written.  Or better yet, BAN should give the money to an actual recycler in China, so that they don't produce "a toxic river of ash".  

In conclusion, is this a cynical post?  I confess, it reads to me like CEFAD.

• The men who made money by shredding scrap defends export of shredded commodities.
• The men who made money promoting that 90% of USA recyclers are bad, admit to "practitioning", and say it's ok now.
• The men who describe rivers of ash, with poster children aplenty, accept a huge "Stewardship" donation from the apparently reformed exporter.
• The men who make new products applaud the standard that destroys used value.
• The men who made fortunes brokering covered electronic devices in command and control systems advocate expanding the system to other items.
• The men who disassemble by hand in the USA, exporting the parts, say they would not trust people overseas to disassemble or separate the same parts.
• The men who export defend the 30% reuse value, without promises to reform the other 70%.
• And the man, yours truly, waiting for the export market to put air conditioners in the sweatshops, writes another post defending the majorities Americans like to call minorities... as Jim Puckett said last winter, using a "very self-serving" interpretation of international law..

What is making the rivers ashy black?  I think it is burning wire and washing printed circuit boards in ashes.   We need to clean up markets with incentives, not boycott them with insults.

What the recycling world needs now is Women.

Followed in second place by coverage in The Economist, by Fareed Zakaria, or Tom Friedman, or Wall Street Journal... someone who understands trade and is not distracted by shiny objects.

And I'm playing Lou Reed.

All too frequently, I post before I've had a chance to edit.  Sometimes that's a mistake, sometimes it is timely.  Sometimes I think I am drawn to do it before I chicken out.

Read more: http://www.bittium-energy.com/cms/content/view/43886/65/