Robin's CRT Demand Forecast

Forecast is cloudy.   But winter is coming.


As regular readers and members of WR3A know, I am the staunchest defender of the integrity of export markets for reuse items, and have tried to push back against the hysteria over Cathode Ray Tube (CRT) exports in particular.  The CRT is a beautiful thing.  It was built like a battleship.   A typical CRT lasts 25 years and is a very decent display device.  


It is more fashionable to have an LCD or plasma or LED, and it's space conscious, but there is none of the "functionality" trade-off to continued use of a CRT monitor, as compared to a Pentium II desktop.   The refresh rates on a good CRT are actually better than an LCD.   Some people, such as internet cafe operators in developing countries, prefer something that lasts longer, survives high heat waves, and is difficult to steal.  I prefer the big CRT television in my house because I can channel surf 5 times faster than I can on an LCD in a hotel room.


Since I've made my position so clear, many readers who have been exporting their CRTs are now calling me and saying "We agree!  Buy ours!"  The phones start to ring...


What you must also hear me say:  "It's a buyers' market."   


It absolutely AIN'T a seller's market.  Buyers dictate the terms.  If I have 5,000 CRTs this week, I  can find good homes for 5,000.  But if I get 10,000, the quality specification will change - I may still be able to ship only 6,000.  The other 4,000 will be voted off the island and recycled.  WR3A members are frustrated that the more supply we obtain, the pickier the buyers get... because it is the poor buyers in developing nations who get to dictate the terms of a buyer's market.


The price offered for reuse CRTs is crashing through the dang floor.  As Hong Kong and Kuala Lumpur and Jakarta and Singapore and Shanghai upgrade to LCDs, they are flooding the reuse market with working CRTs.   There is still demand, but just like corn or wheat or milk, the supplier cannot dictate the price.

They also don't particularly like buying from the USA.  Shipping costs are high, and Korea, Taiwan, Japan and Singapore are all upgrading displays and generating very nice CRTs for the secondary market.  When you add USA environmental groups which call them "primitive" and send letters to their governments alleging pollution, you can't be surprised by the "don't call us, we'll call you" tone of these manufacturer takeback programs.

Some American recyclers respond by leaving the market and shredding up the CRTs.  As the price of copper and lead go up, they say it doesn't make as much economic sense to export.  State legislation pays you to destroy them, and besides, the export market has already become the social-stigma-equivalent of dating a black man in Birmingham Alabama in 1959.  Those who sell overseas risk being are branded as "export-lovers" by our competitors, and those who shred are called "Stewards".   

This is all natural in the free market.  What I don't like is the moral speeches from those who choose to destroy rather than export for reuse.  And I don't like that the losers are the poorest internet users in the world.


How does an Ethical "E-waste" Exporter continue in fair trade in a crashing market?  


First, study the market.  Make sure that you are not just clinging to old sales models.   I've quoted Danny DeVito before (Other People's Money) about the best buggy-whip maker who made the last best buggy whip.   I've read www.digitimes.com since 2001;  the subscription pays for itself.

Second, be comfortable breaking even.   If you can just ship the monitors for free, the avoided disposal cost may be worth it.  Five years ago we were paid $7 apiece for white monitors... now it's a lot of work to sell them for $1.50   But it's still environmentally preferable if done in a fair trade manner.


At a certain point, the price of LCDs will fall to where their estimated life of 5 years is offset by their reduced shipping cost (more fit per transport container).  Some of the emerging markets, such as BRIC nations, will continue to enjoy increasing wealth per capita.  At a certain point, CRTs may still have demand, but relegated to a non-credit-worthy environment.  Just as farmers will turn to producing high-protein-muscle-building-whey when children as still hungry for milk, the refurbishing market may abandon the SKD (professional refurbishing factory) business.  

Every month that my company inspects computer monitors for working CRTs, we know there is a chance we won't get paid for a shipment.  That's still worth it to me.  I'd like to be the last guy in America to get the last working screen into an internet cafe in West Africa.  But WR3A will find it very hard to broker loads for other suppliers as we enter this stage.


At that point, the CRT monitors would become suitable only for direct-reuse, a market which is a) applauded by BAN, and b) notorious for its "informality", compared to the contract manufacturers which BAN and ETBC have vilified.


I digress.  But the point is:

1. CRT demand is declining rapidly as a percent of the display device market.
2. The display device market is increasing wildly, promoted through huge growth and over-production
3. CRT demand in absolute numbers is steady, but supply (from displaced CRTs) is increasing.  
4. It's a buyers market
5. The buyers of CRTs are poor.

It kind of resembles automobile manufacturing.  Poor people in the 1970s still needed small cheap cars, but USA auto manufacturers didn't want to chase that market.  They decided to make big expensive cars for richer people, and left the manufacture of little cars to Asia.  The CRT is the little cheap car with a low margin, sold to people with bad credit.



What Good Point Recycling is doing is charging generators almost the same for the reuse items, and selling them cheaper than the other exporters, while getting pickier about quality (or in cases like Mexico, paying to properly recycle whatever swing in the market dictates for "reuse" CRTs that cannot be moved economically).


That's our niche, we have clients willing to pay us for their stuff that can still be reused.  The ones who want to get paid are good people, but let them by plane tickets and go sell their working stuff like we do.


I have personally bent over backwards to create WR3A and to establish easier ways for the good companies to sell their material.  What I run into in my marketplace is clients who have been told we are a bad operation, because we export.  The recyclers I applauded as Stewards five years ago are exporting almost nothing.  The investment has all been made overseas.  The overseas SKD and contract manufacturers have put in glass processing, established zero-import of cadmium phosphors in their POs, gotten ISO14001 and ISO9000, etc.


What should we do?

The CRT reuse market in the for-profit sector may be down to the final 18 months, and we are transitioning to charging everyone for everything.  Even notorious junk exporters are charging for CRTs now.    The market may pick back up again when some of the CRT molding machines close (Samsung Klang skipped retooling and is in its final death march for 2012), the smartest thing might be to charge for them and warehouse them like airplane parts.  But the price war in LCDs, and the coming of LEDs, is causing the market to bristle for, at best, a glut of recently-replaced CRTs (from people who respond to the LCD price war crash by upgrading), and at worst, a further slow in demand in the CRT reuse market. 

We are still paying for CRTs from WR3A members who have stayed with the organization from the beginning.  We are still exporting to the SKD factories which, as I have emphasized, are less "informal" than the largest and best E-Stewards, full of engineers and technicians who are the aspiration of their nations.  Those men and women are starting to outgrow CRTs, they are growing into larger companies.  This little episode in the early millenium when they were depicted as wire burning chimps will be over, and their willingness to refurbish CRTs will probably be limited to markets like United Nations sponsored school and internet programs.  


The United Nations and charities may find donated working CRTs to be a boon to the non-profit digital divide sector.  But they have been labeled "toxic waste" by so many people, that the easily-sued, trigger-happily sued donors may walk away from students who cannot leapfrog their way to an LCD.

ICT programs will help to develop new markets, which Cisco and Dell and HP and Lexmark will benefit from... if they aren't beaten to it by Wistron, Foxconn, BenQ and Proview.

For the history books, the story of CRT exports is going to look a lot like the story of yellow cheese vs. white cheese.  That's a reference to a Political Science course I took at Carleton College, about the Interstate Commerce clause and the attempts by Wisconsin and Minnesota to protect their cheese factories by regulating the color of the cheese.  I cannot even find any reference to it on google.  It was all the rage, cheese color protectionism, back in the day.

Another Research Paper: Boma Brown-West June 2010

 I wrote this post at 4AM and then took off, hoping to come back and read the thesis below, and assuming I'd have managed to make contact with the author by now, in person.      - Robin

There's been another academic research paper published.   Brown-West submitted this for her Master of Science in Technology and Policy, last June.

"A Strategic Analysis of the Role of Uncertainty in Electric Waste Recovery Systems Economics:  An Investigation of the IT and Appliance Industries"

I haven't finished reading it.  I see a lot of people accessing it through the blog, hope it's generating good discussion.  It appears to make the case that uncertainty tends to be bad, and cites interviews with people in the end-of-life (big shred) business for background.

My two quick comments are that "recycling" in the USA does not necessarily increase certainty, except that reuse is out of the picture.   And that while BAN and the shredders are legitimate data points, that it's a good idea to also interview people in the cores and refurbishing business.

The paper compares recycling systems for white goods / appliances and electronics.  As I took a stab at in my post "E-Waste Travels in Scrap Metal", many have failed to distinguish between specialized electronics disassembly operations and raw "scrap metal" (ferrous scrap usually) recycling.  Throwing a computer into a scrap steel bin is a major, if not the major, end point for most Americans.  It's important, therefore, for all researchers to distinguish between electronics recycling, auto shredding, refurbishment, and simply lumping computers with toasters and other appliances.  There may be a false sense that shredding equipment in the USA means less primitive recycling in Guiyu, or that hand-separation of intact units in China necessarily leads to a more polluting outcome than hand sorting of shredded pieces.  (Again, I am not tying this to Brown-West's paper, which I haven't read, but making the point that "shredding vs. export" can be a false dichotomy for comparison,  if ultimate disposition is to be measured in the end).

There are few e-waste companies which have invested as much in shredders as GEEP.. and I've frequently written about electronics manufacturers who embrace shredding as a form of "planned obsolescence in hindsight".  When I saw that these people cited as industry sources in "acknowledgements" about exports, my yellow light started flashing.

The recyclers she interviews - Metech, GEEP, Sims, and certainly HP, are all good companies.   Their processes are appropriate for a large share of used and obsolete equipment.  But they are also part of a "obsolescence industrial complex" which is funded in part by a war on the grey market.  The major failing of investors in capitalized, automated processing systems has been the zeal to embrace a "no intact unit" policy. In particular, display units (CRT monitors) do not have the short life described in "Moore's law", and constitute over 50% of the weight of the computer and 50% of the cost in the most rapidly emerging markets (the 3B3K markets which increase access to internet at 10 times the rate of developed countries, and are the spotlight of the CES International show in Las Vegas).  These should be assessed separately from IT equipment, as IT is from white goods.

My concern is that environmentalists and researchers have been in many cases enlisted in an all-out firefight between major OEMs and the "white box" marketers of ink cartridges, cell phones, LCD televisions, and Pentium 4 computers.  I'll be reading the paper to make sure it doesn't get used unfairly to promote shredding in cases where hand-disassembly can create sustainable jobs.

Original equipment manufacturers have very legitimate concerns, as well as pure economic reasons, to emphasize policies which result in the demise of the secondary market.  My point is that to get a more rounded trajectory, researchers should balance shredder-solution sources with interviews of "white box market" manufacturers.  I recommend the Harvard Business Review article, "the Battle for China's Good Enough Market".  While the Harvard paper does not deal directly with refurbishing per se, many of the industries they describe began by refurbishing of cores or using off-spec or used parts to make a less expensive gadget.  When parts are available for refubishing in very large and uniform quantities - like the $350M in Dell Optiplexes which had bad capacitors, which almost no American tried to replace - the refurbishing or white box market is able to achieve scalable economies, and can rapidly emerge as a primary manufacturer.  Wistron and Acer came from the computer monitor refurbishing business.

There is certainly "uncertainty" in scrap metal prices and reuse value prices, but it is almost always a certainty that the more someone offers to pay for a material (assuming transparent and open transactions and warranty), the more value added they recognize.  Value added is almost always more in a reuse appliance.  It's harder to prove with mixed loads, but if you assume uniform loads (e.g. 1,000 CRT monitors of a certain age and model), you can quickly deduce whether the "80% burned as scrap" allegation holds water.

There is more uncertainty in mixed loads.  A single Mercedes Benz or Harley Davidson hidden under piles of junk TVs can go a long way to paying for a load.  But using materials to hide other materials from customs is not a problem unique to recycling - it exists in food aid, malaria medicine, school books, and corn shipments.  The Egyptian market was virtually shut down in 2008 by discovery of an operation in Toronto area which was putting generic viagra into used computer monitors.

Shredding equipment into little pieces certainly shortens the flow chart, and I guess that reduces "uncertainty".  Likewise, selling to poor people will increase "uncertainty"..  The more humans are involved, the less control of the "final outcome".  NO INTACT UNIT policies draw the shades on the people outside who are willing to replace capacitors, fix boards, or burn wire to keep from starving.  I believe that certainty is best achieved with enforceable civil law contracts, purchase orders, and audits.

During my own time in developing countries, I learned that the loyalties and friendships that people carry mean more to them than a new car means to you or me.   And that is really kind of refreshing.   During my time in Peace Corps, I think I laughed and had more natural dopamine from friendships, loyalties and relationships than I could ever get with a new I-phone or X-box.   For me, that is the part of the trade with developing nations which the USA gains the most from.  It leads to nothing less than world peace.  Fair Trade Recycling has a social and spiritual multiplier effect which some e-waste watchdogs are completely tone deaf and blind to.

Now again, I've not studied this paper, and I hope that by posting a link to it I can increase the type of dialogue we all want to have. I'm not writing blindly about the paper, I am just very very cautious if I see BAN, HP, GEEP as major sources of about what happens in an export market.  It's like taking testimony about bicycling from people on the subway.

Speaking of deaf dumb and blind, here is a link to a place that sells replacement circuit board to pinball games.  Pinball games aren't manufactured any more.  They are only refurbished.   People take the same board from the pinball game (Tommy) and put it into a new pinball game, like Spiderman.

Rhode Island E-Waste Recycling at URI in Kingston

Good Point Recycling will be holding its 60th "one day event" at the University of Rhode Island this Saturday, from 9 to 2PM.  The event has been advertised at several games and on the web and radio, and is expected to be a doozy.  The cost of the electronics will be paid for by MITS.


MITS, the Manufacturers Interstate Takeback System, represents a group of electronics manufacturers who financially assist with local collation activities and oversee the entire process to assure residents and customers that only responsible recycling methods are followed. Sony Electronics, Acer America Corporation, Viewsonic Corporation, and LG Electronics are represented by the MITS program in Rhode Island. Good Point Recycling of Middlebury Vermont, a member of the MITS responsible e-cyclers network, will coordinate collections and process material for Rhode Island recyclers, including Elwin Electronics, Goodwill Industries, RRI Recycling, Indie Cyle, Smart Technology Management, and other groups.

How Dumb Are We "e-waste" Quiz?

Yesterday's post, about trans-boundary movement (e.g. tourism) and exports (e.g. emigration) was pretty simple by some standards, but complex for people who get their news off of Twitter.   Recognizing the impact of stick figures in the "Story of Stuff" video, I have designed a Quiz to help you decide whether you are capable of learning about electronics recycling policy from this blog, or should remain with stick figures and tweets.

Here is the simple quiz on "E-Waste" Recycling, inspred by the Stuff film



Here it is faster for smart people:

Is Technically Not Imported "E-Waste" Still Exported "eWaste?"

The term "competent authority" sounds so good.  But is it too good to be true?

What if you took a trip to Cancun, and when you came back home, an environmental agent (or other authority without expertise in Immigration and Naturalization) said that you had not vacationed, but had emigrated and were no longer a citizen?

In the world of contract manufacturing, assembly, piece work, and repair, the terms "import" and "export" are not thrown around lightly. There are many commerce treaties involved, and sometimes a device is more of a tourist than an immigrant.    The discussion of "export rules" begs the question, if someone thinks they are the authority, and their national courts say they are not, then how competent are they?

In Mexico, the Ibarrolas (customs agents) must document that loads brought into the "maquila" zone have not been imported.  The maquilas were set up to bring assembly jobs for televisions and automobiles, creating employment for Mexicans in the border area.   Ford makes car parts, sends them to a Ford plant in Mexico, and the screws are affixed and the car is brought back for sale in the USA.  Nothing remains in Mexico, Mexico does not collect customs on any parts or cars, and the USA Commerce Department does not consider the car parts to have been exported and Mexico does not consider them to have been imported.

China has "special economic zones", and the island of Macau in Chinese waters is an entire small economy based on "not importing" into China.

Now there is a company in India, Intarvo, which has created "refurbishing" factories for electronics.  India is notorious for not allowing import of used equipment, and famous for its brilliant young techs who can fix anything with a cord.   Intarvo has set up facilities to bring in used electronics without "importing" the e-scrap.  They repair what they can, but cannot keep it in India... it has to leave the country.

Personally I think this is a lot of work to create recycling and repair facilities in places which have the knowledge and skill to recycle and repair used electronics.  But when I asked an EPA person whether this is "exporting" (in the case of our Mexico facility, which ships all the screws and plastic and CRTs back into Arizona for processing after testing and disassembly), the person said "of course it's exporting if it leaves the country".

What I'm pointing out is that you can split out the two issues - primitive polluting shameful practices and technically adept refurbishing - and not even get to the definition of import and export at all.

Even Radiohead (the rock band) knows what a "Maquiladora" is.  My point is that a group of people gets together to figure out what the rules should be for "ewaste exports", and they don't even bring in a representative from Commerce, they don't bring in anyone from an importing country, and they start to make rules based on what a small non-profit says that the Basel Convention says...  And I'm not complaining or trying to be mean.  It's kind of funny, if you aren't being clubbed to death.