From Ashes to Action

Companies are seldom tested in the way that Neoshred of Akron, Ohio, was tested on the afternoon of July 13, 2009, when a fire quickly spread through the building that housed the company’s information destruction business. According to newspaper reports, more than 30 firefighters, five fire trucks and two medical units were called to the scene.

As the extent of the devastation became clear, Neoshred owners Giovanni Donatelli and Guido DiIorio didn’t spend much time feeling sorry for themselves. Instead, the duo, thankful that no one was injured in the fire, focused on resuming operations as quickly as possible. Within two days, and with help from family, friends, suppliers and even competitors, Neoshred was back in business.

As firefighters fought the blaze, friends and family began to arrive to offer support. While Giovanni and Guido say they expected encouragement and help from family and friends, they were taken aback by the number of competitors and other local business owners who offered assistance. Bolstered by this support, Giovanni and Guido immediately began taking steps to relocate their business and resume operations.

Within hours of the fire being extinguished, Guido and Giovanni had found a building at which to potentially relocate Neoshred’s operations. Guido also had phoned Ameri-Shred, Alpena, Mich., about purchasing a used shredder for the new facility. In the meantime, using the company’s shred truck and some help from competitors, Neoshred was able to resume servicing its clients days after the fire, staying true to the company’s goal of making the customer a priority.

An area competitor offered help with a community shredding event that Neoshred had scheduled for the following Saturday, honoring the pricing terms that the company had quoted, Guido says. Other local destruction firms offered the use of their equipment, while area businesses offered Neoshred the use of their facilities, the business partners say.

In addition to this support, Giovanni and Guido say they owe their quick return to business in part to off-site data backup of their computer files. Much of the company’s computer equipment was destroyed by the water used to fight the fire. This could have spelled disaster for the business, had it not been for Giovanni and Guido’s foresight in this area. "Off-site backup is critical," Guido says. "It’s cheap insurance."

In addition to off-site data backup, Guido suggests investing in sprinkler and fire alarm systems and reviewing insurance policies yearly to ensure the proper coverage, especially if new equipment has been added to the operation.

Neoshred’s experience with its insurance provider, Grange, was good, given the circumstances, according to Guido. The night of the fire, he and Giovanni had a $25,000 check in hand that helped Neoshred purchase equipment for its new facility and return to operation quickly.

As of mid-December, the company had been reimbursed for its building and equipment, though a number of smaller claims had yet to be settled.

The fire at Neoshred came during what proved to be a challenging year for the information management industry in general. And Neoshred was no exception. Like many document destruction operations, Neoshred has felt the negative effects of the decline in recovered paper pricing that began in the fourth quarter of 2008, Guido says. He describes the decline in recovered paper prices as the biggest challenge associated with the recession.

"The decline in paper prices hurt everyone," Guido says. "The reason was because of how fast it fell—75 percent in one month."

With roughly 80 percent of Neoshred’s business being off-site destruction, the company says it can better control the quality of the paper it markets than a company with a higher percentage of on-site accounts. However, Guido and Giovanni say the ability to provide on-site service opens doors to potential customers that were closed to them before adding the service.

Neoshred has outfitted a straight truck with a shredder from Ameri-Shred and a generator to provide on-site destruction services. "We purchased the Ameri-Shred system, and it actually grew our off-site shredding because people wouldn’t even talk to us when we couldn’t do on-site," Guido says. Many customers opt for off-site service after they realize the cost savings associated with it, he says. Also, some customers may begin with the on-site service and migrate to off-site service after they become more comfortable working with Neoshred, Guido says.

Giovanni and Guido say they view recycling as an integral step in the destruction process, with Guido adding that without it Neoshred would only be doing half of the job.

Neoshred enjoys a long-term relationship with a broker that helps to ensure that the company can continue to move its shredded paper, even when markets lose their footing, as they did in late 2008.

Guido says he’s hopeful about paper markets in the future, noting the continued need for tissue products and the projected decrease in office paper generation. "With computers and the talk of offices going paperless, less material is being generated. Paper prices should increase as a result."

Giovanni’s previous experience in the recycling industry acquainted him with the fluctuations of the recovered fiber market.

Before there was Neoshred, there was Aluminum Container Recyclers of America (ACROA), which Giovanni started in 1980 with his father-in-law, Mike Silashki, to recycle aluminum cans. ACROA quickly expanded into paper recycling.

When Mike retired from the business in 2001, Guido became co-owner along with Giovanni, at which time the business partners renamed the company Neoshred. They refocused on confidential document destruction, but the company also offers recycling services for books, magazines, newspapers, cardboard, shrink wrap and general office paper.

Neoshred services firms in northeastern Ohio within a 70-mile radius of its Akron location. "We manage anywhere from three to five driver routes daily, depending on customers and call-ins," Guido says. "We average about 200 to 300 tons of materials shredded and recycled per month."

The duo says they are always thinking of the next move and how they can continue to grow Neoshred. Right now, that means expanding into hard drive and electronic media destruction.

In addition to expanding the materials they accept for destruction, Guido and Giovanni also are working to incorporate the next generation into the business. Guido’s daughter Angela serves as the company’s marketing coordinator, while his sons Guido Jr. and Vince work in the plant. Giovanni’s daughter, Ali, recently graduated from college and joined the company full time this winter in the role of security provider.

Giovanni and Guido say they would like to see their children increase their involvement in Neoshred in the years to come as the business partners reduce their daily involvement in the company.

While passing the business on to their children is a long-term goal for Giovanni and Guido, the more immediate goal will be to find a permanent location that allows Neoshred to grow. In light of what the duo was able to accomplish after a loss that may have spelled the end for some companies, they are surely up to the task.

The author is editor of Storage & Destruction Business magazine and can be contacted at dtoto@gie.net.