Taking out the tech trash

Touring the plant at Materials Processing Corp. is like watching Santa's workshop in reverse.

Workers at the Eagan-based facility disassemble a personal computer in 10 seconds. A giant shredder turns circuit boards into bite-sized chunks that workers shovel into giant bins for recycling. Forklift operators in green and blue jumpsuits create mountains out of boxes stuffed with cables, keyboards, cell phones, TVs and computer screens.

If you've ever wondered what happened to the laptop you dropped off at Best Buy or the old TV you hauled to your curb on recycling day, chances are it ended up in a graveyard of gadgets just like this.

For companies such as Materials Processing Corp., known as MPC, Americans' unending need for electronics means growing business.

MPC collects all manner of electronics from businesses, municipalities and consumers and doesn't put a single scrap into a landfill. More than 95 percent of the aluminum, steel, copper wire, precious metals, plastic and glass gets recycled, and the other 5 percent gets turned into fuel at renewable energy plants, according to MPC.

"We don't own a single dumpster," said Todd Schachtman, MPC's president of global business development, highlighting a point of pride for the company.

Minnesota's laws have put the state at the forefront of the electronics-waste, or e-waste, movement. It has been illegal to throw away TVs and computers since 2006, and new regulations added in 2007 put the onus on electronics manufacturers to pay for recycling. The state now has more than 200 registered collection sites for consumer electronics, according to the Minnesota Pollution Control Agency.

MPC processed more than 20 million pounds of e-waste last year, a sevenfold increase from late 2006, when Schachtman and business partner David Kutoff, the CEO, bought the company. MPC got its start as a spinoff of Control Data in 1983. The number of employees has grown from 19 to 75 to handle the explosion in the electronics waste stream.

In 2007, MPC was overwhelmed by the unexpected number of consumers who showed up -- waiting for hours to drop off their electronics -- for what was supposed to be a three-day event at the Mall of America. The event was shut down early.

But MPC hasn't been immune to economic downturn. Its clients pay 15 cents to 35 cents a pound, depending on the material and category, for MPC to haul off and recycle the no-longer-needed electronics. But part of MPC's fortunes are closely tied to the price of copper, steel, aluminum and other metals.

Unlike scrap companies that can warehouse materials while waiting for market prices to go up, MPC sells its de-manufactured materials to other companies that rely on a steady stream of metals to make their own products.

When the bottom dropped out of the commodities market for base metals in late summer and early fall, MPC raised its processing charge 2 to 5 cents to help offset the decline. It also put off capital expansion plans, including a new processing facility it had hoped to open by now in Philadelphia. The company has four other collection centers across the United States in Baltimore, Chicago, Memphis and Tampa.

"Right now the economics of the business are such that the operational side has gone up a lot, but the cost of doing business has gone way up, too," Schachtman said.

Despite taking a hit from commodities in the third and fourth quarter, revenues last year increased by 81 percent, and MPC, while not giving specific sales numbers, expects them to double this year.

The main reason is that Schachtman and Kutoff are on something of an evangelical mission to find clients big and small, and to keep toxin-filled electronics out of landfills and out of third-world countries in Asia and Africa. Their clients include Hennepin County and Border Foods, which sponsored a deal where Pizza Hut deliveries also came with a postage-paid envelope for consumers to send their cell phones to MPC.

MPC is one of 32 companies that is certified by the Basel Action Network, a watchdog group named for the Swiss city that sponsored a treaty aimed at stopping developed countries from dumping toxic waste on poor ones. It also has two ISO certifications that require companies to adhere to strict environmental policies and quality management programs.

Keeping data private

Companies are so concerned with protecting their data that they routinely spend up to $15,000 to audit MPC and the companies with which MPC does business.

"It's good to know at the end of the day we can rely on them," said Jason Todd, environmental program leader for LG Consumer Electronics, which has been working with MPC since summer to recycle mobile and handheld devices, including cell phones, GPS systems and PDAs. "We don't have to worry about where everything's going. It's being done responsibly."

MPC said it has recycled about 17.5 tons of cellular scrap for LG to date -- including 120,000 cell phones, 1,500 pounds of lithium ion batteries and 8,000 pounds of power adapters.

Commercial real estate company Welsh Properties recently teamed up with MPC to provide a free e-waste collection to tenants at all of its 200 office buildings in the Twin Cities. For Welsh, it's an added service at a time when the company is fighting to attract and keep businesses.

"It took me all of about 5 minutes to decide this was an absolute must-do," said Mark Parten, senior vice president of property management for the Minnetonka-based company. "It's another way to provide a convenience service for our customers. They have junk sitting in their back rooms and offices. It's just one less thing for them to have to worry about."

MPC also sees potential in its Reboot store, a retail outlet at its Eagan headquarters that sells refurbished flat-panel TVs, laptops, desktop computers and plenty of cables and other accessories.

Schachtman said 99 percent of the items MPC collects from consumers are at the end of their lives. But 10 to 15 percent of what gets collected -- most of it from businesses that are upgrading, moving or going out of business -- still has value and shows up on shelves at Reboot.

MPC quietly launched an online site for Reboot in October. It hopes to turn the store from the dominion of techno-geeks looking for hard-to-find parts into something with broader appeal for families and small businesses looking for a good deal.

Reboot's sales increased 70 percent in 2007 and 45 percent last year, something that helped minimize the punch from the commodities market, Schachtman said.

The company projects sales can increase to $45 million to $55 million by 2014, a six-fold increase from today, through acquisitions and expansion into new markets.

Jackie Crosby • 612-673-7335