Recycling Industry

In the town of Yashiro, 27km outside of Osaka, Japan, washing machines, air conditioning units, television sets and refrigerators hum along conveyor belts, each having reached the end of its life cycle, and is about to be disassembled, shredded and, sometimes, pulverized. Machines capture noxious gases that comprise cooling refrigerants. Resins including polypropylene and polystyrene are recovered thanks to technology that can quickly sort and separate various types of plastics. New developments will improve the capture of rare earth metals from high end electronics.
This is the PETEC (Panasonic Eco Technology Centre) complex, a clean, ultra-modern and relatively quiet facility. Since 2001, over 1.4bn appliances have been recycled, producing enough materials to manufacture 95 jumbo jets, the equivalent of 81 of the Great Buddha statue at Nara and 158,000 cars from reclaimed aluminum, copper and steel.
Japan's Home Appliance Law, in effect for over 10 years, is in large part responsible for the innovation that facilities like PETEC have sparked. The law has forced the extensive implementation of extended producer responsibility (EPR) that has become common in Europe, but has found huge success and buy-in throughout Japan. The law places the burden and responsibility of recycling on everyone: consumers, retailers and manufacturers.
Consumers pay a recycling fee when they drop off their used appliances at either a retail outlet or collection center. They must also purchase a recycling ticket that proves to a collector that any recycling fees, which manufacturers themselves impose on products, have been paid. Recycling fees, which are supposed to cover the costs of collecting, transporting and recycling the appliances, are eventually transferred to the manufacturers. Retailers continue their roles as the middleman as they are tasked with collecting and distributing unwanted machines to the appropriate recycling facilities.
The vast investment in PETEC has provided an approximate 10 percent return on investment, and the thriving research and development staff in Yashiro keeps churning out best practices that filter to Panasonic's 48 other recycling facilities. UK Guardian has a good story on PETEC.

In the U.S. the typical life of most major home appliances is 10 to 18 years. We have local and state programs for recycling appliances but nothing like Japan’s. We probably should, given that major home appliances are made up of approximately 75 percent steel. About 10 percent of the steel processed by the recycling industry comes from large appliances. The Environmental Protection Agency reports that the use of scrap instead of virgin materials to make new steel results in a 97 percent reduction in mining wastes, 90 percent savings in virgin materials use, 86 percent reduction in air pollution, 76 percent reduction in water pollution, 74 percent savings in energy, and 40 percent reduction in water use. The remaining materials in appliances include metals such as aluminum, zinc and copper, as well as recyclable plastics and CFC refrigerants.
More interesting, though, is the U.S. scrap metal industry. According to a 2011 study by the Institute of Scrap Recycling Industries (ISRI), the U.S. scrap recycling industry is not only a thriving economic engine, but also a pivotal player in environmental protection, resource conservation and sustainability. The industry recycled more than 130 million metric tons of materials in 2010, transforming outdated or obsolete scrap into useful raw materials needed to produce a range of new products.
In addition to being an environmental steward, the study confirmed that the U.S. scrap recycling industry plays a prominent role as an economic leader, job creator and major exporter. Specifically, the study found that the people and firms that purchase, process and broker old materials to be manufactured into new products in America provide 459,140 adults with good jobs in the United States and generate more than $90 billion annually in economic activity.
The export market is also a huge economic driver. In fact, were it not for the export markets, many materials, including post‐consumer paper and electronics would probably not be recycled at all simply because there is no demand for them in the United States. By opening up new markets, the nation’s recycled materials producers create demand for materials that might otherwise end up in landfills.
In the case of electronic products, for example, there simply is not enough demand in the United States for the more expensive post-consumer materials including gold and titanium that may be smelted out of circuit boards, capacitors and other electronic parts. On the other hand, countries like India, where demand for gold is particularly high, see value in these materials. The scrap industry is the first link in the global supply chain for the growing demand of all manner of commodities ranging from iron and steel to paper; nonferrous metals such as aluminum, copper, and zinc; plastics; electronics; rubber; and more. The result is economic and environmental sustainability for the U.S. and theworld through the supply of high quality, environmentally friendly and energy saving raw materials to the global marketplace.
In 2010, the industry exported nearly $30 billion in commodity grade scrap products to more than 155 countries, significantly helping the U.S. balance of trade.

Week-end in Business

Here are some interesting, thought-provoking business items I ran across this week:
We all know that the job market is looking better with 200,000 jobs added last month. This good news is added to growing consumer confidence, factories stepping up production and small businesses showing signs of life, but did you know that for the first time in many years, manufacturing is a bright spot in the American economy? The Institute for Supply Management reported that its employment index for December was 55.1, the highest reading since June. Any number above 50 indicates that more companies say they are hiring than say they are reducing employment. The United States is particularly strong in machinery, chemicals and transportation equipment, which together make up nearly half of the exports. Exports of computers and electronic products are growing, but are well below their pre-crisis levels. Production of cheaper computers and parts shifted to Asia long ago. Check out the article here.

If you've ever watched It’s Always Sunny in Philadelphia, here’s another take-- It’s Always Sunny in Silicon Valley. In Silicon Valley, Occupy Wall Street isn’t really an issue, since, according to Google Chairman Erin Schmidt, “Their issues are not our daily reality.” In Silicon Valley, restaurants are booked, freeways are packed, and companies are flush with cash. According to this week's Bloomberg Businessweek, Silicon Valley gets 40 percent of the country’s venture capital, up from 31 percent a decade ago, the area’s job market jumped jumping 3.2 percent, triple the national rate, and real estate, a cesspool of despair in the rest of the country, is humming along. The closest Silicon Valley got to “Occupy…” was “Occupy: Cupertino” the line outside Apple stores in October for the iPhone 4S.

Retail news: I’m sure you’ve heard that Barnes and Noble is considering breaking off their profitable Nook business, but did you know that Hansen Natural Corp is changing its name to Monster Beverage Corp? Hansen Natural Corp makes a line of namesake juices as well as Admiral Iced Tea, Blue Sky energy drinks and Junior Juice. Its website features pastoral images of rolling hills and butterflies. Not good enough. Hansen’s also makes the gritty Monster Energy drinks, with its neon-green triple-slash logo. Stockholders agreed Thursday that the company needed to toughen up its image with the new name. Monster Beverage Corp. shares will begin trading under the ticker symbol MNST on Monday.


Since my daughter lives in Scotland, I’ve come to read the business section of The Guardian. In addition to all the articles on American politics, Eurozone unemployment, Australian sports, David Bowie turning 65, and might The Hobbit get a new ending? I found an interesting article on the London Summer Olympics—they’ll be fun, but don’t count on them to fix the British economy. Michael Saunders, of Citigroup, examined the data from ten Olympics held between 1964 and 2008. Growth tends to rise in the run-up to the Olympics, but the effect starts to fall away even before the games begin, and afterwards, growth tends to be weaker. This is to be expected since the jobs created are primarily from construction, which ends long before the opening ceremony. What is worrisome is the less productive workers huddled around television sets, and travel disruption as hundreds of thousands of supporters flock to London.
The London Olympics team claim that tourism would benefit "right across the UK, not just during the games, but for years before and afterwards as well"; but what about the visitors who might have come to the UK anyway, and will just switch the timing of their visit. Australia saw a 16% rise in short-term visitors in September 2000 when the Sydney games were held; but visits then declined for three years afterwards – presumably lots of people who'd always fancied going Down Under chose to time their visit to coincide with the Olympics.
David Cameron cites the "feelgood factor", which he claims will lift the mood of the nation as the sporting jamboree unfolds, it won't necessarily result in a sudden boost to consumer spending. In fact, it's just as likely to depress demand while everyone is glued to their televisions.
Research has consistently shown that unless you've a beautiful-but-neglected city you want to put on the tourist map (Barcelona), or plenty of world-class sporting venues already (Los Angeles), the impact of holding the Games is ambiguous at best.
As Saunders puts it, "In our view, the Olympics are likely to be very entertaining. But the games are not an economic policy."


Have a great weekend...