Branching Out

The confidential document destruction business continues to generate tremendous attention. As more companies enter the market, some forward thinking operators see product destruction as an excellent opportunity to grow their bottom lines.

While a growing number of firms battle among themselves to secure accounts and provide ancillary storage and shredding services, some of these companies have found an opportune niche by offering shredding and destruction services for materials other than paper.

One somewhat natural progression is to offer shredding of CD-ROMs, floppy disks, and perhaps even computer hard drives. These electronic storage media are widely used in office environments, a key market for shredding companies.

As concern about information falling into the wrong hands escalates, many businesses find that shredding electronic media is a fast and effective way to resolve the issue.

While destruction of these types of products is being widely performed, there are other products that are fast becoming a market area for some shredding companies.

Opportunities abound for companies that offer shredding services for materials as diverse as clothing, outdated pharmaceuticals, pill containers, toys, shoes, and even more exotic materials.

Why shred these items? There is a fine line that manufacturers and marketers walk with their product lines. If a clothing company is discontinuing a clothing line, there is a concern that unsold items could be dumped back on the market, potentially flooding the market at the same time a new line is being introduced.

Another scenario is when a manufacturer ends up with a line of products that are deemed damaged. To prevent the damaged material from entering the marketplace, a manufacturer is likely to seek out a shredding company that can destroy the product.

One company that has capitalized on this endeavor has been Shred First LLC, a Spartanburg, S.C.-based company that has seen its interest in product destruction take off after initially introducing the service several years ago.

In an article in SDB magazine last year, John Bauknight IV, president of Shred First LLC, noted that shortly after his company first began shredding music CDs and software, this segment of the business skyrocketed, By 2000, product destruction was making up a healthy percentage of the company’s business.

The destruction of compact discs yields a mixed stream of plastics that Bauknight and his business partner Nick Wildrick initially treated as mostly unrecyclable. "The recycling story started out bad, but has a good ending," says Bauknight. "We were originally landfilling most of the material, but then in 2000 we began exploring the recycling options. Since then, we have processed almost 1,000 tons of this material per month and recycle over 95 percent of it."

While product destruction can range from smaller items to large, bulky products, the approach to the service is important. As to what equipment is needed to handle product destruction, Bauknight says it is all relative. "It depends on the nature of the beast."

While the company handles CD-ROMs, the company also has destroyed products such as cooking grills.

To handle the range of products that customers send its way, Shred First has a wide array of shredders to handle the different materials.

And, reflecting on the company’s emphasis on growing this segment of the business, Bauknight estimates that roughly 50 percent of his company’s business comes from product destruction.

While the overall information destruction business holds significant opportunities, Bauknight calls the product destruction side of the business a "fantastic opportunity for us as a company. It should grow between 20-25 percent a year."

From discussions with many shredding companies, one of the biggest barriers to increasing the level of product destruction is the basic fact that many shredding firms just forget to ask about other opportunities. While many companies don’t think twice about contacting an information destruction professional to handle their paper documents, handling other materials often is forgotten.

A key to nurturing this side of the business is just asking, one shredding company says.

Several shredding firms note that they are already servicing such customers. However, the client may not make the connection that many document destruction companies can also handle non-paper material.

Many of the industry’s equipment suppliers, however, recognize the opportunities available with product destruction. Chris Hawn, Vecoplan LLC, a shredding equipment manufacturer based in Archdale, N.C., sees the product destruction side of the business as an "absolute growth industry." From shredding hard drives and electronic media to various types of containers and equipment, many of the equipment companies are responding to the demands from their market to provide equipment that will extend the shredding capabilities of the shredding industry.

"The beauty of the equipment is the flexibility," Hawn adds.

If a company is considering growing its product destruction side of the business, it needs to look at not only what it is doing now, but what the company hopes to shred in the future.

Bryan Hesterman with Assured Shredding, an Oakland, Calif.-based shredding company, notes that what the company handles and where it goes depends on the type of material. A lot of the material can go through a strip shredder. However, he adds that often product destruction provides more wear on the equipment used. At the same time, the products being shredded may have little or no value on the back end.

Ensuring security is already ingrained for companies shredding confidential documents. However, there are different fundamentals when considering extending the shredding business to handle products. For a company destroying clothes or music CDs, there may a new type of temptation for an employee to take some of the material to be shredded.

Certainly, security for non-paper shredding must meet identical or similar existing standards for confidential documents. Many of the companies contacted say that their shredding business for products follows the same procedure as they have in place for paper shredding. For NAID members, this rigorous routine brings the guarantee to the customer that the material is being handled and destroyed properly.

Richard McMullen, owner of ShredMax, an Arkansas-based mobile shredding operation, says that the company does handle some non-paper shredding services, although most of the time it is limited to hard drives. Additionally, while acknowledging there are opportunities available with product destruction, most often it is the customer who broaches the possibility of shredding the material. "They [customers] typically make the connection. We don’t usually market the service to them."

In one instance, however, the company was asked about destroying some defective back braces.

Because some companies are strictly providing mobile shredding operations, there are other considerations that need to be factored in.

While a plant-based operation can run the process back at its plant, without fear of contaminating other materials being shredded, a company that performs on-site shredding must attempt to avoid shredding highly recyclable paper with non-paper materials. This can create a logistical issue, as efficient route density is something shredders seek.

For McMullen, this may mean that if a larger percentage of products need to be destroyed, it would have to schedule one day per month to handle the non-paper shredding. "We wouldn’t want to destroy microfilm or microfiche when we are shredding paper," he adds.

In fact, he adds that on most anything "not normal," the company may run a test on to see how effective the product destruction is. "Whatever will go through the machine we will take," McMullen says.

That is one of the issues that companies that offer only mobile shredding opportunities need to contend with.

While many companies have moved into the product destruction side of the business somewhat tepidly, Shred First has realized the opportunities afforded with extending its service to non-paper shredding.

One of the most apparent steps the company has taken to boost its business in this lucrative area is actually one of the simplest tasks: asking customers if they have any other items that need to be destroyed.

While many shredding companies may offer some modest shredding of floppy disks, CD-ROMs and maybe an occasional hard drive, one of the biggest issues that many of these companies need to overcome is getting enough material to make it a successful endeavor.

This is a trickier proposition than on first glance, especially for mobile shredding operations. One reason is that while shredded paper is highly recyclable, shredded product content may not be as marketable. And, with greater attention to ensuring that the paper is segregated enough to prevent high levels of contamination, a mobile shredding operation would have to focus exclusively on non-paper shredding on certain routes. Without enough volume this endeavor would be ineffective, too costly and would fly in the face of route density, a key consideration for a successful shredding operation.

An additional issue that some have mentioned is the possibility of landfill restrictions. While some shredding companies have been able to market more of their non-paper finished shred, many companies end up disposing of the material that isn’t easily recyclable.

But, if there are landfill restrictions or regulatory restraints on some materials, the disposal issue may become more important.

Doug Breidle with Confidential Document Services, a Wisconsin-based shredding company, says that while the company has ventured into the product destruction area, it has a lot more caution about what it does with the finished product. "End markets are an issue. It can be a landfill product [and] there are more restrictions."

While he is referring to the shifting landfill and disposal legislation in different states, he acknowledges that there is more information that the company needs to be aware of. "We have to go to school," he notes.

The company recognizes it is a growing segment. "While it is a small niche for us, it has grown. However, it is still not a high-volume service" Breidle says.

Of the products the company handles, the majority of them contain plastics. In fact, one area where the company has had success is in taking in quantities of prescription bottles and vials from pharmacies.

While many shredders can handle a wide range of materials, there are some materials that may prove more problematic. Hawn notes that shredding non-woven material can be very demanding on the shredders.

Regardless of the type of material shredded, Bauknight says that his company treats the service of product destruction the same as it does paper shredding. "We use the same set up—tracking and security are all the same for us."

Other companies say that while there are material differences between products and documents, the most important step is to treat any and all materials in as secure a method as possible.