IT industry faces scrapheap challenge

Manufacturers and resellers are gearing up to profit from the EU's new recycling laws.

Mention the acronym WEEE to the average reseller and they will put it down to your toilet humour. But when the Waste Electrical and Electronic Equipment Directive makes its way onto the UK statute books in 2004, the channel may not have much to smile about.

Under the new law PCs, faxes, monitors, keyboards, printers, phones and answer machines can no longer be just thrown into landfill sites. Anything that runs on an electric current will have to be recycled.

To keep within European Union (EU) law, the UK will have to start recycling all IT equipment, or face hefty fines.

Recycling computer equipment has to start, but it is not yet clear who will have to pick up the tab.

"I agree with some form of legislation to make the industry take on its responsibilities. But where does the responsibility lie? With the customer? Probably not. With the manufacturer? Probably," said Gordon Davies, commercial director at reseller Compusys.

Phil Jones, non-executive sales director at printer specialist Brother, supports the directive, as long as manufacturers are not made responsible for recycling waste they did not make.

"This legislation is not going to affect just the manufacturer, it is going to affect every IT and electrical appliance user from the individual consumer to multi-national companies," he said.

"It is critical that manufacturers closely follow forthcoming legislation to ensure that they are prepared. The implementation of this legislation will need to be carefully policed."

Who is responsible?

Joy Boyce, head of corporate environmental affairs at Fujitsu Services, said: "Until the EU directive is transposed into UK legislation, we won't know what we are all responsible for.

"Everybody in the chain will probably have a part to play. The key things are how the financing is going to work and who is going to be responsible for picking the PCs up.

"You have to make sure a machine is packaged up properly otherwise it may get damaged or bits may disappear in transit.

"The business-to-business market, where the majority of PCs are sold, does have quite a good system for taking PCs back. The WEEE directive is mainly concerned with domestic machines."

As chairman of the Industry Council for Electronic Equipment Recycling (Icer), Boyce is responsible for putting the industry's viewpoint to the Department of Trade and Industry and the Department of Environment, Food and Rural Affairs.

"We are beavering away to ensure that what comes into force is what we want. We are determined to keep costs down," she said.

However, despite some scepticism one firm believes that recycling IT equipment is an untapped goldmine and has launched a strategy to become the number one IT recycling firm in Europe.

Business opportunities

MIREC Asset Management, formed through Dutch firm MIREC's take over of recycling firm Frazier International, is pledging to become the European leader in the re-use of IT equipment.

The firm values old equipment and, if it can't be sold again, will recycle it.

Morgan Johnson, director of corporate development at MIREC, said: "With the WEEE directive, producers and distributors have to organise the take-back of equipment from end users, which is where we come in.

"Equipment between three and five years old will be refurbished and resold, but anything over five years will be broken into parts and sold that way. We sell a lot of recycled equipment through our channel, mainly to service and leasing companies."

The 'R' word

Many resellers are already used to the idea of recycling. Compusys finds that public sector organisations mention the 'R' word as early as the tender process.

"More and more companies are expecting to be able to pick up the phone and say: 'We've finished with our PCs, come and get them.' Sharper public sector organisations have accepted that there will be a legal requirement for recycling in future and are putting it into the contract today," said Davies.

Compusys collects the machines and scrubs or destroys the hard disk, depending on what the customer has asked for. They then call in the recyclers.

It costs Compusys £10 to £25 per PC, depending on the machine's specification and what can be salvaged. PCs are refurbished and sold on to overseas markets or cannibalised for disk drives and memory. The carcass must be disposed of according to guidelines set by the Environment Agency.

Ahead of the game

Some IT manufacturers are more proactive than others. In Germany, where environmental laws are stricter than in the UK, Fujitsu Siemens is ahead of the game. The company built a recycling facility 12 years ago, and now handles 5,000 tonnes of kit a year from business customers in Germany.

The company expects that figure to shoot up to 120,000 tonnes a year by 2005, when the German version of the WEEE directive kicks in.

Fujitsu Siemens arrived at that tonnage by taking into account its 23 per cent market share of PCs and servers.

"Responsibility for recycling is to be divided out according to market share," said Peter Burgdorf, director of re-marketing and recycling at Fujitsu Siemens.

There is even a figure for how much recycling is expected to cost the company: 47p per kilo.

Burgdorf believes that local authorities will step in with collection points for domestic appliances. "The WEEE regulation has left this point open. Industry can't collect from private households. That wouldn't make sense," he said.

"Normally the local authority is close to residential areas, so we are guessing they will have collection points, from which we will be able to pick up the waste."

Pick 'n' mix

Local authorities will not sort by brand of PC as it would not make commercial sense, so each load that Fujitsu Siemens picks up will be a pick 'n' mix of everyone's machines with, perhaps, a few antiques thrown in.

"Industry will be forced to take back historical waste, such as PCs from companies that have gone bust and no longer exist. We will have to pay the costs for this," said Burgdorf.

While it may be up to the manufacturers to build recycling facilities, resellers may still have to contribute in some way.

"Where resellers have a role to play is in establishing an effective take-back system for domestic IT equipment," said Boyce.

"We need a clear route back for the machines. We have to do it in a way that is not going to mean we are paying for hairdryers and electric toothbrushes as well."

A UK law on recycling electronic goods is still some time away. The WEEE directive is expected to pass into European law at the end of this year, after which the UK has 18 months to pass its own version. But some resellers believe that the time to act is now.

Phil Hackney, UK logistics director at Computer 2000, said: "People were caught on the hop when the waste package regulations came into play.

"This time round we need open discussion between manufacturers and partners on how to collectively manage recycling, how to deliver it and who picks up the tab.

"The risk is that everyone decides it's someone else's problem. Resellers should be asking themselves, 'Do we fully understand the regulations and what they mean?'"

Hackney thinks that the legislation, with all the paperwork it entails, will hit small businesses and smaller resellers hardest. "The smaller you are, the more difficult it is to keep up to date with regulations and compliance," he explained.

He does not want to see manufacturers taking sole responsibility and collecting all PCs into a central location.

"It is not viable to pass PCs up the chain from customer to reseller to distributor to manufacturer. Each time you move them, you are adding transport and handling costs," said Hackney.

Joint initiative

Zöe MacMahon, Hewlett Packard's (HP's) UK environmental manager, is suggesting a joint initiative between manufacturers. "It won't make sense to have a separate Sony bin and an HP bin for recycling. For economies of scale, it will make sense to have multi-company schemes," she said.

While a new law could have a negative impact on PC retailers, there are always those which see new rules and regulations as a business opportunity.

Gartner analyst Ranjit Atwal said: "A few resellers could specialise in recycling. It may be a company that is already in the repairs and service business. You could charge £20 or £25 to come and pick up a PC."

However, he admitted that it will need to be a specialist operation, as there will be industrial processes involved, such as melting down lead.

"It is not so much the components that will be valuable, it is more likely to be the zinc, lead and mercury in the machines," said Atwal. "For an existing manufacturer it would be feasible to add this on as a sideline."

SUMMARY:

• The Waste Electrical and Electronic Equipment Directive will mean that anything that runs on electricity must be recycled, not put in landfill sites.
• It is unclear where the burden of cost for recycling will fall.
• Although manufacturers could be responsible for building recycling facilities, resellers will have to play their part.
• Existing manufacturers could offer recycling services as a profitable sideline.