Bits and Pieces

For waste companies, paper shredding offers a way to further serve valued customers.

WHILE THE DEMAND for document destruction services has grown in recent years, waste industry professionals agree that the market is maturing. Though this maturation doesn't necessarily equate to a drop off in business, it does indicate that clients are becoming more selective about the materials they're willing to pay to have destroyed. “The big trend to shred is re-evaluated after they get the bill,” says Tony Colosimo, CEO of Artistic Waste, Des Moines, Iowa, which offers document destruction as part of its waste handling services.

Similarly, Jim Harvey, CEO of E.L. Harvey & Sons Inc., Westborough, Mass., says he's unsure of the extent to which the market has matured, but he has seen some change in what companies are having destroyed. “It's not a big enough part of my business,” Harvey admits, estimating that 2 percent of his business comes from shredding. “But some people are cutting back and being more picky about what they have shredded. Some businesses used to send in pizza boxes. Shredding for security is much different.”

Nevertheless, others point out that the cost of that discretionary screening of material often will cancel out any cost savings gleaned from reducing the amount of paper to be destroyed. Thus, says Derek Porter, director of corporate communications for Fairfield, N.J.-based Covanta Energy, some companies may be reluctant to sort what is sent for destruction given the added cost, keeping volumes constant. The jury is still out.

The Paper Chase

E.L. Harvey & Sons has offered in-plant shredding for 15 years and began offering mobile shredding in 2005. Banks are the company's biggest clients for this service. Artistic Waste offers mobile and in-plant shredding services for its clients, primarily insurance companies. Both companies shred medical records, financial statements from banks and businesses, as well as documents from local governments.

Colosimo says that the market for shredding and document destruction has seen a lot of consolidation, but notes that most document destruction services fall into one of two categories: companies that focus only on destruction services, and companies like Harvey & Sons and Artistic Waste that offer document destruction to their clients as part of a full compliment of waste services. “Our customers had a need for it,” says Colosimo. “We are a fully integrated waste and recycling company and offer a bundling of services.”

Because shredding is a fraction of his overall business, Colosimo concedes specialized companies likely handle a greater volume of shredding than his company. Shredding is such a small part of Harvey & Sons that Harvey says he doesn't follow market developments as closely as others. Nevertheless, “we're a one-stop waste solution for the customer,” he says.

Instead of shredding, some companies like Covanta Energy use on-site boilers to destroy documents. The documents are burned into an ash and landfilled. Covanta started its Secure Services program in 1994, but has offered document destruction services since 1988. “It started as an individual service at specific facilities,” Porter says. “Over time, we realized this could be a revenue source for the business on a larger scale.”

Today, Covanta offers document destruction services in 21 of its 32 facilities in 16 states, including California, Oregon, Michigan, Indiana, Florida and most of the eastern seaboard. Covanta handles financial, government, medical and court documents.

Unlike Harvey & Sons and Artistic Waste, Covanta doesn't offer collection services. Customers drop off their documents or have them delivered to the destruction facility. They also can schedule appointments to witness their documents being destroyed. Covanta chose to use boilers instead of shredders because of the fact that many of the facilities that currently offer destruction services already were equipped with the boilers. Porter says that his clients actually prefer incineration to shredding because they know their documents are completely destroyed. “Once they tour (the facility), there's no doubt in their mind,” he adds. “Even shredding companies bring their waste to us because our process is more final.”

However, many waste companies treat the destroyed documents they handle as another revenue stream. One of the major reasons Harvey & Sons and Artistic Waste opt to shred their documents is so they can recycle the finished product by baling it and selling it to paper mills.

“Why would I burn it when I could sell it?” Harvey asks, adding that paper mills buy back the shredded waste for almost $80 per ton.

Stamp of Approval

Whether shredding or incinerating, some companies decide to seek certification as a means to assure their customers that they are employing the highest quality of secure document destruction. The Phoenix-based National Association for Information Destruction (NAID) is the only nationally recognized trade association for information destruction. NAID officials attribute the growth of document destruction to the Fair and Accurate Credit Transaction Act of 2003 (FACTA), which was the first federal legislation to require information destruction.

Although FACTA specifically dealt with destruction of credit report documents, it has spurred many waste companies to get into the document destruction business because it also extended destruction liability to the companies responsible for transporting, storing or disposing of those credit records.

NAID offers membership and certification programs that potentially can open doors for waste companies when it comes to document destruction. The Federal Trade Commission recognizes the certification program and certain states and local governments have enacted policies of only contracting with NAID-certified members. “There's a long history of these things popping up on the government side,” says Robert Johnson, executive director of NAID. In 2007 the Florida Department of Revenue and the city of Seattle passed legislation requiring waste companies to be NAID certified to receive their destruction contracts.

Johnson says that even though the Florida decision didn't extend to all levels of state government, it has been adopted by the university system and various other levels of the state. He also notes that 15 states, including Florida, now have passed certification requirements.

NAID currently has nearly 1,000 members, Johnson says, including 140 vendor members. Of those members, 300 are certified. Harvey & Sons is certified, and Harvey notes that it was an extensive process. Neither Artistic Waste nor Covanta are members or are certified.

For NAID certification, a company must begin by submitting an application. The certification process involves meeting certain requirements before one of the 13 U.S. NAID auditors inspects the operation. Auditors themselves have received accreditation from the American Society for Industrial Security. Requirements that must be met before the audit vary depending on whether the company operates mobile or on-site destruction equipment.

For mobile destruction, companies must implement specific procedures and security policies associated with the collection and destruction process. Employees also must undergo background and drug screenings before the audit can occur. “There are about 15 or 16 things to do in order to meet specifications,” Johnson says. “Overall, the process takes about four to six weeks.”

The requirements for on-site destruction involve similar procedures, policies and checks, but also call for the facility to install a closed-circuit television system to monitor and record plant activity. The company must maintain a 90-day library of footage, which must be finished before the audit can take place. Once the audit is performed, the final approval process usually takes about three weeks.

With or without certification, the document destruction industry continues to evolve. While companies that specialize in document destruction may process greater volumes and serve more clients than waste companies that offer destruction as part of a suite of services, companies such as Covanta, E.L. Harvey & Sons and Artistic Waste say they will continue to grow that segment of their business as needed.

Porter says expansion within Covanta's existing service areas is market driven because it makes little sense to invest in offering document destruction to clients in rural areas. Harvey claims his in-plant shredding operations have grown by 60 percent since 2005, while mobile shredding has experienced 87 percent growth since 2006. Colosimo says his company is looking into developing systems to install shredders at customer sites. “We're a small to medium player in the market,” he says.

Chris Carlson is associate editor of Waste Age.