Saving the Recycling Business, 2009 (continued)

How I Saved My Company in 2009-10: Yearbook 2

I described yesterday the precipice I found myself on in January 2009.   I'd just purchased 50,000 s.f. of overhead.   The renter who paid (the other) half of the mortgage had gone out of business.

Learning to enjoy the desert

Scrap prices from almost everything we tore down, except for chips and boards, were at pre World War I lows.  I had a business consultant tell me to liquidate everything and try to rent the building, and a couple of VC (vulture capital) deals come circling around.  A competitor started offering all my VT and NH clients 1 cent per pound recycling on CRT televisions, something unheard of, supposedly financed by an international company overseas - but mysteriously carpet-bombed at all our New England clients - no similar interest by the Asian company in Arizona (where we also did business), and as mysteriously, the Asian company disqualified it if it was collected in Good Point trucks and delivered to the same place...

And this sounds like a joke, but some people out there know the guy - a scrap dealer from outside the state started calling my cell phone and saying the F word and saying I was screwed and he'd locked  up ALL my accounts, and I was going to regret not having sold to him.  I'd hang up and he'd be the next call, 30 seconds later.   (I think he must have had a brain aneurysm, it wasn't normal, even for scrap dealers.)

All I had going for me was Chicas Bravas - the NPR discovered our fair trade recycling banquet in Sonora Mexico.  And our long-running partnership with the SKD (contract manufacturer) in SE Asia was still alive.  And both had CRT glass cullet end markets for free nearby.   We were hitting 22% reuse then, which was not as high as off-lease computer dealers, but it was 90% of our income in January 2009.  We just had to believe in it and make sure our clients could believe in us.

I not only made nothing in 2009, I paid my personal savings account into the business to meet payroll.   We were fortunate that the quality of employee and applicant improved, and that the Vermont E-Waste legislation (which I still kind of oppose intellectually) was on the horizon, giving us hope for revenues as the reuse business inevitably faded.

We had another bad year in 2010, but it looked worse than it was as we entered 2009 bloodbath payables in January (had we entered them in December, the bank may have foreclosed... though it was the bank that was purchased that year, and the Vermont bank staff who lost their jobs).  Reuse got more difficult as the SE Asian markets teetered on home-grown surpluses (less expensive to buy LCDs from Shanghai and Kuala Lumpur than from Vermont).  And in a bizarre twist, Mexico's EPA just about shut everyone down by changing the rules for CRT glass delivery - either to my Retroworks de Mexico plant or to the largest North American plant for CRT cullet - Thompson's Tech Display Mexicana.

I made some payments back to my personal savings account in 2011 which were more than the paychecks (less than $30K), but we kept retaining excellent staff.  The state law allowed us to finally lift our rates, which had been held down by the Asian CRT recycling carpet-bomb grants.  I let go of the reuse brokering, we got R2 certified, and I can say today that we "survived" the crash without doing anything environmentally questionable.

But it was more than a rough ride... it was an end of the reuse sale era from the USA.  During that time, no one in the USA had any more incentive than I did to export working and reuseable goods.  No one had more riding on it than I did.  I flew Asians to meet our plant in Mexico, I flew to Africa and had Africans fly here, we made deals in South America.   I tried to compete by selling better product than anyone else, testing computer mice and finding PS1 keyboads (a rarity) for resale.   Like a yankee in the Depression, or a crippled Ozark farmer, we squeezed our business for every last drop of profit and retained earnings.   We learned to enjoy respect as much as we'd enjoy a dollar.  And it was respectable, how we survived.  I can hold my head high.

Now, under the new "ewaste legislation" regime, we really don't have the same incentives.   If we sell something for reuse, it can be questioned, and if we scrap it, we send the bill to the OEMs.   It's someting of the end of a reuse era.  I'm still visiting friends from the golden age of exports, visiting friends from Cairo, Lima, Burkina Faso, Accra, Angola, Semarang and Penang.  But it feels now like an old timers game.   They have scrap locally, reuse close to home, and cheap cheap new goods to trade.

Today, I fear we as a nation are losing contact with the developing world as they find more sources of used goods, and more affordable new goods, and more wealth to buy from.   As I explained during my trip to Peru last spring, the buyers now have three choices:

= buy working used NTSC analog TVs from the USA

= buy working used NTSC-ready analog TVs from China

= buy new LCD NTSC TVs from China

Ten years ago, choice 2 seemed impossible to imagine, and the per capita income in Peru and the cost of LCDs from China made #3 a very distant competitor.  

Whatever you may say about individual people, when it comes to the non-OECD, "The poor are getting richer, and the rich are becoming more numerous".  The people whose mission it is to ban trade between rich and poor may succeed in stopping trade between old money and nouveau middle class, but they cannot stop trade between city and slum, or between folks in Shanghai getting new gadgets and folks in Accra buying the old ones.    

The Basel Convention says trade in repair is legal and defines it as a commodity, but even if that "loophole" (as BAN.org describes it) is closed, there will be no net decrease in the supply of used TVs etc.  There are more used computers and TVs generated within the non-OECD cities now than there were generated by USA, Europe, Korea and Japan when this "boycott ban" business got started.

How I enjoyed surviving the Crash.  I have never been more proud than I was when my twins helped translate deals in Peru and Mexico.  They weren't real deals, like the deals before during the crash.  But seeing my old partners happy to be speaking fluently with an American "E-waste Exporter" they'd grown to trust, it made me really happy.    I'd never give up the years I travelled and traded and hosted importers in my home, and I hope my children are forever touched by the hugs with Muslims, Catholics, and Buddhists they learned to expect living in our small town of Middlebury, Vermont