ISRI, AGMA, NSWMA: Part I - Trade Orgs, Regulations, Grey Teeth and Free Trade

A First Draft Treatise on Horizontal and Vertical Industry Lobbies...


Please don't read this unless you are an academic.  The non-academics laugh at my pompousness (at least, differently than academics do).  Recyclers... I waste their time which should be spent recycling.

AGMA, ISRI and NWSMA. Each is a trade organization which lobbies for a variety of interests.  A small electronics asset recovery firm at ISRI has little in common with a large automobile shredder at ISRI.   A software licensing company at AGMA has little to do with an ink cartridge manufacturer at AGMA.   A third organization, NSWMA, holds the key to the challenge inherent in these organizations: horizontal and vertical.

At NSWMA, there is really not much difference between what the smallest member does - collect trash - and what the largest member does (collect trash).    The biggest threat to the large member is the growing small member, and the biggest threat to the small member is the large NSWMA member.



At AGMA, on the other hand, there is little competition between members.   Member businesses vary from software, feed units (cartridges), and hardware (Cisco blades).  Members have little in common, except that they typically command of large market share (the members gross $290 billion per year, according to their website) and a rely on brand, copyrights, and other intellectual property rights to protect relatively high margins on their activities.   A $20 printer ink cartridge costs about as much to make as a pack of ball point pens... an attractive target for counterfeiters.  And refurbishers.

ISRI has in the past been more like NSWMA.   Of course there were differences between the paperstock division, bulk scrap metal, non-ferrous metals, and scrap metal operations which rely on chop-shop auto parts resale.  But it was perceived to be more like NSWMA than like AGMA.   Now, ISRI has taken over the IAER.  It has brought in a very rapidly evolving set of electronics recycling companies, which range from asset management to "e-waste" shredding.  Those companies have very different interests, and are looking at legislation and regulation a lot more like vertical AGMA than like horizontal NSWMA.

All trade associations find it easier to recruit and keep paying members if those members can be united by a common cause.   For what I call horizontal lobby groups, where the threat is from someone just like you, that usually means rallying everyone against a third party - an outside threat, usually government regulators.   For vertical trade groups, where the individual members have little in common with each other, they common threat is usually small players, non-members on the outside, who are trying to copy their way in.



AGMA, on the other hand, has always been about uniting big guys whose big threat is small emerging guys.  As I've posted before, they have very legitimate concerns.  I wrote a post about the worst reuse practice I can think of, which is probably the most lucrative - taking electronics batteries, like laptop batteries, which have been discarded.  Put them into cellophane and put a brand new label on them.  Sell on line.  BAM-O!  Your profit per pound is astronomical.   Or better yet, find a shipment of brand new laptops with the same battery.  Take the old discarded battery, buff it up and polish it and relabel it.  Eject the battery from the new laptop.  Replace with the old battery. Now, when the new consumer finds that the new laptop battery needs changing much sooner than expected, you can sell the stolen new battery online to replace the junk one you switched.

And if the laptop was under warranty, well then Lenovo or Dell or HP or Acer pays for it.  A beautiful crime.

So there are very legitimate reasons for AGMA to beg for government enforcement.  And there are very legitimate reasons for NWSMA and ISRI to avoid choosing sides when a large member embraces a government standard which the smaller members cannot meet.   I could label ISRI and NSWMA as "horizontal" membership orgs, and AGMA as a "vertical" membership organization.

There can be a dozen vertical issues.  Camera refurbishing.   OS Licenses.   Laptop batteries.  E-waste exports.  Wire burning.  These are very specific and of intense interest to one or two members.   Cisco has a certain empathy for HP when ink cartridges are refilled and given phony HP labels, but Cisco is not exactly in the same business when a legitimate rebranded cartridge remanufacturer is taken to task... Cisco isn't producing disposables.   When you have twelve different members manufacturing 12 entirely different products with different product lifecycles, it would be easy to blur the lines between piracy and legitimate secondary markets.  But the bias of the vertical organization is going to be pro-regulation, pro-barrier to entry, because none of the proposed anti-gray-market regulations splits cartridge makers from camera makers or software license printers.

For a horizontal organization, everybody is doing pretty much, more or less, the same thing.  A regulation may affect them all in common, or it may tilt the scale from one set of members to another.  Big vs. small garbage haulers is NOT the topic the NWSMA wants a long debate about, NSWMA wants to find issues which they all have in common and can all oppose.  There are usually a couple of "early adapters" who may embrace a new regulation because they think they have a head start in it, but the organization cannot really get behind those pro-regulation guys.

Now, there would be examples of people doing the same thing which might be pro-regulatory.  Hypothetically, a dental association would want to erect regulatory barriers to entry, because the operations are not really scalable.  Scalable means that the more units of production, the lower the cost per unit... you have something to protect against, like generic drugs.  With dentists, you are just as likely to have a conflict with another dentist in one large dentist partnership as you are with a dentist in a private office, and your market is pretty much determined by the number of dentists serving a particular population.  Your biggest threat is a quack dentist opening an office serving your population.   Or a good dentist serving your population.  See what I mean?  The "grey market" for teeth would have legitimate gripes commingled with barrier to entry gripes.

This would be an interesting college thesis.  I have to go get my trucks started.  Oh, well.


I saved and didn't publish this for about 9 months.  I was troubled that the definition of "horizontal lobbies" compared to "horizontal monopolies" was missing a coup de gras.  But a lobby is very different from a monopoly.  Then, I thought, there is much more to be written than has been said in this blog, and I hit "save".  But time passes on, and (like us all) am slowly dying...