E-cycling In 2013
Chris Rodinis
January 7th, 2013
Of all recycling, e-waste recycling is growing fastest. This has attracted interest by investors and entrepreneurs. Here are some noteworthy points:
- Legislation is forcing e-cycling
- New regulations and certifications for the long term
- Volumes are up due to an upward sales trend and shorter life cycles
- Innovative and more efficient processing
With such growth the sharks are circling for acquisition targets because there is an opportunity for more growth. Avnet and Arrow are recent examples of companies buying up e-cyclers.
Industry Overview
E-cycling encompasses different types of companies that do things such as collecting, processing, refining and re-purposing. Considering that 50 million tons of e-scrap is generated every year, there must be plenty of potential for the upside in this industry.
The main concern today is proper management of e-cycling concerning worker health and environmental risks. As long as the industry keeps improving the latest prediction for the size of the industry in the year 2014 is about $15 billion per year.
The industry is active worldwide with at 1,000 active companies. Most companies are local and only the bigger players have global reach.
Here is interesting direct quote analyzing the state of the industry:
“The fragmented nature of the market, along with positive underlying dynamics, makes e-cycling an attractive sector as the industry consolidates looking to capitalize on strong organic growth.”
Growth Drivers
E-cycling companies count on legislation to keep a level playing field and to make sure everyone is in compliance.
Regions vary as to how far advanced they are with regulation and take back programs. Europe is the strictest and the most productive.
“In most cases, the scope of these regulations varies. For example, the U.S. currently does not have a federal mandate to recycle electronics. However, as of October 2012, 25 states had enacted electronics recycling laws, according to the U.S. Environmental Protection Agency (EPA). Meanwhile, countries such as Japan, South Korea and Taiwan have made fast inroads into this sector.”
For now the big players have an advantage in compliance and meeting requirements of regulation. More legislation is needed and in the interim, different markets will develop at different rates.
E-waste volumes are way up. The reason is obvious in that electronic sales are up! The only problem is that the recycle rate is still only about 20%
Another important trend in the e-cycling industry is that more recycling infrastructure is developing. Companies are investing in more equipment and bigger facilities.
Also, because regulators and customers are becoming more “green,” they are demanding that companies become certified as R2 or E-stewards. That way everyone is sure that the e-waste recycling is being done in environmentally sound and OSHA proof methods.
The last growth factor is “take-back” programs. Dell, Hp and Samsung are leaders in taking back and many more manufacturers are following. Some states like Connecticut already require all local manufacturers to have take back programs.
Mergers and Acquistions
As far as merger and acquisition trends, the recent recovery in the economy is heating up in the recycling industry.
From the report: “With the recent market recovery, acquisition activity in the sector has increased globally with significant interest coming from strategic acquirers. Transaction volume is expected to be higher still in 2013, driven by expected tax regulation changes, the strengthening balance sheets of recycling service providers and improving debt markets for financial investors.”
“For example, a competency in electronic product collection is attractive to a firm seeking to expand or acquire capabilities in reverse logistics. However, in instances where the e-cycler is reselling parts or remanufactured products, they also must understand forward logistics capabilities, such as customer service, merchandising and retail elements relating to the target customer base.”
“E-cycling is a fast-growing sector that should continue to attract healthy interest from domestic and foreign acquirers. Strategic and financial investors have access to capital, and competition for attractive assets will support healthy valuations for willing sellers. It is expected that favorable long-term demand prospects, supported by government regulation, significant increases in e-scrap volumes and further investment in the recycling ecosystem, will continue to drive substantial M&A activity in 2013 and beyond.”
For more information about electronic waste recycling please contact:
www.EwasteWiz.com