E-Scrap News

Closed flat-panel specialist has turnaround hopes

The chairman and principal investor of 3S International says the processing company’s future is bright, despite a recent filing for Chapter 11 bankruptcy.

In an interview with E-Scrap News, W. Sidney Smith was frank about the company’s early struggles. But he held firm that 3S would find a way to profitability utilizing its three automated processing machines for mercury-containing flat-panel display (FPD) TVs and monitors.

“We really missed the market and that slowed us way down,” said Smith, who was accompanied on the call by John VanFossen, the company’s president and chief operating officer. “But we love the product, we know it can work and we know it can make money. We’ve just got to redefine the supply.”

After suspending operations at the company’s Michigan and Illinois facilities on July 31, 3S filed for Chapter 11 bankruptcy, which typically allows for reorganization, on Aug. 6. According to its initial filing, the company has liabilities totaling $10 million to $50 million while assets have been pegged at $1 million to $10 million. Smith, a Michigan businessman new to the e-scrap industry, has invested more than $8 million of his own finances into the enterprise, court filings show.

He said the goal now is to “slow the company down” and reassess its role in the marketplace, which continues to be dominated by CRTs, with national FPD volumes remaining low.

“We’re probably a year ahead of ourselves,” Smith said. “The CRT problem is just starting to wrap up and obviously FPDs are becoming the new CRT problem.”

Until very recently, the vast majority of FPDs on the market were made with cold cathode fluorescent tubes, which contain mercury. While LED FPDs have overtaken market share and do not contain mercury, research by E-Scrap News indicates roughly 470 million mercury-containing FPDs were sold in the U.S. between 2001 and 2014.

Some within the e-scrap industry worry that handling the devices in large volumes will pose significant processing challenges.

Smith, who agreed to invest in the company in late 2013 after being approached by Joe Yob, 3S’ CEO, said the company’s processing machines, manufactured by Blubox, were always the main attraction. “I got real enthused about it because of the technology, and I still firmly believe in the technology,” Smith said.

When 3S was still operating, the Blubox machines operated by the company were the only automated processing systems for FPDs in use in the U.S. While manufacturers and processors continue to explore automated processing options, manual disassembly, which is both more costly and more time-consuming, is the dominant method of recovery.

The early struggles of 3S were tied to its original business model, which was to act as both a collector and processor of electronics. According to Smith, the company realized its niche was to serve as a downstream vendor for collectors and intermediate processors of FPD devices.

The company was also paying for FPDs as opposed to getting paid to recycle them until the first quarter of 2015, VanFossen said.

According to Smith, some material is currently stored at the company’s idled processing facilities in Taylor, Mich. and Tinley Park, Ill., but he said most of it is already processed and “awaiting sorting.” While all employees have been laid off, Smith said Yob remains the company’s CEO and the firm is actively looking for both “new talent” and investors in order to reopen.

“It’s time to get some new money,” Smith said.

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