Computer recycling business to expand |

Computer recycling business to expand

Matt Slagle

DALLAS (AP) – Only about 10 percent of computers, cell phones and other electronics gadgets get recycled, industry analysts say, with the vast majority either collecting dust or leaching toxins into landfills.

While it’s a growing problem, Austin-based Newmarket IT founder and CEO Jeff Zeigler also sees a huge business opportunity.

The private company said Tuesday it has won $50 million in funding from equity firm Catterton Partners to help it expand in the computer recycling market, which Zeigler said is a $1.5 billion industry that’s growing 45 percent annually.

The computer recycling business has been fragmented so far, with hundreds of companies vying for a piece of the industry, said Gartner analyst Frances O’Brien.

The International Association of Electronics Recyclers, an industry group, estimates there are about 400 mostly small companies in the U.S. electronics recycling business.

“The market is so fragmented that it’s hard to identify sizable competitors,” Zeigler said. “Our biggest challenge right now is market awareness for our industry and our services.”

That market is shifting, and demand for larger-scale services is expected to grow significantly as states and municipalities regulate the disposal of so-called “e-waste.”

At the same time, major manufacturers including Apple Computer Corp., Dell Inc. and Hewlett-Packard Co. have launched recycling initiatives of their own.

Much of the work involved in refurbishing or recycling old systems, however, is outsourced to companies such as Newmarket, which has contracts with Dell and other manufacturers.

“The manufacturers have realized they have the capability to do this and make money at it,” O’Brien said.

Newmarket began in 1999 as a computer leasing company. But the focus soon switched to recycling as industry demand for leased PCs slackened during the dot-com bust.

The company now makes money by fixing up and wiping clean used equipment from corporations and then reselling it, mainly to corporate customers.

Aging or broken systems are disassembled for spare parts or their raw materials at processing plants in Richmond, Va. and a 120,000-square-foot former Dell manufacturing facility in Austin.

Newmarket said it will use some of the $50 million, which it is set to receive Aug. 8, to open new facilities in Reno, and somewhere in the Midwest later this year as part of a national expansion.

Newmarket also said it has tapped Jake Player, the former head of Dell’s Asset Recovery Services, to be president of the company.

Even with companies like Newmarket, there’s still a long way to go in an industry where far more systems are built than recycled.

For now, Newmarket handles laptops, desktop PCs, corporate servers and peripherals such as monitors. Zeigler said the goal is to expand into more consumer-oriented products like cellular phones and even video game consoles.

Zeigler said Newmarket is able to process about 3,500 machines daily at its Austin facility, which equates to roughly 1.3 million per year.

Nearby Dell, meanwhile, shipped 37 million PCs in fiscal year 2005, spokeswoman Caroline Dietz said.

“There’s a huge gulf between units coming in and units coming out,” Zeigler said. “It’s a huge opportunity.”

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