ARCOA

Short chat with Brett Apold from Arcoa. What Arcoa does and how they can help office equipment dealers increase revenue with adding a new profit center for ITAD services. In addition we discuss what's required to start providing ITAD services (IT asset disposition)

By Michael Vosnos, ARCOA – Businesses today face numerous options and decisions in the acquisition phase of their IT assets’ lifecycle.  Myriad factors such as business requirements, the decision to lease or buy, support costs and budgetary constraints all impact a business’ decision whether to extend or shrink their overall IT refresh cycle.  Effective IT asset management is often an afterthought.  However, having a firm grasp on the real total cost of ownership over the life IT assets can yield significant cost savings and increased operational efficiency.

One of the first questions decision makers need to ask themselves is, does it make more sense to lease or buy?  Leasing is attractive to many as it offers the advantage of lower initial capital output, and often maintenance support can be included in the lease agreement.  However, the longer the lease term, the more a business will typically spend versus purchasing the equipment outright.

Purchasing comes with the advantage of ownership and the associated tax benefits of having a fixed asset as outlined in section 179 of the US tax code.  In addition to the benefits that come with capital expenditures on equipment, the depreciation of that equipment can provide significant tax savings over its life.  The downside to ownership is that businesses own the maintenance and repairs as well as their hardware.

A study done by Huntington Technology Finance examined the total cost of ownership throughout a typical three year and five year refresh cycle.  Taking into account the cost of maintenance to include software upgrades and patches, break/fix support, software development costs to support legacy systems, lost productivity when units require repair, drives become corrupted, and systems accumulate layers of software and security updates that require additional system resources and take up more drive space, the difference in total cost of ownership between a three year and a five year refresh are significant.  By hanging on to IT equipment beyond three years, where repair/upgrade costs begin to factor in on top of regular maintenance costs, businesses can end up paying for their equipment twice and by year five, these costs typically exceed the initial hardware costs.

In addition to maintenance associated savings, the study found that the typical PC laptop retained approximately 25 percent of its original value at the 36 month mark.  This residual value, if captured through a reliable ITAD vendor, can be applied to defray the cost of new hardware acquisition.  A case study based on 2,000 laptops compared the total cost of ownership between the same devices over a 36 month and 60 month period.  Over a 60 month period, the total cost of ownership for a business on a 36 month refresh cycle was $5,492,000 or $2,746 per device.  Conversely, the total cost of ownership for the business with the same devices on a 60 month refresh cycle was $6,886,000 over 60 months or $3,443 per device.

Each business will have its own unique factors and considerations that will feed into its acquisition decision making process.  However, as demonstrated above, simply “hanging on” to older equipment might not only not be in the best interest of a company in terms of operability and typically do not present the cost savings that many decision makers imagine.  It is imperative to examine the total lifecycle costs and to integrate a robust asset management plan into the decision making process that will minimize maintenance costs and capture the maximum residual value of assets.

By Michael Vosnos, ARCOA – Last month, ARCOA President George Hinkle was among a group of the nation’s recycling leaders who went to Capitol Hill to meet with Congressional leaders and Trump Administration officials.  The group’s message to leaders was that while the nation’s industrial, commercial, and residential recycling infrastructure is strong, there are some key policy areas that require adjustment in order to yield larger economic, environmental, and strategic benefits.

The recycling industry in America today touches almost every aspect of life.  Taken together, the industry has created over 500,000 jobs with $33.5 billion in wages and approximately $110 billion in economic output.  American manufacturers have come to largely depend on recycled materials as a key resource stream and access to rare earth materials used in high tech products are a national strategic priority.  Processing recycled materials requires 60 percent less energy and generates 58 percent less CO2 emissions than raw materials and 2 out of every three pounds of steel made in the US comes from scrap steel.

Despite the essential role the recycling industry plays in the US economy, some significant hurdles remain.  The group of industry leaders voiced their support for a number of policy initiatives aimed at creating greater economic and environmental efficiencies.  First among these was their support for expanded access to international markets through global trade agreements.  Specifically, they pressed their support for approval of the US Mexico Canada Agreement (USMCA) which has a direct and immediate effect on the 135,000 US workers that support recycling export to the US’s closest neighbors.

Second, these leaders sought changes to federal policy which would recognize recycled materials as the valuable commodities they are and not as solid waste.  This classification is important as it impacts the way these materials can be used, exported and traded.  Currently, recycled materials arriving in foreign countries come with a bill of lading labeling them as “waste” when they are not.  This lack of clarity in classification places significant restrictions on the use of these materials despite the fact that they are environmentally and economically preferable to raw materials.

Finally, in an effort to further spur domestic demand for recycled materials, recyclers pressed congressional and administrative officials to employ recycled materials into infrastructure projects where economically and technologically feasible.  This would include the use of rubberized asphalt in the construction of roads, plastic in guard rails and the use of rebar from ferrous scrap.

Hinkle played a key role during the assembly of industry leaders, meeting with senior staff members of Illinois Senators Tammy Duckworth (D-IL) and Dick Durban (D-IL) and Congressman Brad Schneider (D-IL 10^th District).  Last November, he was called upon to brief Senators John Boozman (R-AR) and Tom Carper (D-DE) on the environmental and economic benefits specific to electronics recycling.  And last fall, Congressman John Shimkus (R-IL 15^th District), who chairs the House Recycling Caucus, toured ARCOA facilities in Waukegan, IL as part of his briefing from Hinkle on the unique features and policy challenges relating to electronics recycling such as data security, hazardous material, and reuse capabilities.

Such advocacy efforts have already born fruit in the policy arena.  For instance, the Unlocking Consumer Choice and Wireless Competition Act overturned the 2012 decision by the Library of Congress which ruled that the unlocking of smartphones was a violation of the Digital Millennium Copyright Act.  Effectively, this gave consumers the ability to switch cell phone providers without having to replace their phones.  While consumers were elated by this change in law, what few of them realized was that it was a result largely of the lobbying efforts of the electronic recycling industry.  It is hoped that similar efforts in Washington last month will yield similar results.