Coming to maturity

Features - Secure Destruction

Consolidation is influencing the landscape of the secure document destruction industry.

June 1, 2017

When it was relatively young, the secure document destruc- tion industry was characterized by a number of startup operations that consisted of a single operator with a truck shredding documents on-site. While some such operations certainly remain, they are fewer and farther between, particularly in light of the waves of consolidation that have occurred within the industry, according to sources.

Fighting on fewer fronts

Today, two large national players remain: Iron Mountain and Shred-it, which was purchased by Stericycle in late 2015. Shred-it had combined its shredding business with Cintas, another large player, in 2014, taking the Cintas name out of the document destruction sector.

Ian Taylor, CEO of Eagle Secure Shredding, Tucker, Georgia, describes the document destruction industry as being better than it has been in the last four or five years. While he says many factors are at play, the primary reason is consolidation. “We are not fighting on all fronts,” he says.

The service providers who were pushing down service prices in his market have gone out of business, Taylor says. “Pricing has become more robust, and we have been able to increase pricing and see it stick.” While he describes the price increases as “nominal,” Taylor adds, “People are willing to accept that to get the quality of service they want, they have to pay for it.”

Ray Weijland, vice president of Paper Recycling & Shredding Specialists Inc. (PRSS), Pomona, California, also says he feels the industry is “turning a corner” as fewer new operators enter the business and as consolidation has occurred.

Valerie Androutsopoulos, principal of Vangel Paper, Baltimore, says Stericycle’s purchase of Shred-it is having additional effects on the industry.

While Shred-it was founded based on an on-site service model, its current owner is trying to move the company to an off-site model. In an April 28, 2016, conference call to discuss the Stericycle earnings report for the first quarter of 2016, Brent Arnold, executive vice president and chief operating officer of the Lake Forest, Illinois-based company, said Stericycle had reassessed the timeline for this conversion. “While several regions have successfully made this conversion, the time to convert each region is taking longer than previously anticipated,” he said.

Arnold said nearly $20 million in anticipated reroute “synergies” would be extended into 2017, with their full impact realized in 2018.

As a result of Shred-it’s change in service model, Androutsopoulos says more clients and potential clients are entertaining off-site service who might not have done so in the past. “Shred-it drove the mobile business,” she says. “Whatever Shred-it does is the way the industry is going to go.”

“Pricing has become more robust, and we have been able to increase pricing and see it stick. People are willing to accept that to get the quality of service they want, they have to pay for it.” – Ian Taylor, CEO of Eagle Secure Shredding

Off-site versus on-site

Androutsopoulos established Vangel Paper with her husband, Angelos, in late 1988. In the mid-1990s, Vangel began offering off-site document shredding services to its existing clients as a courtesy, she says. Of course, that changed when they began to realize the importance of secure destruction services to Vangel’s growth.

Androutsopoulos says she never wanted to get into the on-site shredding business but did so at a client’s request in the summer of 2009. Today, Vangel has two shred trucks and its business is evenly split between on-site and off-site services. However, Androutsopoulos admits that she has been trying to grow Vangel’s on-site accounts to increase route density.

But, she says attitudes toward off-site shredding are changing as service providers and clients realize the importance of process in secure destruction services.

Cory Tomczyk, president and founder of IROW, Mosinee, Wisconsin, provides off-site secure shredding, recycling and waste services in north central Wisconsin. Like Vangel, IROW expanded into secure destruction from the recycling sector.

IROW currently operates a straight truck and a collection truck to service its secure destruction clients, though Tomczyk says he is considering adding a third collection vehicle.

He says some prospects can be nervous initially when they learn IROW provides off-site rather than on-site destruction services, though they are not necessarily the large accounts in the area. “What is funny is that we do all the big operations—the hospital systems—up here,” Tomczyk says. “It’s the four-person insurance office that says they have to have on-site.”

Tomczyk says, while he has looked at shred trucks, because IROW’s service area is “too rural and too spread out,” the on-site model doesn’t make financial sense.

Even the national service providers with clients in the area that used to be serviced on-site have transitioned them to off-site service, he says.

Eagle Secure Shredding operates six shred trucks serving the Atlanta area. Taylor says the difference in price between on-site and off-site shredding in the area “is almost nonexistent.” That situation resulted six or seven years ago, he says, “with some crazy operators in our market” who slashed pricing for on-site service.

“The expectation is that it will be done on-site, and they understand that it will cost a little more,” he says of clients and prospects in the area.

Taylor says he “can’t make the numbers work” when it comes to off-site shredding. “Our cost is collecting the material. The throughput on a modern shred truck is 10 times what it was 10 years ago.”

PRSS operates 21 trucks—18 on-site and three off-site. Weijland says he has seen the sense of security once associated with on-site service diminish somewhat in his market. “Residents still have a preference. Businesses are a little more flexible.”

Room for growth

While sources agree organizations affected by the Health Insurance Portability and Accountability Act (HIPAA) understand the need to securely destroy documents, not all industries recognize the liabilities associated with improperly disposing of sensitive information. Yet others insist on doing it in-house. Therefore, educating prospects remains something secure destruction service providers find themselves doing.

Androutsopoulos says the message that security and process are important when it comes to destroying confidential documents still hasn’t penetrated with some prospects. “They see going paperless as an option instead of getting a NAID (National Association for Information Destruction) certified vendor to shred their paper.”

She adds, “There is still plenty of room for growth within the industry. But I think you’re going to see less and less paper and more growth in hard drives and SSDs (solid state drives).”

Weijland says PRSS maintains 5 to 10 percent growth annually without a dedicated sales staff. “As customers grow, we grow with them.”

Taylor says Eagle Secure Shredding has grown 25 to 30 percent on average year on year since its founding in 2009. “We have added a truck or bought a company every year since we started.”

While he says companies in his area that fall under HIPAA understand the need for secure destruction, some manufacturers “could stand to get with the program a little bit more.”

IROW educates small businesses in its area on risks associated with unsecured disposal of documents that contain sensitive information. Tomczyk says this process can help to cement business relationships.

Despite the industry maturing, he says, “There is room for growth, even for us.”

The author is managing editor of Recycling Today and can be contacted by email at