With the introduction of flat screens and HDTV, Americans are expected to toss over half a billion analog TV sets and computer monitors—containing thousands of tons of lead and other persistent toxins—in just the next three years.
This fact, combined with the momentum of e-waste legislation at the state level, means a new (big fat) liability has reared its ugly head on electronics companies’ balance sheets.
A couple of weeks ago I blogged on the recent passage of e-waste legislation in Washington State. This week’s edition of Business Week covered the issue too, mostly by patting Hewlett-Packard Co. on the back for being an industry leader on the issue (HP was involved in helping draft and pass the Washington legislation). HP believes a proactive approach to e-waste will translate to bigger profits and a wider range of product offerings. Love all that.
The article goes on to expose those companies and sectors that are dragging their feet —notably the TV sector (and, oddly, Apple Computer, counter to their progressive image). Here’s the passage that struck me most:
“But manufacturers have many concerns, including the fact that take-back laws such as Maine’s allocate costs based on the weight of the junk consumers return. Consider the implications for big picture tubes: A company like LG Electronics, which owns the Zenith brand, could end up being responsible for heaps of old Zenith TVs, even though LG’s market share is relatively small. And IBM, which has abandoned the PC market, might still be forced to recycle millions of machines bearing its logo. “They’re really discriminating against legacy manufacturers,” says coalition spokesman David A. Thompson, director of Panasonic Corp.’s Corporate Environmental Dept. “New market entrants have no waste stream. They’re getting a free ride in Maine and Washington.”” (emphasis added by me)
How much do you want to bet that when LG bought Zenith (or whatever company owned Zenith at the time), there was no line on Zenith’s balance sheet that said:
“Long-term liability: toxics installed in millions of homes; cost unknown and potentially enormous.”
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And how much do you want to bet that the next time LG—or any other growth-by-acquisition minded electronics company—goes on a buying spree that it’ll be looking to put a number on that liability? If it doesn’t, then someone ought to be fired. All of the sudden what looks like a great deal could be a complete lemon.
And how does a would-be acquisitionee lemon-proof its balance sheet? Put safety first by getting rid of toxics in its products, and quick.
And how does a savvy investor in the high-tech market reduce risk in their portfolio (while likely also increasing returns)? Dump the stock of companies that aren’t taking the toxic liability issue seriously.
My guess is that HP saw this way in advance, and they’re spinning what could have been a huge liability into a market advantage. Well good for them. It’s a start.
This is part of why I love the market—it’s incredibly dynamic and responsive. And we as a society have both the ability, and the responsibility, to make it fair–to make it work for us, and not against us.
Last observation: one flaw in using component weight as the factor in allocating costs—if you’re a company producing an electronic with fewer toxics in it, you’re penalized the same as a competitor with similar product that’s highly toxic. Hopefully Washington can still design its program in a way that measures what matters. That is, it should allocate costs based, at least in part, on the actual toxic burden, and not just the overall weight of the components. (Anyone know any more about this?)
(And incidentally, I find it ironic that the legacy manufacturers are saying that the new entrants are getting a “free ride“–isn’t that what the legacy manufacturers have been getting for the past 50+ years?)
Thanks to EdP for alerting me to the article.