Gold Standard

Jim Greenberg entered the electronics recycling business for several reasons, including the harvesting of precious metals and the re-selling of computer components.

Ultimately, however, the company he founded—Gold Circuit Inc. of Chandler, Ariz.—is enjoying its greatest growth because of the need by customers throughout the western United States to have electronic data securely destroyed.

Both electronic data destruction and product destruction services are keeping Gold Circuit’s customized shredding plant in Casa Grande, Ariz., busy to the point that a second shredding line may soon be installed to handle the incoming volume of material.

The growing importance of information destruction to Gold Circuit’s overall business was not part of its initial business plan, Greenberg admits. "That wasn’t expected," he acknowledges.

But as Gold Circuit has worked with and has broadened its customer base, the company has learned of the vital importance of the secure destruction process. "Lately, every customer in one way or another needs the cleaning of hard drives or the destruction of equipment—even if it’s only 10 percent of what they send us, they have some interest," Greenberg notes.

It is, in some respects, a long way from the company’s origins in 1991 as a circuit board recycling firm trying to maximize the recovery of gold and other precious metals.

The company started with two people and 1,000 square feet of space, and soon shifted to reconditioning and reselling computer equipment.

Even during this phase of the business, corporate clients such as financial and health care institutions began demanding that data destruction aspects be addressed appropriately.

This led to hiring additional technicians familiar with the procedures for destroying data on hard drives, a segment of Gold Circuit’s business that is still important, as the company now has 11 full-time technicians involved in such activities.

The additional technicians are needed not only because of the company’s volume increase, but also because the job has become more formidable. "A decade ago, it may have taken only a minute or two to clean a hard drive. Now, a 40-gig hard drive takes 4-1/2 hours to clean correctly," Greenberg notes. "It’s labor intensive, and you have to have the technical know-how to do it."

As do most electronics recyclers, the company conducts a "triage" process to determine whether a computer or monitor will be refurbished and re-sold, will be disassembled to sell components or whether it should be shredded.

Unlike most other electronics recyclers, however, Gold Circuit has the means to do its own shredding.

In 2001, Greenberg made the decision to move Gold Circuit into the capital-intensive segment of electronics recycling and data destruction by building a shredding facility.

Gold Circuit turned to RRT Design and Construction, Melville, N.Y., to help it build the plant in Casa Grande, which features the shredding and sorting equipment needed to safely and efficiently handle electronic scrap—including monitors and other equipment with cathode ray tubes (CRTs).

The plant includes what is called the E-Vantage Separator System, which has been trademarked by RRT and its supplying equipment companies, SSI Shredding Systems Inc. of Wilsonville, Ore., and Andela Products Ltd. of Richfield Springs, N.Y.

The shredders, combined with a series of screens and magnets, produce a variety of secondary commodity streams that are shipped to a number of different consuming markets.

With both electronic data destruction and hazardous materials disposition (CRTs contain leaded glass) leading the way, Gold Circuit’s shredding plant has been increasingly busy since it opened.

The Casa Grande plant was designed to leave room for a second shredding line should the market dictate the need for one. Apparently, that is exactly what has happened, as Greenberg says Gold Circuit is already considering such an expansion. "At the time, we thought it might be overkill, but it turns out it may be necessary very soon."

Many of the same forces driving increased document destruction needs are similarly powering the electronics shredding market.

"We run into HIPAA (Health Insurance Portability and Accountability Act) considerations with the medical industry, on hard drives in particular," says Greenberg. "And there is a certain amount of work from government agencies with equipment that has to be destroyed, and often witnessed as it is destroyed."

As the retailing and telecommunications industries have changed, they are creating their own streams of electronic information that must be destroyed. Greenberg says point-of-sale equipment such as scanners can contain hard drives, chips or other information that has to be "flashed," or erased, in order to remove proprietary information. He says handling such computer networking, telecommunications and retail equipment "are all things we’re doing that most other companies are not doing."

Product destruction is also a growing segment. "We are now doing parts of airplanes, such as electronic systems, so they cannot be remarketed or reused," Greenberg notes, pointing out that The Homeland Security Act and FAA regulations have caused a surge in this market segment.

The year 2004 may stand out as a particularly strong year in Greenberg’s mind as one that has bolstered Gold Circuit’s secure destruction business model and helped fuel the Casa Grande plant as an endeavor with a future.

"We have gone absolutely berserk," Greenberg says of Gold Circuit’s recent business activity. "It seems like almost every contract we have gone after has come our way."

The influx of work has kept the technicians and office personnel busy at the company’s Chandler headquarters, and has also provided the material to keep the Casa Grande plant humming.

Even though the Casa Grande plant receives a steady stream of equipment, Greenberg estimates that only about 15 percent to 20 percent of the computer equipment it recycles is sent there for shredding. (The rest is erased, refurbished or disassembled by technicians.)

"But I believe that percentage will go up because of the way information laws are changing," says Greenberg. "More and more customers are going to want things just shredded—they don’t want liability in any form or in any way. Shredding eliminates the liability."

The plant has allowed Gold Circuit to forge relationships with electronics recyclers and information destruction companies throughout the U.S. "We’re enjoying a lot of cooperation with electronics recyclers who don’t do their own shredding," says Greenberg. "They have had the same problem I had earlier. Ultimately, using our Casa Grande plant can get us both more contracts."

Gold Circuit also trades leads with document destruction companies. "In a lot of cases, the document shredding companies retain the customer contact and do the billing, while we perform the electronics destruction as a sub-contractor. I don’t really want to get involved in the paper shredding side, but we give out a lot of leads to those already in the business and usually get referrals back."

The fact that Gold Circuit is as much in the security business as it is in the recycling business is evident in many ways, says Greenberg.

The company issues both certificates of recycling and certificates of destruction, which are usually demanded by companies seeking information destruction.

"The security aspects of our work have increased in many ways," Greenberg remarks. "A financial institution recently sent a security team over to make sure our building was secure. We had to pass their inspection and receive a security certificate in order to keep doing business with them. They also sent technicians to audit our hard drive procedures. Many companies have conducted audits because they are very much concerned that their suppliers are doing things right."

Gold Circuit’s own employee screening now includes background checks and drug tests. "That is pretty much a requirement when you’re dealing with information," he notes.

The environmental concerns that helped spur electronics recycling are also still present. In fact, notes Greenberg, even while leaded-glass CRTs are losing market share, many of the LCD screens on laptop computers contain mercury vapor backlights, which will also require special handling.

The two markets combined should help make Greenberg’s decision to build the Casa Grande facility look like a wise one. "There are still plenty of opportunities out there," he remarks. "More people are concerned than ever have been before. No one is just tossing this equipment into the garbage. The information destruction issue in particular has produced a big awareness, which has helped our business. It has taken awhile, but customers realize they have to change the way they handle this obsolete equipment."

The author is editor of Secure Destruction Business and can be contacted at btaylor@gie.net.