Beyond Cartridges: A New Profit Center for Recharger?

RECHARGE asia Magazine – September 2007

Beyond Cartridges: A New Profit Center for Rechargers?
by Art Diamond, DRC, and Alwin Morgenstern, freerecycling.com

OUTSIDE THE BOX

The outlook for cartridge rechargers is getting gloomy. Profits from black toner cartridges are growing thinner as the cost of oil drives toner prices upward. Competition is getting fiercer as OEMs adjust their prices downward, become more aggressive in enforcing their intellectual property (IP) rights, and develop more complex, encrypted chips. Kodak’s reduction of the price of ink jet ink (by 50%) is another threat to the refillers.

It seems to me that rechargers around the world would welcome another profit center that is compatible with their current business operations. Therefore, this article is being written as the first in a series to expand the recharging operation into one that will be capable of mining cash from a mountain of ink jet ink cartridges, unwanted CDs, DVDs, toner cartridges, and cell phones.

Remember the R&R trade shows that we produced in the 1980s and 1990s? The initials stood for Recharge and Recycle. Recycling polycarbonate resin, in my mind, represents a good opportunity because it is among the most expensive, retrievable plastics. Pure, virgin resin, for example, normally sells for $3.00 to $5.00 per pound, depending upon volume. A sustainable collection program is the key to making money on recycled polycarbonate (PC). The collection system described in this article gives rechargers a means to send all of these waste materials to one collection center.

I don’t know what the payment would be for this amount of metalized PC resin, but any money is good money. And, if the PC collection box brings in a new customer for ink or toner cartridges, then it becomes a valuable “reverse marketing” sales tool as well. My advice is to look beyond the cartridge to expand your business. Or, putting it in the most common terms, “Think outside the box!”.

A PRIMER ON OPTICAL STORAGE MEDIA
Optical storage media comes in two popular families: CDs (Compact Discs) and DVDs (Digital Video Discs, or Digital Versatile Discs). Depending upon the type, CDs have a storage capacity of up to 700 megabytes (MB) and DVDs up to 8.5 gigabytes. The new DVD formats such as Blue-Ray and HD-DVD have even higher capacities. Optical media are used mostly for storing computer data, to distribute computer software, music, movies, and other pre-recorded content.

Within each family, there are three types: Recordable, Re-writable, and “Stamped”, or “Pressed”. The last type is the most common, representing the pre-recorded music or video content most consumers are familiar with. For these discs, the actual data content is physically molded into the disc and cannot be changed. Initially, all optical discs begin as a flat, clear, PC substrate made using a precision injection molding technique. The PC must be optical grade and the manufacturing conditions are critical to the eventual electrical signal characteristics of the playback device. Extensive development has gone into the coding and error-correction systems within the data and the recorder or playback device to minimize the effect of handling damage (scratches, fingerprints, etc.).

For CDs, the substrate is 1.2mm thick and the actual data pattern is either “stamped” into the surface, or, in the case of recordable and re-writable formats, a spiral groove pattern is embossed into the “blank” substrate. This allows the recorder’s laser to stay “on track” while the data is written. The data is represented by a complex pattern of oblong features (pits) and the space between the pits (lands). Recordable discs use a spin-coated abatable dye to create the pits and lands in response to a laser beam, and re-writable discs use a complex metallic alloy, applied via sputtering, to create a layer that responds to a recording beam by changing its phase (either amorphous or crystalline) and therefore the reflectivity of the read back signal. The discs can be overwritten with new data since the phase change is reversible.

DVDs employ much the same principle, but actually contain two substrates each of 0.6mm thickness. The layers are bonded together and each can contain data. For most DVDs (single-sided), the second substrate is actually a “dummy” and contains no data. For Dual Layer DVDs, the second substrate is also a “dummy”, because the two layers exists on the same substrate. Finally, it is possible to have both double sided and dual layers DVDs.

Above the recording layer, all discs contain a sputtered reflective layer to provide a path for the returned beam. These are either aluminum in the case of “pressed” discs, and silver alloy for recordable discs. Gold is used in some high-end CD-Recordable discs because it enhances the archive life of the recorded data considerably.

Finally, above the reflective layer is a UV-Curable lacquer sealant to resist moisture, and then a printed label applied via conventional screen printing.

freerecycling.com
A company located in Laguna Niguel, California is launching a highly specialized plastics recycling operation that should be of strong interest to ink jet cartridge remanufacturers who want to expand the scope of their business.

The principals of freerecycling.com are Alwin Morgenstern and Ursula Schoeneich who have served the imaging industry for the past 18 years under the banner of Service4U GmbH in Germany. They settled in the United States in the year 2000 and continue to collect and sell ink jet cartridges to a base of close to 20,000 customers in the United States alone. As the attached drawing illustrates (Photo No. 014) their customers are scattered across 50 states, Canada and Mexico.

freerecycling.com, LLC – United States Customer

INPUT STREAMS
According to Alwin Morgenstern, “There are four main input streams for polycarbonate waste: 1) the music industry; 2) the movie and television industry; 3) offices, hospitals, and government agencies; and 4) small offices, home offices (SOHO), and private homes.”

The first two streams—music, movies, and television—usually press a larger number of discs than are actually used or sold. As a result, millions of these unsold or excess discs must be discarded in a secure manner. In most cases, they are accurately counted before being destroyed so that the number of unsold discs can be deducted from the total amount produced. This count enables the producers to determine the correct royalty payments due to performers, writers, musicians, and other contributors. “These first two streams,” says Morgenstern, “typically have fewer sources, but output much larger volumes per source than the last two. They can be expected to deliver truckload quantities of waste metalized PC discs.”

Office and home sources, on the other hand, output smaller quantities of discs and require a network of collection containers and a closely managed and maintained pick-up system. For the small package shippers, including FedEx, UPS, and the United States Postal Service, however, it is the ideal package—clean, lightweight, safe, and shipped from locations nationwide.

COLLECTION
It all begins with a unique collection container developed by Alwin Morgenstern for which patent protection has been applied. It is shown in the attached photograph. This 35-gallon, wheeled container (or waste bin) serves two functions: 1) it destroys data; and 2) it collects discs. The bin is fitted with a locking cover that has a horizontal slot in front and a vertical slot in the rear. When a CD or DVD is passed horizontally through the front slot (see Photo No. 001) all data is instantly destroyed by a series of sharp blades operating simultaneously on both sides of the disc.

Easy Mechanical Datadestruction for CD Recycling Ready for Drop In – CD collection –

The scored, scratched disc is next inserted vertically into the rear slot where it falls into the recycling bin. Because the locked cover has a very narrow width, the rear slot serves as a filter that prevents any jewel cases from entering the bin. These would contaminate the PC discs with polystyrene resin.

The bin has a capacity equal to roughly 6,000 discs. There are about 30 discs to a pound, which means the wheeled container could hold up to 200 pounds of discs. Because each disc contains a vacuum metalized layer the waste material has a low value—perhaps 25 to 50 cents per pound.

Return shipment boxes and ARS (authorized return shipment) labels are provided by the central collection facility. Each shipment box will handle about 40 pounds, which is about 1,200 CDs or DVDs.

The patented waste bins will be sold to each collection location for an estimated $345 with the recharger earning a $45 commission on each sale. Included in the price of each waste bin are a set of spare parts, tools, a lock and key, shipping boxes and ARS labels.

COLLECTION LOCATIONS
In addition to recharger businesses and refill kiosks, candidate collection locations are numerous. They include internet cafes, fast food shops, office discount superstores, big box department stores, discount hardware and building supplies centers, medical centers, bookstores, universities, office buildings, etc. 

Why should any business want a secure CD/DVD waste collection bin on its property? The answer is simple: these bins are sales tools. They attract customers who are environmentally responsible and want a secure place to dispose of their discs. That motive brings them into a shop, store, or kiosk where they can be sold any number of products, especially remanufactured cartridges.

While the price per pound paid to the individual collector may seem small, it becomes a steady, sustained income that will build up over time.

DEMETALIZING EACH DISC
At the central collection point, or warehouse, incoming discs are stored for processing either in a wet chemical or dry mechanical operation. The latter system is depicted in Photo No. 007. Here the discs are fed onto a conveyor belt where they are visually inspected by plant workers (or robotically by optical devices). Each disc is passed through a mechanical stripper, such as the one shown in Photo No. 006.

CD coating removing and recycling CD and DVD recycling production

Moving along an overhead conveyor, each disc passes an array of steel brushes that scrape off all coatings, labels, and metallic layers. The dust particles and flakes generated by this abrasion process are sucked through the metal grill bars by vacuum and transported by the air stream to a bag house collector.

Depending upon the volume of dust and flakes collected, this material might be smelted to extract the metal layer (burning off paper, dye, PC dust, etc.) and then analyzed for any precious metals (gold or silver primarily). If there is a substantial content of gold or silver, the retrieved metal can be further processed to separate out these valuable metals.

A demetalized disc is shown in Photo 004. Here, the abrasion pattern is Evident, showing where the steel brushes scraped off all outer layers to ensure that each salvaged disc is pure polycarbonate.

CD recycling
The demetalized discs are next granulated to produce a flaked end-product, as shown in Photo No. 005. This material might be called “recycled, Hi Grade Polycarbonate” or Demetalized, Hi Clarity Polycarbonate.” Polycarbonates are among the toughest and most flexible polymers known. They command the highest prices (typically, $3.00 to $5.00 per pound) in virgin form because the material is optically clear and can be used in CD and DVD production.
Recycled polycarbonate resin, however, cannot be guaranteed as optically clear, hence it cannot be used for discs, but it can be colored for use in a variety of applications, such as toys, machine parts, sunglasses or any product that needs a tough, almost unbreakable plastic and which conforms to the material specifications of polycarbonate. Toymakers, for example, can replace brittle, breakable polystyrene toys with the superior polycarbonate material that this recycling stream generates.

CD granulated to flakes – Very clean Polycarbonate

BUILDING A COLLECTION NETWORK
The ancillary benefits of this program stem first from the construction and growth of a network of collection points. As Morgenstern puts it, “This first phase will help educate consumers and increase their awareness of the importance in recycling valuable resources. In a second phase, the network can be expanded to include the collection of other recyclables.”
There is also a third phase, Morgenstern notes, which converts the collection base to a distribution base. “Because it will provide direct access to the consumer market this network could also become an important sales channel for imaging, office, and related products.”

SUMMING UP
In summary, as rechargers continue to face new and more difficult restraints on business growth and profit margins, perhaps it’s time to seek other related opportunities. Let us recall the mission of the rechargers’ “Brotherhood of Entrepreneurs.” It is to reduce, reuse and recycle manufactured products. Environmentally aware consumers, in ever increasing numbers, are getting behind these 3Rs.
The recovery and recycling of valuable polycarbonate resin from CDs and DVDs is a promising path that is compatible with the rechargers’ cause and creed. Looking beyond the cartridge into other areas for business growth, I submit that the strategy for rechargers suggested in this article might become an important part of the way forward.

Editor’s Note: If you are interested in obtaining more information regarding this opportunity, please visit https://www.freerecycling.com.

Ursula Schoeneich CEO & President freerecycling.com, LLC
SIDE-BAR
In March of 2007, Ursula Schoeneich, CEO and President of freerecycling.com, was nominated for an Excellence in Entrepreneurship Award by the Orange County Business Journal. Her firm has grown to become a major force in the cartridge remanufacturing industry, supplying empty ink jet cartridges to more than 10,000 customers in the United States alone.
According to an OCBJ article (March 5-11, 2007), freerecycling.com ink jet cartridge collection service “is free to anyone interested in getting cash back for recycling ink cartridges. Schools, nonprofits and churches are using the service as a fundraising mechanism and people can earn rebates by referring a friend to the site.”
As a core broker, freerecycling.com collects used ink cartridges from HP, Canon, Dell, Lexmark, Compaq, and Xerox printers. Ms. Schoeneich who is the wife of Mr. Alwin Morgenstern, serves ink jet cartridge remanufacturers worldwide. “With 18 years of experience in recharging and recycling, we have kept millions of cartridges out of landfills,” she declared. “Even so,” she continued, “every year more than 1 billion ink cartridges are used and thrown away, either carelessly, or because they can no longer be cleaned or remanufactured.”
Its expanded collection program now includes cell phones and the retrieval of CDs and DVDs as the firm’s latest venture.

PHOTO CAPTIONS
(In order of appearance)

Photo No.
014 A map of the United States and Alaska showing current customers of freerecycling.com for virgin ink cartridges ready for refilling
003 A wheeled trash container is fitted with two slots through which each disc must be fed. Because the cover is locked, the entry slot cannot be bypassed hence no foreign objects, or trash can be placed into the container
001 Each disc is first passed through a front slotted member that houses a mechanical data destruction device. The disc is scored or scratched so that it cannot be read
002 The scratched disc is then inserted into the rear slot where it falls into the waste bin. The narrow slot serves as a filter so that no polystyrene jewel boxes can be slipped into the container to contaminate the polycarbonate discs
007 Flow sheet for the mechanical demetalizing process
006 Discs are fed continuously from an overhead conveyor belt and vertically past an array of steel brushes that remove all metallizing layers and other coatings, labels, etc.
004 The abraded disc pictured here shows the wire brush marks formed when it passed through the mechanical coating removal device
005 Recycled polycarbonate after granulation
010 Ms. Ursula Schoeneich

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