How Tech Dump used marketing savvy to dodge commodity price declines of recyclables

Manuel Santos was grateful last month as he disassembled a personal computer and separated the parts to recycle on one of his last days at Tech Dump's warehouse in St. Paul's Midway.

Santos left an $11-an-hour job at Tech Dump for a 40 percent raise plus benefits at a Minneapolis manufacturer.

"I'm grateful for this opportunity," said Santos, 33, who once spent several months in jail. "I am moving to a job that pays better and provides benefits for my family. I work with good people here. And it gives me a sense of value to categorize things, recycle and restore."

"We're proving that nothing needs to be disposed — electronics or people," said Tech Dump CEO Amanda LaGrange.

About 70 percent of Tech Dump employees have been incarcerated and/or treated for chemical dependency. Management creates a supportive environment and assists with housing, personal and other issues.

Tech Dump's 45 employees will generate about $2.7 million in revenue this year from refurbishing, selling and recycling 5.5 million tons of consumer electronics collected from businesses and consumers.

Tech Dump also is a survivor in the tough business of electronics recycling, buffeted by 2014-16 crashes in commodity prices that have ranged from 50 to 70 percent declines for plastics, aluminum and metals.

The company's operations have grown from an 8,000-square-foot site five years ago to nearly 40,000 square feet at plants in Golden Valley and St. Paul.

It likely would have failed if it had not started its higher-margin Tech Discounts refurbish-and-sell retail outlet in 2015 that will account for about half of this year's sales and makes money.

LaGrange, 31, was an accountant at General Mills for six years before joining Tech Dump as a volunteer director. She took over as marketing director four years ago and CEO in 2015. She uses Craigslist, e-Bay and social media to sell flat-panel monitors for $30, and laptops and PCs for $125, with a 30-day, money-back guarantee.

"It's affordable for families who want a second laptop for a school kid, or people who just can't afford new technology," LaGrange said. "Absolutely, we would have failed in 2015 if not for our growing sales of refurbished electronics. Commodity prices were too low to sustain our organization."

Tech Dump is a Microsoft-registered repairer and also has the "R2" industry-standard certification for data destruction.

Tech Dump gets more than 60 percent of its electronic goods from businesses. That tends to be higher quality than electronics donated by consumers. And it has started charging $10 to $40 for items that are hard to recycle or contain hazardous materials, such as old tube TVs.

Electronics recycling is the gritty underbelly of our everybody-has-one wired consumer economy.

The junk has to go somewhere. The worst practices result in hundreds of tons exported from the U.S. from unwitting or unscrupulous recyclers and dumped in Mexico, Asia and Africa. There is little regulation. And recycling workers and the environment often are exposed to hazardous wastes and dangerous practices.

Garth Hickle, a veteran Minnesota Pollution Control Agency professional who works with municipalities, recyclers and secondary markets, said the most recent study last week by environmental watchdog Basel Action Network that tracks e-waste found no illegally trafficked e-trash from Minnesota overseas.

The bad news is that low prices since 2014 have hurt the recycling industry. For example, Colorado-based Arrow pulled out of the Twin Cities market. Other recyclers have shuttered. Mendota Heights-based Materials Processing Corp. closed last year after it illegally stored hundreds of tons of hazardous electronics in dozens of trailers around the Twin Cities without reporting to pollution authorities.

Municipalities have had to increase payments to remaining recyclers to subsidize losses.

Entrepreneurial recyclers like Tech Dump and OceanTech of Eden Prairie focus on business markets because the equipment is newer and easier to refurbish, and they don't have to deal with old TVs and consumer products that have little to no residual value.

"They see the market trends and they invest," Hickle said. "We could use more of that."

Tech Dump is one of about 275 collectors and recyclers in Minnesota of electronics that handle more than 40 million pounds annually, more than 7 pounds per Minnesotan per year. Minnesotans have recycled about 300 million pounds since the 2007 Minnesota Electronics Recycling Act that forbids dumping. Municipalities, manufacturers and consumers pay most of the tab for recycling.

Tech Dump was capitalized and started in 2010 as a "social enterprise," the operating business of a foundation started by business partners George Lee and Tom McCullough. The successful cellphone and internet retailers wanted to give back, and employ second-chancers. Only 2 percent of Tech Dump revenue comes from philanthropy.

LaGrange and board Chairman John Dinusson, a veteran venture capitalist and medical technology executive, want to refurbish more electronics because that creates more revenue, value and less expensive waste.

Tech Dump and other recyclers again will push a right-to-repair bill at the Minnesota Legislature in 2017 that stalled in committee last year. It was opposed by Apple, Samsung, LG and other manufacturers. They say they don't want unqualified people working on their electronics.

The refurbishers say the manufacturers limit certified repair shops to a few and don't distribute repair instructions because they want to see iPhones, flat-screen TVs and other electronics recycled rather than repaired — because fewer repairs and sales of used products means lower sales of their new products.

"It would allow us to better train technicians, employ more and repair more equipment to provide affordable technology for people who can't afford it," LaGrange said. "We could repair a lot more flat-panel TVs.

"We processed 56,000 pounds of Samsung, LG, Panasonic and other flat-screen TVs, or well over 1,000, from January through July. We get them when they go off warranty, commonly after only five or six years."

Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at nstanthony@startribune.com.