Implementing Facility Recycling Stanards with Pitney Bowes’ Ellen Huang and Adam Lewenberg

June 8, 2011

JOHN SHEGERIAN: Welcome back to Green is Good, and we’re so honored today to have with us from Pitney Bowes Adam Lewenberg, the Director of Business Development Green Products and Ellen Huang, the Director of Environmental Affairs. Welcome to Green is Good. ADAM LEWENBERG: Thanks for having us. JOHN SHEGERIAN: We’re happy that you’re both here today. This is great when we have two great green leaders on from an amazing and wonderful legendary brand here in the United States because both of you bring different perspectives to the discussion. I want to just start off by asking you about this hall of fame that you guys are in. You guys were honored with the WasteWise hall of fame by the EPA. What is this about? I’ve been in the waste and recycling industry for years, but we’ve never gotten any award like this. Tell us how Pitney Bowes got this award. ELLEN HUANG: Thank you, John. Back in 1994, the U.S. EPA launched the WasteWise program as a voluntary initiative to help businesses and institutions find practical methods to reduce municipal solid waste and increase material reuse and recycling and to encourage the use of recycling and recycling practices. That happened in 1994. Pitney Bowes had participated in the WasteWise program since 1996, and because of our commitment and all the new recycling initiatives that have taken place within our program and our leadership in the community for recycling, the U.S. EPA awarded us the highest honor in their WasteWise hall of fame in 2007. So, we’re very, very proud of that accomplishment. All of our major facilities all over the world participate in recycling programs. We have product recycling as well as all of our internal recycling stream from everyday office products, including office papers and ink cartridges and toners and so forth. JOHN SHEGERIAN: On the earlier segment before your segment here on the show, we were talking to General Motors. They shared with us how recycling has saved them $2.5 billion a year, which goes right to their bottom line. So, again, with your message again, Ellen, it’s proving that recycling does pay. Recycling is an important part of the sustainability message, and it also leads to greener products with a better bottom line for the companies that engage in recycling. ADAM LEWENBERG: We’ve found that we’ve been able to create businesses around this program, where we’ve been able to reuse a lot of our products, which is, in our world of formal recycling, by reusing some of the products that we get as returns, and being able to offer them to customers. We just find huge opportunities in this space, John. Our typical customers lease equipment for a period of time, three or four years, and then when that lease is up, they typically will get new equipment. There’s this huge pool of returns that we can make available to these customers and to run through responsible recycling programs. MIKE BRADY: So, Adam, when you have these returns, the equipment is still good, but it’s not the latest and greatest, so you do what with it then? You refurbish it and you make it available to customers at a different price point? ADAM LEWENBERG: Exactly. In some cases, this is the latest model that we’re still producing, but we will follow a factory-certified process to break them down and rebuild them, test them, and mark them to the same specifications, basically, as new equipment. Customers benefit because the equipment is less expensive, and they feel comfortable with the fact that they’re factory-certified units, that they know they can depend on. JOHN SHEGERIAN: So, in other words, Adam, what we just learned from Ellen and from you is recycling is really part of the DNA of Pitney Bowes. ADAM LEWENBERG: Exactly. JOHN SHEGERIAN: Love it. Talk a little bit about design. You have a whole program called Design for Environmental Quality, which is fascinating to us, and I want our listeners to hear because you’ve broken it down in a very forensic and very interesting way. Can you give the highlights of your Design for Environmental Quality program? ELLEN HUANG: Absolutely. When Adam was talking about our product take-back program and how we do recycle and reuse parts and components and remanufacture products, we start with a conceptual design, planning all the recycling and the end of life disposition of these products way up in the conceptual design. Back in 1991, Pitney Bowes was really a leader in integrating the environmental considerations into the product engineering and design process. We had what we call the Design for Environmental Quality initiative because it was good for the environment, and we thought it was also smart for Pitney Bowes’ business to consider, for example, different features, compatibility of materials, minimizing the number of different and similar material types, so that when the product has lived through its first life with our customers and it comes back to our facilities, it facilitates us separating and disassembling the material and rebuilding the product, so that we can remanufacture it as another quality product that can be provided to customers as remanufactured equipment. JOHN SHEGERIAN: So, you were talking about the six top lines that we’re talking about here, Ellen, are energy efficiency, material intensity, selection, operating efficiency, reuse and recycle, sustainability supply chain and eco-efficient solutions. ELLEN HUANG: Right. Over time, the Design for Environmental Quality program evolved into different areas, including energy efficiency and having different sleep modes for our equipment, our material selection. We have designed now certain materials that may be of concern from a hazardous perspective or regulatory perspective. Upgrading efficiency of the equipment, even the noise levels of our equipment, definitely reuse or recyclability of our machines. Over 95% of the machine is recyclable in terms of commodity materials when it does finally reach its end of life, and we can’t give it to other generation out in the field. We do scrap the equipment and recycle the equipment, and those products or those parts can be broken down into commodity materials easily, and be recycled. The supply chain has as lot of focus on pulling down these similar commitments and values throughout our supply chain, and providing our customers an eco-efficient solution. JOHN SHEGERIAN: Mike’s on his laptop and I’m on my iPad here in the studio, and for our listeners who just joined us, we’re really honored today to have Adam Lewenberg and Ellen Huang from Pitney Bowes on with us. If you’ve got your iPad or laptop or desktop open in front of you, please go to their great website, www.pb.com/responsibility. On this great site, I see here, Ellen, to further what you’re saying, not only do you recycle the wonderful products that you guys make, but you also extend your recycling efforts and your sustainability efforts to the content of your packaging of your products. ELLEN HUANG: Right. We do integrate as much recycled content into our packaging material as possible. As with our products, we minimize the similar types of materials so that the packaging could be recycled more efficiently and be reused. In fact, the machines that come back into our operation, we do recover all those packaging and we either reuse them or we recycle all the packaging material. JOHN SHEGERIAN: Adam, a little while ago, you were talking about the reuse. Mike was asking you about the reuse issue. Can you share with us new versus old? In these austere times, why would customers want to buy used products rather than old ones? How does that work at your great company, Pitney Bowes? ADAM LEWENBERG: One of the main benefits of these units is they’re 30% off or more off the list price of the new equipment basis. In a lot of cases, we’re still selling the same units as new as we’re selling as remanufactured. That’s one reason. The second is they have the same exact warranties and maintenance contracts as new equipment. We don’t differentiate. From a warranty perspective, it’s during the first 90 days a unit comes out and is faulty, we will fix it, replace it, and if that doesn’t work, we will terminate the agreement and refund the money back. Most of our customers have maintenance agreements. With the maintenance agreement, the entire term of the lease is covered by our warranty, as well as three years if it’s purchased. We want to make sure that these units, when they’re leaving our facility, are in the same shape as new equipment because we don’t want to have increased service calls in the field. We want a good customer experience out there, and we want our customers to be satisfied with these units, especially customers that need lower price points, like government entities or people that are struggling in the economy. JOHN SHEGERIAN: Interesting. It’s nice to always buy something nice and new and shiny, but there’s really not much downgrading if you’re buying a well taken care of and upgraded used product. Can you explain, though, the process? Walk our listeners, Adam, a little through the process of rebuilding them. How does that really work in reality? ADAM LEWENBERG: Sure. In the industry, there are small equipment dealers that might sell rebuilt units, and they’re basically Windexed down with a couple parts replaced. That is not all we do in this facility. Before we can even start remanufacturing a specific model, an engineer has to set up a process plan, and that process plan is detailed to the point of what parts need to be replaced, what breakdown levels we have to do, if there’s a scratch over an eighth of an inch on the covers, what are the requirements for replacing covers, and then a quality testing process that someone has to follow. After that processes are written up, each unit, when it comes down the line, it’s made a decision. The best unit to go through the process to be rebuilt, and we select those units based on what kind of condition they come in at, how many cycles they have, how many service calls they’ve had, and then from those units, the best units we pick, we take them down the bones and we break them down, fix the needed parts, rebuild them, and then test them to a factory-certified testing process. That’s the reason that we call these units factory-certified, because we’re taking them down to that level. We box them like new and ship them to customers all over the world. Because we go through that regimented process, we’re willing to back them with the same warranty and the same maintenance contract and the same maintenance costs as new equipment units. We’re that committed to these products. MIKE BRADY: So, Adam, would it be safe to say that based on the life of these units that you are refurbishing and making like new, you would also look at where in the life cycle certain parts are likely to need to be replaced in the future? Do you do some preventative that way too, and replace the parts that like three months from now may need to be replaced as well? ADAM LEWENBERG: Yes. Anything that we think of that could be a problem during the service history, the normal life of that unit going out in the field, we want to get that fixed or replaced up front because our goal is to eliminate service calls out in the field. Service calls are an annoyance to the customers, but they’re also costly to us as a service organization. Our goal is to minimize those things and have units that we feel conform to the like-new standards before they’re shipped out. JOHN SHEGERIAN: Given that point, then let’s segue to the next issue, then. How do you make those choices? How do you decide, Adam, which units get rebuilt and which go to the end of life part of your business? ADAM LEWENBERG: Sure. We would decide on a couple different issues. First is the age and the specific model number. We only have a specific list of models that we’re physical rebuilding. Older units immediately will get sent to our recycling partner, but newer units or units that are on our list to rebuild, we’ll look for the units that are in the best condition, that don’t appear to have any blemishes or damages, and then we run them through a testing process, where we see how many cycles do they have on them, how many service calls, are there any inherent issues that we see that’s going to make this more difficult for us to rebuild? We’re only basically picking the best of the best units that we’re going to rebuild, and the rest of the units follow a different process. JOHN SHEGERIAN: Explain, then, the different process for our listeners out there. ADAM LEWENBERG: What we do is we do a two-step process. The first is we break the units down for parts. The units we don’t plan on using, we’ll pull parts off those. Those parts can be used, and those are parts that we find that are in good condition and in perfect working order, and we use those in some of the rebuilt units, and we use them in service calls out in the field. We feel that if we have perfectly good parts in units that we’re not going to use, we should use them, as opposed to having to buy new. It’s much better environmentally, we feel. And then everything else gets bundled up and sent out to electronics recyclers. They grind it down and they commodity products out of that that can be used for future products out in the industry. JOHN SHEGERIAN: So, when you send the products over to your recycling partner, what happens then? It gets broken down into commodities that then go to smelters? ADAM LEWENBERG: Yeah, they have a pretty amazing shredding system that will take the units down and break them down into parts, and then separate the plastics and the metals and break down the different metals into different commodity parts, so those things can be sold onto the open market. JOHN SHEGERIAN: Got it. What’s measurable is manageable. How many pounds of electronics do you recycle a year? It’s always fascinating. Our listeners always want to know the wow numbers, like when GM walked us through that. Talk a little bit about how many million pounds, like what real impact does Pitney Bowes make? ELLEN HUANG: In the U.S. and Canada, we’ve recycled on the average 6 to 7 million pounds of product every year. Over that, in terms of all of the materials that we recycled throughout our facilities, probably in the order of 20 million pounds. JOHN SHEGERIAN: Wow, 20 million pounds annually. ADAM LEWENBERG: Yeah, we try to do our best to make sure that we have as close to zero waste as we can have. JOHN SHEGERIAN: Wow, that’s great. When you’re choosing the products, Adam, that’s an internal process, the ones that you choose to then refurbish and to resell again, and then you cull out the ones that then go to your recycling partner. How rigorous and how much time did you and Ellen put into choosing your downstream electronic waste recycling partner, and what were the criteria that you were looking for in that kind of partnership? ELLEN HUANG: We view our recycling vendor as a strategic partner. It’s very important for us to select someone who shares a similar value on commitment that Pitney Bowes has. In the electronics recycling industry, there’s a lot of practices that, while may be legal, may not necessarily be the most responsible practices. We certainly wanted to partner with somebody who is beyond legal, who is in the forefront in terms of making sure that they are committed to responsible recycling practices themselves, as well as for us, their customer. In terms of our process, one of the reasons we selected our electronics recyclers is because they were in the forefront of developing one of the most stringent electronics recycling standards available today. There is also responsible recycling with the EPA, and I think Electronics Recyclers is pursuing both simultaneously. It is very important for us from a business perspective that there is a leader in the electronics recycling that has the geographic footprint to support all of our needs throughout the country, but more importantly, that they share in our commitment and in our values for responsible recycling practices. JOHN SHEGERIAN: Ellen, that’s great because as we know, a lot of folks in your positions sometimes delegate that responsibility and don’t always choose, sometimes, at the low-cost or the no-cost recyclers, and we’ve read and heard and seen images of what the results can be when that happens. I’m on your website. I’m on my iPad, which is really just really nice, and Mike’s on your website with his laptop. Again, for our listeners out there that have your devices, your electronic devices in front of you, www.pb.com/responsbility. Click on the Environment button because that’s where we’re going to go next with this discussion. Your environment section on your website, both of you, Mike and I are very impressed here. We’re looking at it and we’re sort of making faces at each other and holding up little signs. It is really well done. Can you both walk us through the many different things, the highlights, of your environmental programs at Pitney Bowes that you want to share with our listeners, both here in the United States and around the world? ELLEN HUANG: Sure. Some of the things that we have done is we are committed to helping our customers in terms of connecting our customers and their communications with their target markets. One facet of that, of course, is the mailing aspect of physical mail. With that, there is paper involved, and so we are committed to using paper and paper products, such as cardboard, from sustainable forestry sources. We don’t have a preference for one over the other, we are just committed that our paper sources are from sustainable forestry certification programs. So, internally, we have procurement policies in place to make sure that our paper sources are from the sustainable sources, whether it has recycled content or not. In addition, we focus on recycling paper materials, so we do place a Recycle Please logo on a lot of our publications. Also, we are founding members of different initiatives, such as the Green Power Market Development Group, which is a partnership with the U.S. Environmental Protection Agency that promotes development and purchasing of alternative energy. Every year, we have committed to purchasing renewable energy credits to support green power projects. So far, our renewable energy credits have resulted in over 15,500 metric tons of CO2 emission reduction. JOHN SHEGERIAN: Also, don’t some of your products also offer remanufactured ink or something like that, I’ve read? ADAM LEWENBERG: Yeah, we have a lot of products designed to help the environment, so one we’re selling remanufactured ink cartridges and toner cartridges. We also sell software that helps reduce undeliverable addressed mail. A lot of companies get a lot of returned mail because they’re not managing the addresses properly. So, we have software that upfront, before the piece is mailed, can clean up those addresses so it has a maximum deliverability effect on the mail. Finally, we do consulting on environmentally friendly mailing practices that can help customers both reduce costs and become more environmentally friendly. JOHN SHEGERIAN: That is just amazing. We’re down to the last minute-and-a-half unfortunately, and of course you both are always welcome to come on back because there’s just so much you’re doing, it’s hard to fit it all in in 23 minutes, but we have to start somewhere, and we had a great start today. Where do you see your industry going with regards to reusing and recycling? Can you both share your thoughts on that? ADAM LEWENBERG: Sure, real quick, I think a lot more customers are going to feel more comfortable having remanufactured equipment, knowing the warranties are the same, and knowing that there’s opportunities for reduced cost. More customers are going to be looking for a way not to have to buy new resources to get those products, and to be able to use what’s already out there and built as a way to reduce costs and to help the environment. JOHN SHEGERIAN: That is just great. Ellen, what do you think? ELLEN HUANG: Absolutely. When there are limited resources available in this world, we have to look for efficient ways to utilize the materials that are available, and we have seen, both from our suppliers, ourselves, and our customers, having an increased interest in terms of recycling practices, recycling content, and recyclability of materials in the products and services that we offer. JOHN SHEGERIAN: Again, Mike and I are so honored for both of you to come on the show, and we wish you continued success at Pitney Bowes. It’s well deserved and earned because you guys truly are the green leaders in your industry. Adam Lewenberg and Ellen Huang, you are the dynamic duo of the environmental movement, and truly living proof that green is good.