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Sony Likes The Yield From Its Junk


Outside Japan's borders, Sony Corp. (SNE) has never been in the vanguard of recycling. In the U.S. it has long trailed high-tech manufacturers such as Hewlett-Packard Co. (HPQ) and Dell Inc. (DELL)—partly because Sony must contend with a bewildering array of consumer products while the two U.S. giants deal mainly with PCs and printers.

So environmentalists were impressed in mid-August when Sony announced a recycling scheme that dwarfs rival programs in scale. But as Sony executives now explain, the objective wasn't simply to paint itself green. An internal Sony study, authored by a curious employee, showed the company could actually make money off its discarded wares. "We believe it can pay for itself over time," says Rick Clancy, senior vice-president of Sony's U.S. electronics unit.

The aim is to process enough Sony-brand electronics castoffs to offset, pound for pound, every new product the company sells annually in the U.S. "If ore refiners can make money, then recyclers should be able to make even more on the richer waste electronics," Clancy contends. Waste Management Inc. (WMI), Sony's partner in the recycling plan, already makes money selling materials such as copper retrieved from e-waste. In the future, Sony will get a cut. And while Clancy expects up-front costs to be "significant," Sony will try to make money without forcing consumers to absorb the cost.

It won't be easy. Sony products run the gamut from PlayStation game consoles and video cameras to flat-panel TVs and laptops. To prod consumers to empty their closets of old gizmos, Sony will have to raise awareness and make recycling a lot more convenient than it is today. It must come up with clever ways for consumers to get their used gear to the 75 drop-off centers Waste Management hopes to have ready in 18 states when the program kicks off this month. That number should double next year, and eventually top 1,000 locations that will take used Sony products for free and handle rivals' brands for a fee.

SOARING COPPER PRICES

The fact that Sony is treating recycling as a business, not a money pit, marks a turning point for the industry. For years tech companies ignored environmentalists who complained about growing mountains of electronics gear decomposing and oozing mercury, lead, and other poisonous metals in U.S. landfills. The picture will get uglier in coming years as consumers burn through billions of cell phones and other handheld gizmos and swap their old bulky picture-tube sets for flat-panel TVs. Pressure to solve the problem is mounting as more and more of this e-waste gets shipped to China and other poor countries, where it is often dismantled under dangerous conditions. That's one reason a handful of U.S. states have begun mandating "take-back" programs.

But states, industry groups, and companies also spar over how to collect junked devices and who should pay. Some counties in Minnesota charge consumers for curbside pickup, while California requires retailers to add a $6 to $10 fee to the price of all new TVs, laptops, and portable DVD players. Maine and Washington collect recycling fees from tech manufacturers.

Executives who are pressured to recycle complain about the lack of federal rules for dealing with anomalies such as "orphan products" from defunct brands. A 2005 study in Florida turned up 111 brands of TVs, 295 of PC monitors, and 221 of desktops among the e-waste. Sony could use an image boost from recycling. Since last year it dropped from No. 5 to 14, the lowest rank, on Greenpeace's Guide to Greener Electronics. But it's the treasures in trash that are really driving the new plan. Copper is currently selling for upwards of $7,000 a ton, three times the price in 2002.

By Kenji Hall


Silicon Valley State of Mind
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