PAPER RECYCLING CONFERENCE: Shredding an Imperative

Over the past several years the shredding and document destruction industry has grown in stature. At the same time, the number of traditional paper recycling companies that have begun moving toward offering shredding and document destruction services has grown.

According to several speakers at the recently concluded Paper Recycling Conference & Trade Show, those paper recycling companies that haven’t made the move or have decided not to pursue this area the future could be tough.

In a session that touched on the growing sector of document destruction and shredding, three shredding companies, who also operate recycling facilities, discussed some of the key issues that are affecting their business.

David Powelson, with Tri-R Recycling, says that one of the biggest issues that companies looking to get into the shredding business should be aware of is the absolute importance of running a secure operation. “For processors it is simple, you can learn how to shred or you can lose business.”

With all the new legislation and standards being implemented, there also is the importance of keeping up to date with the alphabet soup of regulations, policies and standards. Acronyms such as FACTA, HIPAA, and GLB may seem like alphabet soup to an outsider. However, for shredding companies, as well as those looking to get involved in the business these are huge issues, ones that are driving the market.

In his presentation, Powelson pointed out that the shredding industry has become a growing part of the overall paper recycling stream. Less than 20 years ago the fiber that was sent to recycling centers from shredding and document destruction companies was negligible. However, as the industry has grown, the percentage of the material is growing at a significant rate. This trend, Powelson says, will likely continue for the foreseeable future.

While on the surface it may seem like an easy step to go from a paper recycling to a shredding company, the reality is that it is very tricky. There are a host of obstacles for recyclers who may be considering expanding their business. For one, becoming a security business dictates that the company needs to establish a chain of custody. Also, there needs to be the creation of employee standards, trading and physical separation between the non-shredded material and the shredded documents.

David Friedman, with Friedman Recycling, a Phoenix, recycling and shredding company, stressed that security sensitivity “has never been higher.”

At the same time, the shredding business is showing exponential growth. While growing so sharply, it is still a very fragmented business, with more than 92 percent of all the companies having sales of less than $1.5 million, Friedman notes.

While the industry is growing, what is also becoming even more apparent that shredding in and of itself isn’t necessarily the only step companies should provide. Roughly one third of the companies providing shredding services also provide records detention services; another third provides recycling services; and another third are dedicated to being shredding companies.

What hammers home the essential need for recyclers to make the move toward offering shredding services, Friedman touches on a number of trends and realities. To support his case, he notes that large corporate clients are discontinuing office recycling programs. In their place companies are going toward an “all shred policy. The liabilities and risks are too great. This means that the office paper, to be used by paper mills, will be more and more controlled by shredding companies.

Another reality is that as shredding companies come to control more of the office paper, the quality of the supply will deteriorate. “Office paper will shift from a sourced product of a process designed to protect the security and confidentiality of a client.”

“We are actually forced to shred,” Powelson says. “It is a large, organized crime scene, Powelson says in reference to the total amount of money lost, roughly $50 billion a year.

This doesn’t even take into consideration things such as protecting a company’s basic business such as protecting the customer list.

Also, shredding is beneficial when looking at reducing a company’s legal exposure, Powelson says.

Friedman says, sensitivity to shredding has never been higher. “It is said that one in three Americans either have been or know someone has been the victim of identity theft.”

This, he continues has forced more companies to shred material. According a recent report, the National Association for Information Destruction (NAID) estimated that in 1999 the U.S. shred market was $500 million. Today it is over $1.5 billion.”

With such a burgeoning market, Friedman says that the office paper recycling programs are disappearing, and they are being replaced with office shredding programs. “The phrase we are hearing now is ‘shred it all, because we don’t want to worry about it’, Friedman notes.

This move is resulting in more fiber coming from the shredding operations and less coming from recycling programs. This shift will create new issues, a major one is that the quality of the office fiber will deteriorate within the next five to ten years.”

“The value of the recovered paper is not a high priority for shredding companies,” Friedman says.

With these changes come a number of realities coming. The first is that mills must adapt their intake; processors must adopt a shredding policy; office fiber will become more expensive to force shredders; mills must get themselves involved in the education of the processors; and companies must find friends, align objects and work together to protect yourselves.

Roy Giegel, Fox River Fiber, a paper company based in Wisconsin, is one of the paper companies that does accept shredded paper as part of its raw material intake. The mill makes wet lap pulp from the shredded material.

“Ten years ago Fox River procured about 20 percent of the fiber from the document destruction business. Today we are close to 60 percent almost 70 percent is shredded, chopped or pulverized.”

While the company continues to take in more shredded material, Giegel notes that “ we do need to know how it is processed. If it is sorted or not, a mobile shredder or in-house operation.”

While there are concerns about the negatives with shredded material, Giegel says that the company will take in all the material.

Further, paper companies will have to learn how to use this material. While recognizing that quality issues are a constant concern, mills will have to make adjustments or they will be left with a dwindling supply of raw material to feed their plants.