Question: how many PCs are expected to be dumped in the US in the 10 years ended 2007? Answer: an incredible 500 million.
In the UK we are running at a dump rate of about 1.5 million PCs per year, and the entire European Union (EU) generates six million tons of electronic waste annually.
That's a lot of used PCs left in landfills just to keep people contented at their desktops. Worldwide, everyone agrees that the IT industry has to wake up to its environmental responsibilities.
But the question of who should pay for a greener IT industry is hotly debated, and the final shape of the UK's legislation is likely to mean tough options for the channel.
The European Commission's (EC's) answer to the problem has been to draft the Waste Electrical and Electronic Equipment (WEEE) Directive, which became EC law in February last year.
This broadly puts the responsibility for disposal with the equipment producers and sets a recycling target of 70 per cent.
The term 'producers' includes manufacturers, sellers and resellers of own-brand equipment, and importers and exporters of electrical and electronic equipment into the UK.
Confused? You're not alone. The finer details are still being clarified in each member state.
EC law is one thing, but member states clarify specific requirements and policies with respect to the directive, making it impossible to assess the impact of WEEE until this process is complete.
To add to the complexity of the situation the EC has also formulated another directive: The Restriction of Hazardous Substances in Electrical and Electronic Equipment, which states that from 1 July 2006 electrical and electronic equipment must not contain heavy metals (including cadmium, lead and mercury), or brominated fire retardants.
Manufacturers have succeeded in softening the directive, which now requires them to recycle products only on a like-for-like basis.
They argued that the original directive would have put such a serious financial burden on some firms that it could send them into bankruptcy.
This suggestion came from a report by a parliamentary committee dealing with WEEE and considering the EC's revised approach. The committee recommended that parliament accept proposed changes without amendments.
By August producers must have set up procedures to recycle all kit badged with their name, and the directive will be enforced after August 2005.
Meanwhile, the Department of Trade and Industry (DTI) is continuing its own consultations on the WEEE directive and how it should be implemented in the UK.
DTI-backed regional seminars have now been concluded and the industry awaits the second public consultation document outlining possible options for legislation.
A third and final consultation will take place in the spring before the directive is ratified into UK law in August.
Unsurprisingly, views vary on the impact of WEEE. At one end of the scale, some believe it will simply increase costs for customers; at the other end there is the fear that vendors will lock resellers into specific arrangements with their own recycling systems.
IT recycling firm RDC, a Computacenter subsidiary, which refers to its business as "end-of-life asset management", says its strategy is to make the problem go away for end-users.
"The industry is trying to get its head around the problem but no-one is really taking the bull by the horns," says Gerry Hackett, managing director of RDC.
"You can see it is beginning to work in retail, with small fees charged for removing dishwashers and fridges. The same will happen in IT, with fees factored in at the beginning of the deal."
But the recycling and refurbishing industry is full of contradictions. If it succeeds at refurbishing then it runs the risk of affecting sales of new kit; if it gives kit to charities working in the Third World it risks moving the recycling problem to countries that have no recycling industry.
Meanwhile, some recycling charities are concerned that the new emphasis on producer responsibility and falling prices will lead to less kit being available to charities.
Tony Roberts, chief executive of Computer Aid International, says: "With prices of new PCs continuing to decline, the margins for resellers in the UK are bound to decrease.
"The WEEE directive will cause a flood of second-hand machines into the market, squeezing margins further. When you look at all the costs involved, donation to charity is the most effective route."
But companies may have fewer options under the new legislation. Under the current UK plans, producers will have to remove 'like for like', meaning that if they deliver 100 PCs, for example, they will have to take away an equivalent number.
Hackett agrees this may go against pan-European vendor plans to recycle their own kit where possible, but believes it is the most flexible approach and favourable to asset-management firms such as RDC.
"The main problem is that for large orders there is the complex logistical issue of removing equivalent kit," he says. "It has to be planned and can require many visits."
Most manufacturers have been taking the matter of disposal seriously for some time but are waiting for final details of the legislation before getting to grips with its implications.
This statement from IBM is fairly typical: "IBM is currently consulting electronics OEMs on this legislation and what they should be looking at to comply. IBM internally is also taking its own advice and addressing these issues."
Will it mean they will have to add an end-of-life removal fee to new orders? According to recent research by analyst Gartner, most businesses do not take into account the disposal cost of obsolete and surplus IT equipment.
Gartner estimates that after three years of ownership, firms receive three to five per cent of the original cost, but disposal costs range from £50 to £100 per PC.
"Sale proceeds vary, depending on the quantity, method, vintage and condition of the equipment being sold. However, an important consideration is that PCs sold after four years have little economic value and still incur disposal costs," says Frances O'Brien, research director at Gartner.
Disposal costs include disconnecting the computer from the network, backing up and sanitising the hard drives, and in some cases reloading the operating system, testing the equipment and processing payments. Administration costs must also be taken into account.
To make matters worse, incorrect disposal can result in a fine. Although fines have been rare so far, the WEEE directive is expected to include increased penalties for unauthorised dumping of electrical products when it becomes part of UK law.
Firms are understandably worried about the possible bad publicity from inadvertently contravening the legislation or from handing on equipment without removing data effectively.
A survey by MIREC Asset Management highlights the lack of attention to the new conditions facing companies. It found that 89 per cent of businesses are still unaware of WEEE. It estimates that 65 per cent are failing to dispose of IT equipment in a way that complies with the new rules.
But on a positive note, nearly half of firms already have some sort of recycling policy. Forty-seven per cent said they resold or passed on for reuse old equipment.
Families and friends and charities were the main beneficiaries. Disposal agents and council collection schemes were used by 24 per cent of businesses.
What was most clear from the MIREC survey is that currently there is a state of general ignorance on environmental matters. Forty-four per cent of respondents said they either knew nothing about their company's environmental obligations or did not feel responsible for their company's compliance.
Such a finding suggests that the IT channel could have a role to play in providing services and advice as companies shape up to full compliance.
Not surprisingly, most resellers feel somewhat stuck in the middle in this whole debate, as they try to manage customers' expectations while meeting the stringent demands of manufacturers and vendors.
Phil Reakes, managing director of recycling specialist SML, believes the channel is hard done by.
He claims that resellers have a responsibility to take back end-of-life goods to keep on the right side of their customers, yet the major manufacturers will either put pressure on resellers to deal with these returns themselves, or will force them to use potentially expensive closed-market recycling and disposal schemes set up by the manufacturers themselves.
"Without some sort of control or the provision of recycling services, resellers may end up paying far more than is necessary," Reakes says.
Mike England, managing director of Bracknell-based recycling firm CKS, points out that the like-for-like take-back scheme means that one vendor may be taking back kit from one or more other vendors.
"Yes, it will add complications working out what is equivalent and then working out the most effective way of refurbishing or recycling that kit, but it's the simplest approach and it's one that we hope vendors will look to the experts to help them with," he says.
"The problem, of course, is that it may not work because, for example, manufacturers find ways of contractually washing their hands of disposal."
England says the risk to the recycling industry is that manufacturers will develop pan-European solutions that create massive one-stop recycling centres. He also notes that reuse is preferable but that there are no targets for reuse at present.
Meanwhile, in a recent policy statement, law firm Eversheds said there may be a financial impact on channel customers.
"End-users will be required to dispose of IT by making it available for collection by the producer, and EU states may provide that end-users are partly or fully responsible for disposal of pre-August 2005 goods (historical waste)," it said.
Eversheds believes it is likely that producers will enter into contractual arrangements for disposal that may mean extra costs for end-users.
But WEEE does not allow for vendors to arrange to share the cost, or for cost to be put on product prices. In addition, end-users who do not make a new purchase have to dispose of goods themselves.
The channel itself seems to be monitoring the situation cautiously. "You realise you need to take WEEE on board, but the real responsibilities are yet to be defined," says Karen Doughton, marketing manager at Midwich.
"For example, they are still qualifying who is the 'importer' if it is not the manufacturer. The government needs to sort it out."
Nigel Lomas, commercial director at TRAMS, has a similar watching brief. "We are aware of the directives and we're waiting for manufacturers and vendors to take a lead or to advise us, so it's still a bit of a grey area that needs classification," he says.
"Currently we deal with brokers who come up with residual value deals and manage removal of data; confidentiality is a very important aspect of removal."
So is there potential revenue for resellers in WEEE? Firms operating in the disposal, recycling and refurbishment business recommend that resellers approach them to develop partnerships, but also recognise that some enterprising resellers will want to get more involved in some aspects of the business.
This could include:
- Environmental consultancy.
- Asset management.
- Data security (wiping hard disks prior to disposal).
- Value recovery (offering a percentage of resale).
"There would be a possibility of revenue from WEEE if we had a relationship with a recycling broker," Doughton says. "Clearly the end-user will ask the reseller to solve the problem in many cases."
Elaine Erskine, assistant managing director at Shift F7, agrees. "There is money to be made. A large telecoms client of ours has an agreement with a recycler and gets 30 per cent of the resale value.
"Perhaps we could get that figure higher for them. Some also take the charity route. Clearly firms will be interested in a route to recycling because of the revenue, or just for good PR," she says.
Customers are likely to look for resellers with WEEE expertise, Reakes claims. "They will want resellers to be accredited, and if you are smart you will offer a take-back service," he says.
Simon Taylor, finance director at Sol-Tec, advises VARs to look to data removal. "Resellers should take this opportunity to provide further services to customers, by giving advice on what their responsibilities are and how they can recycle equipment, as well as the most important issue: ensuring data is wiped off the hard drive before a computer's disposal," he says.
Whatever happens, there is bound to be someone making money out of the implementation of WEEE. The UK recycling industry currently has a turnover of about £12bn and that figure is expected to rise to £30bn by 2018.
It remains to be seen whether the channel will benefit from this new focus or simply play a game of catch-up as vendors dictate the pace.
CONTACTS
Computer Aid International (020) 7280 0091
www.computer-aid.org
CKS Recycled Technology (01933) 411 416
www.cksgroup.co.uk
Midwich (01379) 649 200
www.midwich.com
MIREC Asset Management (01387) 723 000
www.mirec.com
RDC Technology Asset Management (01376) 504 626
www.rdc.co.uk
Shift F7 (01306) 873 900
www.shiftf7.net
SML Recycling (0118) 903 7903
www.selwaymoore.com/sml
Sol-Tec (0118) 9514 200
www.sol-tec.com
TRAMS (020) 7544 1200
www.trams.co.uk
