Ghost Weight Interview with Bob Erie
Ghost Weight Issue Poses Challenge for Recyclers, Manufacturers and Policymakers
In 2014, I had the opportunity to interview with Bob Erie, CEO of E-World Online and E-World Recyclers with respect to the vexing issue of ghost weight as it pertains to e-waste and electronics recycling, a challenge the industry is still facing. This topic is real significance to society's efforts to help divert old electronics from landfills and responsibly recycle.
(Note: In 2015, Bob Erie, according to press release, "was criminally indicted in December of 2014 by a Grand Jury for conspiracy, trafficking in counterfeit goods, falsifying records, and lying to the government.
He was subsequently arrested, released on bail, and pled guilty to the charges. The case is still pending a final judgment.")
Q: Does e-Stewards or R2 certification ensure that a recycler isn’t reporting ghost weight?
A: Unfortunately I am not aware of any regulatory requirement within the e-Stewards or the R2 certification that will ensure a recycler is nor reporting ghost weight. While both programs have mechanisms designed to track some type of mass balance system (adding up the weight shipped out of a facility - theoretically should equal the weight shipped into a facility) that mass balance system has no cross reference of how much of that weight was sold to, or allocated toward, an OEM’s responsibility as it pertains to Extended Producer Responsibility (EPR) laws or state programs.
It’s also critical to understand exactly what “ghost weight” is. The term Ghost Weight doesn’t mean weight that never existed, nor does it mean the weight was made up or fabricated.
Let’s take a hypothetical situation:
- An OEM approaches a particular recycler to purchase “program weight” or “qualifying pounds” for a particular state. He needs 5 million pounds to meet his goal
- The recycler he approaches is R2 or e-Stewards certified, and he believes he can meet that request for 5 million pounds
- That OEM is simply looking to buy documentation stating that the recycler received, processed, and recycled the 5 million pounds of CED’s (covered electronic devices) that this OEM needs to meet his responsibility in that state.
- That recycler sell’s the weight by providing a paperwork trail, or documentation, to that OEM.
- This documentation shows the recycler received and processed 5 million pounds.
- The manufacturer pays the recycler for the 5 million pounds and everyone is happy, right?
WRONG! This is a formula for disaster and dishonesty and leaves many questions unanswered. Such as how does that manufacturer know:
- Where did the 5 million pounds come from?
- Was it all CED’s as defined by that state?
- Was it all recycled?
- Did it all even come from that state?
- Where did it go?
- Did the recycler sell the 5 million pounds to another OEM after he sold it to the first OEM (Double Dipping) or “reselling” the weight twice?
- Maybe he sold it 3 times?
- How do the OEM’s and/or State Program’s know that the weight was even processed?
- Did the recycler sell the weight to an OEM, then turn around and sell it to another recycler?
- Did that second recycler sell the same weight to another OEM?
I think you get the picture by now. The only way to minimize this threat is to have a software program which tracks all inbound and all outbound materials from its original source, all the way through the dismantling process, and out to the downstream vendors- and that’s exactly what the MITS program does. MITS has the largest unified network of collectors and recyclers in the U.S. and all of them are using E-World’s proprietary software, E-MRG Software, to input their data. E-MRG Software is the only platform that currently compiles all the data from over 20,000 drop off points, ten thousand collectors, feeding 42 facilities in 26 states, and they are all entering data into one portal.
Q: Do OEMs even care if recyclers claim ghost weight as long as they meet their EPR requirements?
- When a state program goes into effect, in most states, the recyclers can no longer charge for their recycling services.
- Those recyclers now have to deal directly with the OEM community in order to get paid.
- The vast majority of manufacturers are simply looking for the best service, at the lowest price.
- The lowest price does not necessarily mean the “best service” and many times – just to get the business commitment from the OEM group – recyclers will commit to pricing that is impossible to sustain.
- LME market prices change all the time, and so do the material streams. While a low price may work when collecting computers (because of the high residuals and commodity values) that same price won’t work for the CRT industry.
As you probably know, CRT glass is being found all over the country with tens of millions of pounds of glass abandoned. Why? The reason is simple. The pricing being offered by recyclers for EPR programs is ultra-competitive. To get paid, you have to have an OEM willing to pay you, and all of the OEM’s want to pay as little as possible. This has driven standard pricing down, just to get the materials. Truth is that the recycler is not getting paid enough money to properly dispose of the glass- run the numbers and you see it’s impossible. It’s not necessarily that these are bad recyclers. They need the materials to keep their doors open and do the work. They take the business at a lower price, and they try to make up it in critical mass. More CRT’s means more plastic, copper, steel, etc. When the commodity market prices drop – like now – there simply is not enough money to be made out of the residuals to continue to operate given the low prices they’re committing to manufacturers.