Transcript How to write vendor contracts 6megs

Good Point Recycling
NERC March 2004
How to write vendor contracts so that they include proper
end-of-life management criteria
Robin Ingenthron
Good Point Recycling
Middlebury, Vermont
www.retroworks.com
Northeast Recycling Council
www.retroworks.com
Middlebury, VT
Good Point Recycling
NERC March 2004
Session Goals:
• Making an educated procurement
1) Understanding the basics behind world demand for
used electronics and scrap
2) Understanding how supply and demand affect your costs
3) Understanding your own supply, and what could or should
happen to it
4) Considerations for evaluating bids (ie demand) from multiple
recycling vendors
5) Contracts and Procurement
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NERC March 2004
Meanwhile
• World Demand for Electric and
Electronic Devices is Rising
China’s copper demand
has compounded at 20%
per year for the past 4 years.
– Disposal and mining
• vs
– Reuse and recycling
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NERC March 2004
Example: the CRT Monitor
• US demand: 50M monitors per year
• Chinese demand: 50M monitors per year
• India demand: 50M monitors per year
• % Made in Asia rising every year
ferrous
copper
lead
silica
plastic
USA secondary (used)
market for PCs is 1:3.
Asia is 3:1.
alum
other
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NERC March 2004
Cost of Consumption
Gorilla and orangutan extinction is driven by electrics metal mining.
One Copper mine in Papua New Guinea dumped 80,000 Tons Per Day of
Cyanide tailings into the OK Tedi River from 1990-2000 – due to reopen in 2004.
USGS – At 1990 rate of consumption, all known copper reserves will be
exhausted this century: Ocean mining for copper to begin in our lifetimes.
USA Model? 95% from federal lands, $5/acre, 14/15 largest Superfund sites,
bankrupts Superfund. GMA 1872 - Became World Bank standard in 1980s.
Hard rock mining produces 45% of all toxics produced by all USA industries.
E-Scrap is 300% richer in copper and other metals than mined ore. Recycling
produces a fraction of the pollution from mining.
Gold mining releases more mercury than mercury mining and
disposal combined!!! www.retroworks.com Middlebury, VT
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NERC March 2004
Chinese demand in particular drives recycling and mining
1. Electric and electronic appliances “made in China”
2. Chinese “New Deal” scale infrastructure development
3. Asia #1 in per capita consumption of gold & platinum
(the only materials which the West does not consume most of)
Mining nightmares in Borneo, Chile, Congo, Philippines, Turkey, etc.
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$$$?
NERC March 2004
Basic Process: Triage for value
1)
Can it be reused? 5% material = 50% of income
- e.g. 17” monitor tested working, $30
$?
2) Can it be repaired? 15% material = 30% of income
- e.g. white box PCs, repairable monitors, $5 each
$
?
3)
Can it be recycled? 75% of material = 20% of income
- gold, copper, aluminum, steel, plastic, pennies per pound
4)
Disposed (incl. contaminants)? 5% material = LOSS
- Wood debris, cable casings
•
All Income combined = 1/3 of collection and operating cost
?
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NERC March 2004
Destiny of materials at Good Point Recycling: 2.5M lbs since 2001
Service and Resale
Wholesale ReUse
Wholesale Repair/parts
Scrap (42% lead glass)
Residue
Glass Smelters
Plastic Recyclers
Gold, copper, aluminum other metals smelters
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Digital Scrap
• Over 1,000 parts requests per day via internet parts
exchange services (tradeloop.com, pricewatch.com, etc.)
•
http://www10.tradeloop.com/tlTF2/pgSummary.cfm
• Contact with over 200 international repair shops via
exporters.com.sg, alibaba.com, globalrecycle.net,
recycle.net, etc. http://www.exporters.com.sg/members/myshowroom/
• Sales of parts and refurbishment on ebay.com
•
www.ebay.com
• Scrap copper, alum, plastic sold directly to end users
•
www.globalrecycle.net
The internet has completely changed the secondary parts and scrap market during
the past 8 years, lowering the barrier to entry into technical and export markets.
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NERC March 2004
Market Forces ~ Recycling Costs
Next 3 Slides:
-USA costs currently (1000 monitors)
-USA costs with 1900 copper prices
-USA costs with Chinese labor rates
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NERC March 2004
Overall USA Monitor Management
$ spent and earned per 1000 monitors
1500
1000
500
0
-500
Copper revenue
Other material
revenue
25% monitor resale
Demanufacturing
-1000
Repair Labor
-1500
Scrap handling
-2000
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Middlebury, VT
Most demand
for used is overseas
Good Point Recycling
NERC March 2004
Possible USA Monitor Management
$ spent and earned per 1000 monitors
4000
3000
2000
1000
0
Copper revenue
Other material
revenue
75% monitor resale
Demanufacturing
-1000
Repair Labor
-2000
Scrap handling
If copper and lead returned
to 1900 prices, and monitors were
repaired at 75% rate
-3000
Countries with high reuse and no mining subsidies have the advantage
in scrap sales. Countries with high reuse and “free” software have the
advantage in reuse.
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NERC March 2004
Overseas Monitor Management
$ spent and earned per 1000 monitors
3500
3000
Copper revenue
2500
Other material
revenue
75% monitor resale
2000
1500
1000
500
No mining subsidies, and 10%
technical and handling labor cost
Demanufacturing
Repair Labor
0
-500
Scrap handling
-1000
Countries with high reuse, no mining subsidies, and low wages are the winners
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NERC March 2004
The good, the bad, and the ugly exports
Scrap Recycling
Toxics Along for the Ride
Repair & Reuse
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NERC March 2004
Struggle to keep recycling from embarrassing itself
REALITY: If USA exports everything, we send 1/3 reusables,
1/3 recyclables, and 1/3 Toxics Along for the Ride.
REALITY: if USA exports nothing, we destroy reuseables (and
they can’t afford new); they mine to replace the recycled metals,
and mining produces even more toxic harm than recycling.
SOLUTION: Setting a Higher Standard. USA processing,
limited exports (tested equipment, copper scrap), simple tests (like
CRT Glass Test); market development to promote best practices;
(funded) state processing contracts with restrictions and
incentives; etc.
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NERC March 2004
Understanding your own supply
1) Pristine takeouts, off lease equipment
- you can deal with anyone directly
2) Picked over Junk, Obsolete and burnt
- you should insist on domestic processing
3) “I dunno”…Mix of good, bad and ugly
- you should deal with USA company with capacity to
separate, process and market, and get documentation
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NERC March 2004
Understanding your own supply
1) Pristine takeouts, off-lease equipment (Reuse material)
Highly Sorted Working and repairable monitors, P2s+, cords,
peripherals, cartridges
positive revenue
dollars per item (not pennies per pound)
high overseas demand, with incentives to hide it from tariff
collectors and anti-gray-market enforcers
Working monitors
-No screen damage
-No VGA
-No Apple
-Make, Model, COM,
-Year, other tech details
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NERC March 2004
Understanding your own supply
2) The Dregs:
• Cherry-picked material,
TVs, obsolete equipment,
residue, shredded or
baled material.
• Damaged CRTs
• Pennies per pound
• Overseas demand based
on copper, gold and
aluminum content
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NERC March 2004
Understanding your own supply
• “I don’t know”: Then make sure the company
you select has capacity to handle either type
of E-Scrap.
Working monitors
“Crapple”
“We’re switching to flat screens”
One fellow insisted his 1990 public school
Stuff “works as good as when it was new”.
Another commercial client insisted that working monitors, replaced by flat
screens, must be recycled/destroyed here in the USA.
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NERC March 2004
4 Simple Due Diligence Tests
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Glass recycling records
Gold-bearing scrap records
Sample manifests (declared reuse items)
Employees or capital investment per ton
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NERC March 2004
1. CRT Glass Test - Legitimate USA recyclers must be able to
show where the LEAD (non-repairable glass) goes.
Credit: www.ban.org
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NERC March 2004
2. Printed Circuit Board (PCB) Gold Test (DRAFT)
Nasty recycling (and nastier mining) practices. We do all Printed
Circuit Boards domestically.
Q: Will this lead to more mining?
A: Gold mining is maxed out already
See March, April 2004 National Geographic for environmental
impacts of gold in Asia
Reuters: chinese miner
BAN: chinese circuit board / gold recycler
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NERC March 2004
3. Truth in Exporting Test - Legitimate bill of lading shows
make/model/voltage/COO/condition.
Curiously: terrific export prices offered by this vendor, but every
sample photo sent includes a carton of cigarettes…Hmmm.
Dual books – purchase orders could include high-end equipment
(e.g. submarine tracking devices) hidden in the scrap.
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4.
-
NERC March 2004
Employment / Capacity Test
How many tons did the company
handle last year?
How many employees per ton?
If fewer employees, how
much automated processing
equipment is in place?
Logistics - Does smaller vendor have
records and signed agreement
with larger vendor
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?
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Good Point Recycling
NERC March 2004
Enforcement – defrauding a state contract
is more than a fine
• Violation of Basel puts vendors in fear of …
um… the United Nations Police (?)
• Violation of a state/federal contract puts vendors
in fear of the Attorney General (so long as the
AG can understand your contract)
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Procurement Goals
NERC March 2004
• Competition: write the RFP so that at least 6 companies can bid on it (3
won’t show up). If there are fewer vendors in your region, you may have
to lower your standards.
• Apples to Apples: establish guidelines to compare incoming product and
markets. (Commercial P2 hard drives are different from Public School
Mac LC2s).
• Perspective: 12 pages is too long for a one-day event.
• Economy of scale: Volume lowers cost, low costs encourage
participation. The perfect may be the enemy of the good.
• Bigger Contract, Higher Expectations: Buy off of existing
contracts (state, EPA, Dell, etc.) which have successfully
imposed high standards and follow-through/evaluation.
(“Recycler agrees to use markets identified in state bid XXX
unless Host is notified in advance”)
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Shortcuts / ROTs
NERC March 2004
• KISS: Don’t make it more difficult than the AG’s office can
understand
• For first events or sales, establish ex-post-facto follow-up
guidelines. “Recycler agrees to provide copy of bill of lading or
shipping manifest for any trailerload or export container with
items recovered from Host”. Document follow up visits (or
make them yourselves).
• Glass Test Etc. “Recycler will fax a copy of each shipment of
processed CRT glass, PCBs, etc.”
• Play multiple vendors off each other might be more credible
threat than to reissue RFP (only if logistics allow).
• Tax primary smelting - take back the federal subsidies to
mining states at the point of consumption
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Good Point Recycling
NERC March 2004
False Comfort
• ISO 14000 lets you do ANYTHING so long as you
document and improve. (You may feed the CRT glass to
babies so long as you document it and feed it to fewer
babies each year).
• California gold rush contract – 68 cents/lb. Nice if you can
get it, but would crush voluntary recycling if left unfunded.
• PA County RFP - 28 pages for 1-day event
• EPA ID Number provided… Superfund sites have EPA ID
numbers.
• Membership in organizations indicates spare cash, not
much else.
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Good Point Recycling
NERC March 2004
HOTLINKS AT www.retroworks.com
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earthworks.org
mpi.org.au
USGS.gov
moles.org
ban.org
copper.org
www.antigraymarket.org
• www.minebox.com
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