Big Firms Aim to Take Back Cartridge Market Share

THIS year, almost two-thirds of the 21.7 million toner cartridges produced in the United States will end up in landfills. That adds up to 40 million pounds of waste.

But this pile of cartridges, used to put print on paper, has turned into a money-making opportunity.

Starting out as a garage enterprise in 1985, remanufacturing toner cartridges has since become a profitable $347 million business for 3,000 to 4,000 companies. By disassembling, inspecting, and refurbishing used cartridges, these companies can sell them back to the consumer for $45 to $95 - a 25 to 50 percent savings.

Industry revenues are expected to reach $602 million by 1997, says John Shane, senior analyst for BIS Strategic Decisions, a market research company in Norwell, Mass. Increasingly, big players are getting into the act. On Oct. 11, Hewlett Packard announced it would begin remanufacturing cartridges, while Apple Computer Inc. says it plans to follow suit.

Mr. Shane and John Hohu, business development manager of the accessories and consumables business at Apple Computer, say they agree that Hewlett Packard's entry into the remanufacturing market helps to legitimize the industry.

Hewlett Packard currently has a 60 percent market share of all cartridges produced. With its strong brand-name recognition, the company could lure customers away from smaller remanufacturers, Shane says. In the US, the top six remanufacturers include NASHUA in Nashua, N.H., Future Graphics and General Ribbon, both in Chatsworth, Calif., PM Company in Cincinnati, Data Products in Simi Valley, Calif., and LASERTEK in Las Vegas, Nev.

UNLIKE these companies, Hewlett Packard remanufactures only one type of cartridge, the Canon LBPX engine cartridge, which Hewlett Packard and other manufacturers make under license. The company had a 90 percent share of the new market for this cartridge in 1991. But once other firms began producing it, Hewlett Packard's share slipped to 55 percent. Now that the cartridge is being remanufactured, the company's share of the new market has fallen to 45 percent.

Hewlett Packard's remanufactured cartridge, renamed the Optiva 95R, is used in LaserJet Series II, IID, III, and IIID printers. To ensure quality, Hewlett Packard will only remanufacture original cartridges or cartridges that the company has previously remanufactured, says Bruce Mayes, product engineer and recycling manager. It will not accept toner cartridges that have been refilled or recoated by other remanufacturers.

The overall positive environmental impact could be enhanced by a return rate higher than the current 15 to 20 percent of total cartridges sold, Mr. Hohu says. Apple plans to launch a remanufacturing program soon, he says. The company is interested in remanufacturing cartridges compatible with the same Canon LBP-SX engine used in the Laser WRITER II, IIF and IIG (offered by Hewlett Packard and other manufacturers), but at a cheaper price, he says. Since Apple's share of the cartridge market is only about 15 percent, the company considers remanufacturing a way to increase that share.

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