Toner cartridge recyclers wage obscure war from LV

Monday, Aug. 16, 1999 | 10:44 a.m.

Las Vegas is the nerve center for a dispute between the makers of office printer toner cartridges and companies that recycle them.

One of the companies affected by the battle is a North Las Vegas operation that is one of the largest remanufacturers in the Southwest.

Golden Imaging, 4580 N. Walnut Road, recycles about 10,000 cartridges a month in a plant employing more than 60 people.

The industry fight pits Lexmark International Group Inc., a Lexington, Ky., printer manufacturer, against about 6,000 companies nationwide that remanufacture cartridges and sell them for about half the price of a new one.

Recharger magazine and the Office of Industry Advocacy, both based in Las Vegas, play pivotal roles as lightning rods within the remanufacturing industry.

Tricia Judge, executive editor of Recharger, writes about the conflict in the slick trade journal while Sue Jones, coordinator of the Office of Industry Advocacy, fields inquiries and lobbies legislatures nationwide for laws to benefit the industry.

Recharger has been based in Las Vegas since October 1992 when the former owner of the magazine decided to move its base of operations from Southern California. Jones' office was formed in July 1998 in response to the Lexmark dispute.

Lexmark has been the focus of the $2.4 billion industry's ire for more than two years since the company introduced its Optra S printer and their high-performance cartridges.

Lexmark offers the cartridge at about a 13 percent discount -- $30 off a $229 list price -- if the buyer agrees not to turn the empty cartridge over to a remanufacturer.

The company calls the deal a "Prebate" program -- a trademarked name -- because the discount occurs up front instead of after a cartridge is returned.

But the remanufacturers call it a restraint of trade and have asked the Federal Trade Commission to intervene.

The remanufacturing industry says it has been threatened with lawsuits by Lexmark if it works on and recycles the cartridges.

"We're talking about an industry that is good for the environment as well as good for consumers," said Judge, whose company also sponsors a trade show and convention for remanufacturers in Las Vegas every fall.

Next month, about 4,000 remanufacturers will be at the Riviera for this year's trade show and conference.

The nation's remanufacturers represent about 24,000 jobs. Industry leaders say they are trying to keep about 37,000 tons of industrial-grade plastic out of the nation's landfills every year.

The cartridges the industry recycles are used in copy and fax machines, laserprinters and the new multifunction machines. Most of the major printer manufacturers -- IBM, Hewlett Packard and Canon among them -- manufacture their own cartridges.

About 12 years ago, the office products recycling industry was born as companies across the country realized the profitability of refurbishing used cartridges and filling them with fresh toner.

Golden Imaging is one of those rechargers.

Joe Cachia, director of operations at the plant near Interstate 15's Craig Road exit, said his company acquires cartridge empties from brokers.

Employees sort incoming cartridges by make and model and inspect them for damage. Some can be quickly refilled with toner; others have to be repaired or rebuilt. The company keeps an inventory of thousands of parts for each brand and model of printer.

Cachia said refilling cartridges isn't as simple as filling a car's fuel tank with gasoline. Each printer needs a different volume of toner and the consistency of the toner varies by machine, meaning that different types of toner must be used in each cartridge.

Some cartridges have to be filled manually. Others are filled with machines that are stocked with toner from 240-pound drums. The machines are the same kind that sift sugar and flour in industrial bakeries.

Each recycled cartridge is tested on the machine it is designed for before it is sealed and shipped. Golden Imaging sells directly to wholesalers, who distribute to retailers nationwide.

Golden Imaging is in a summer lull with most schools out and several offices scaled back for vacations. Cachia said his staffing level could reach as high as 70 when the plant is at full production.

But those jobs and many across the country could be threatened if the printer manufacturing industry takes Lexmark's lead.

"Lexmark isn't that big a player in the industry," Judge said. "But there is some concern about what would happen if some of the bigger companies decide to do the same thing."

Lexmark's Prebate program is being evaluated by other companies, Cachia said. Some companies, he said, also are looking at high-tech means of preventing the reuse of printer cartridges, such as with devices that can read if a new or recycled cartridge is installed and microchips that can restrict the machine if a recycled cartridge is used.

Lexmark said its Prebate cartridge promotes recycling because the company collects and reuses the old cartridges when they are returned.

"The reality is we do recycle the cartridges," said Lexmark spokeswoman Betsy Lang. "We actually make it very easy for customers to return them."

Lang said Lexmark has a very small percentage of the cartridge market, so the recharging industry isn't in any danger of collapsing as a result of what her company does.

She also said the company has not sued anyone for turning a Lexmark cartridge over to a remanufacturer. However, recyclers say the language of the Lexmark use agreement makes it clear they could sue if anyone tried.

Jones' Office of Industry Advocacy, which shares office space with Recharger magazine at 4218 W. Charleston Blvd., has been working to generate support for remanufacturers from recycling groups and lawmakers.

Legislation in support of the recyclers has been enacted in Connecticut and Texas and awaiting action in New York, Wisconsin and California. The office is working with lawmakers that have shown support to the recycling industry in the past.

In Nevada, no legislation relating to the issue is pending.

Legislation supported by Jones' office supports the recyclers by giving them a competitive advantage in state procurement procedures. Some states give preference to recycled or remanufactured items in bids.

Jones said several states already have those types of policies in place and don't need new legislation.

Jones' office also works with recycling groups like the GrassRoots Recycling Network, based in Athens, Ga.

The GRRN targets Lexmark and its products in consumer alerts. The organization encourages consumers not to buy the Optra S printer, to work for passage of legislation in support of the recyclers and to write the FTC to investigate the Lexmark Prebate program.