The waste managementcompanies

The waste management companies Elektronikkretur AS and Hvitevareretur AS are similar organizations with separate administrations. In 1998, when the two waste management companies were established, it was recognized that there were synergies in coordination of activities and, therefore, the companies were structured and organized in the same manner".

The companies have different owners, different types of members and are responsible for different product categories". Therefore, administrative activities need separate attention.

38The business statements are basically identical, except the definition of products and owners.

39See appendix A for an overview of the product categories.

Case1:The EI-retur system

The products that the two organizations have a responsibility for are considered to have highly integrated product flows: ''the same chains, shops and municipalities to collect waste from". For example, Elektronikkretur is responsible for collecting TVs, while Hvitevareretur is responsible for refrigerators but these types of products are often sold at the same shops and chains. Common interests and activities led the waste management organizations to develop a common collection system under the name of "El-retur". El-retur is a concept rather than a legal business unit. El-retur is used as a concept to simplify information and communication.

Elektronikkretur and Hvitevareretur jointly manage the collection system. Management of the collection system includes the defmition of operation structure, identification of which logistics operators to include, negotiation and operation of contracts with the actors, and control of the operations. The waste management companies seek to work with professional partners in the collection system to fmd the best solutions for handling EE-products at end-of-life. The goal has been to reach the 80 % collection level within the first five years of operation, as agreed with the authorities.

The waste management companies also undertake different tasks. This results from the companies having different owners and member groups (cf chapter 2). They are separately responsible for reporting their activities in terms ofnumber ofmembers, collected volume and shares ofhazardous waste to the authorities.

The EE-companies that import and/or produce consumer electronics can become members of Elektronikkretur AS. As of June 2002, Elektronikkretur AS had 455 members. The share of members is assumed'? to be a 70 % share of EE-companies in its product segments.

Membership means that Elektronikkretur takes on the responsibility of collecting 80%of EE-products at end-of-life on behalf of the EE-companies. The members compensate Elektronikkretur AS for the task by paying fees, which are based on the imported and/or produced volume ofEE-products.

The content of the memberships is the same for Hvitevareretur. As of June 2002 Hvitevareretur AS had approximately 150 members. This is assumed to cover 90-100 %of the distributors and importers for white goods and household appliances. The members of Elektronikkretur and Hvitevareretur are represented by the industry organizations that own the

40 The customs has an overview of all the potential companies (i.e. population), however it is not public information.

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waste management companies. A direct dialog between the waste management companies and the member companies is limited, as illustrated:

"Our dialog towards the member goes through the industry organizations, our owners.

Problems that occur are solved administratively.

If

there are political challenges we expect these to be solved on the industry level. These types o/problems have, knock on wood, been next to nothing. We have had few practical problems as well. " Elektronikkretur

"We in/orm the members through our websites. I have to admit that the interest/or our work is very low with the EE-companies. The EE-companies are sales organizations, and their business is sales. As long as they are not bothered too much, the cost is kept as low as possible, and agreements become better over time - they are satisfied" Elektronikkretur

The collection system has been established as an industry wide initiative, i.e. a service toall the importers and producers of consumer electronics and white goods. The logic behind the system is "one for all and all for one". However, as the membership is voluntary, the waste management companies experience a challenge with free riding, as this statement illustrates:

"Companies that have not joined a collective system, or have their own system that fulfill the demands o/the EE-Regulation and the government regulations, do not take their share o/the cost. Rather, they leave it to other companies, their competitors. This give a competitive advantage" and they are capable of having a lower price on the products in an industry with low and pressed margins. " Elektronikkretur

Elektronikkretur has a more heterogeneous product assortment to work with than Hvitevareretur (cf. appendix A), and therefore the range of EE-companies that falls under their responsibility is broader. Hvitevareretur reports less of challenge with free riders compared to Elektronikkretur. The EE-companies pay for the reverse distribution systems and therefore free riding creates a challenge. Members transfer funds to the waste management companies in order for them to administer returns. The membership is signed with the waste management companies separately. Thus, the funding process is also separate for the waste management companies. We describe the funding next.

6.1.1 Funding

In order to ease the work with the funding, Elektronikkretur's owners have established funding companies (i.e. three funding companies - one for each owner). The funding companies do not have employees but buy administration from Elektronikkretur AS.

Elektronikkretur AS charges the funding companies at the end of each month for theactual cost of the collection system for EE-waste. The invoice is based on kilos collected by Elektronikkretur AS. Itis important for Elektronikkretur to cover the cost of the collection system, although the waste management company is not concerned with how members are charged with the fee, as this statement shows:

"We collect and transport scrapped Eli-products in kilo, have contracts on transport and reprocessing in kilo separated in different product groups. We are indifferent how the industry companies and the members agree on their fee. " Elektronikkretur

The cost is directed from the three funding companies to the appropriate industry organizations, or members ofthose. The funding process was changed on April I" 2001. The change to Elektronikkretur's funding system was implemented based on a disagreement of how the transfer of money was being organized. Prior to this date, the members of the systems were charged directly by customs'f (based on customs tariff numbers) on behalf of Elektronikkretur AS. The fee was a unit cost per imported or produced product and the fee was charged at the time of import (i.e. when the products were new), Le. in advance of the operations in the collection system. After April 1st 2001, the funding companies were established as an intermediary funding unit, and Elektronikkretur AS now has three debtors as opposed to all the members (more than 400), which was a feature of the first funding model.

The funding processes are illustrated below:

41The Norwegian word used was "konkurransevridning".

42The Norwegian Customs and Excise - Tollvesenet.

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Prior to April1111 2001 Post April1" 2001

IDvoice Fee Invoice Fee Invoice Fee

Elektronikkretur AS

I

Elektronikkretur AS

I

Invoice Payment Invoice Payment

I

The EI-retur

I

collection svstem _I

Figure 6.1:Funding process in Elektronikkretur - before and after April I" 2001

There were two main reasons for the change. First, it was very difficult to agree on the fee format across the different industry organizations on three dimensions. The dimensions included how to fund each product (fee for copiers vs fee for cameras or computers etc), whether to charge the fee per unit or per kilo/tonne, and how to organize the funding process.

The new model improved the situation:

"Every owner-constellation gets to decide how to collect the money for the products that they have responsibility for. In the new model, companies responsible for copiers do not have to relate to how TVs are funded, and vice versa. Now, each industry can decide individually how tofund the system. " Elektronikkretur

The industry organizations decided on the fee in dialog with their members. Two changed their fee from unit- to kilo-based (IKT Norge AS, Abella AS), whereas one continued using a unit-based fee (Lyd &Bilde). Two of the industry organizations decided to charge their members based on their market share from the previous year (IKT Norge AS, Abelia AS).

The market share comes from the National Bureau of Statistics. The other company decided to charge its members based on units (Lyd & Bilde), and is dependent upon the members to

report the numbers of units sold the previous month. The funding process has not been straightforward for the members. Elektronikkretur explains that the companies decide themselves on howtosolve these issues:

"Small companies are in most cases members in one waste management company, while larger companies, e.g. like Phillips, are members of all the waste management companies. In this sense, itis easier for the small companies to relate to one system, than the large company that gets a different type of invoice from each of the waste management companies. It may be complicated

if

you ask a frustrated accountant, but itis their directors that have taken these decisions. It has been decided politically in the industry that this is how we want it,and then at some level there is a frustrated employee that has to coordinate a number of systems. One system had of course been a better solution, but then ithad been a problem to agree which system. Then you would have problems in a different manner. " Elektronikkretur

"With respect to competition rules, we are not allowed to instruct the EE-companies on how to fond our collection system. Each company has to decide this for themselves. Also, they have to decide for themselves on whether the fee is to be visible to the customer or a part of the product calculation. Each part in the distribution chain needs to decide this. It is illegal to cooperate across the distribution chain. " Elektronikkretur

Second, it was agreed that a better solution would be to invoice costs according to the actual transport and reprocessing in arrears'? of the waste management, rather than payment up front. In this manner, the collected products were registered in the different product categories and the invoice could be directed to the correct 'recipient'.

The funding process in Hvitevareretur AS is identical to Elektronikkretur's first model. The funding of the waste management companies is strongly influenced by the structure of the ownership. Elektronikkretur had to change its funding process so that it would fit better with the ownership structure. Hvitevareretur has had a straight forward funding process, as explained:

"The difference between our's and Elektronikkretur's funding processes is primarily tied to the presence of their three companies. Our owners have been happy with how the funding is organized, and as long as thatisthe case, we keep it asitis. "Hvitevareretur

"The number of owners is a major difference. It has probably contributed to the situation in Hvitevareretur being more easy-going than in Elektronikkretur. The owners of Elektronikkretur have had divergent interests from time to time. We have not had such experiences. " Hvitevareretur

43The word' arrears' means 'påetterskudd' inNorwegian.

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Hvitevareretur AS is funded based on a fee per unit. Hvitevareretur charge their members with a fee in advance of waste management (i.e. when the product is new). The members are charged by customs through use of the customs clearance system, which is based on the customs tariff numbers. The fee is supposed to cover the actual cost of the collection system.

Ittakes approximately two months before the funds are transferred to Hvitevareretur AS.

The funding process in the El-retur system is complex in many respects and represents an identification and integration challenge. The question is to identify how products have to be funded and at what time (at time of import or at end-of-life). That is, what is the cost of collecting and reprocessing a computer, a copier, a refrigerator and so on? Next, there is a challenge to identify how to share the cost between the EE-companies (Le. the members of the waste management companies). The products are not sorted according to brands when collected and, therefore, a calculated factor has to split the cost between the members. The cost then has to be integrated between the collection system and the sales system of each EE-company. The waste management companies in El-retur have decided on different funding processes to handle the situation, and it has been demonstrated that the ownership structure is an influencing factor.

In document Coordinated action in reverse distribution systems (sider 130-136)