Hitting the Streets

During the buying process, there are a variety of other questions to be asked and answered, but shredding company managers are unanimous in saying that making a hasty purchasing decision without considering the bigger picture is probably unwise.

Perhaps the single largest factor that affects every purchasing decision made by a shredding company concerns which business model will be prevalent in its future: on-sight shredding vs. in-plant shredding.

While some companies choose to focus on one business model, a healthy percentage of firms offer both services. Doing so soon leads to bottom line results and customer feedback that helps determine which service is likely to grow faster.

Studying such information may be a good place to start in the truck buying process. "Any time you’re considering making that type of investment, you need to weigh that kind of option," says Michele Moody, president of DocuGuides, San Antonio, Texas. Her company currently offers only on-sight shredding, but she remarks that as the company grows and makes new investments, that is the time to give consideration to the in-plant model.

For those companies that already offer both services, their recent track records should help direct the next purchasing decision. Jennifer Pratt, president of Capital Shredding LLC, Columbia, Md., says her company’s growth pattern has led it to purchase more collection trucks to serve its in-plant shredding system.

The company has seen much of its 150 percent annual growth rate stoked by its ability to serve customers efficiently and affordably with a fleet of 15- and 20-foot trucks and cargo vans serving the Washington and Baltimore markets.

Although Capital Shredding does have two mobile shredding trucks to provide on-sight services, Pratt says the up-front capital costs to purchase these trucks can be very discouraging. "I strongly suggest in-plant service collected by used vehicles," she says.

Moody, on the other hand, says her customer base (especially government and military clients) prefers the on-sight model for security reasons. One of the company’s selling points is on-sight service provided by a hammermill shredder using a 1.5-inch screen. "Our customers are spending money with us to have their information destroyed securely," she notes, adding that the UltraShred truck she owns provides exactly that.

Beyond the mobile vs. in-plant decision, another factor to be weighed is buying vs. leasing.

"We like to lease," says Cory Tomczyk, owner of IROW, a Mosinee, Wis., recycling and document destruction company that offers in-plant shredding. "It’s a matter of the leasing programs available out there—I think some of them are too good to look the other way." Among those program benefits are warranties that cover major repairs and dealer maintenance programs.

Moody chose to purchase the newest DocuGuides mobile shredding truck. "We take care of our trucks ourselves," she remarks. They are so specialized, it can be difficult to find [an outside vendor] who is competent and qualified."

Just as with passenger cars and single-family homes, the "used vs. new" question can be at the top of the list.

Tomczyk lists a couple of advantages he has found when operating new collection trucks. "If you trade in your off-lease trucks every few years, the drivers are happy and your image looks great," he notes. "It keeps you away from the headaches of trying to keep older vehicles up and running during the aging process."

Also attractive when leasing new vehicles, according to Tomczyk, are predictable maintenance costs that come with the lease as well as warranty coverage on repairs. "In most cases, the first three years, or even all five years, may be covered by warranty," he comments.

But the practice of buying used trucking equipment also has its advocates. "If you’re looking at profit margin, I would encourage people to buy used diesel trucks and then design a good maintenance program," says Pratt of Capital Shredding.

Buying through off-lease and pre-owned auction companies, Pratt says, "Used 24-foot trucks can be purchased for $25,000 and under, and a cargo van for $10,000 and under."

While these vehicles may have 100,000 miles on them, she says, "You can get it painted and, it will look new and keep running until it reaches from 200,000 to 300,000 miles."

Terry Medlar, president of Infoshred.net, Cleveland, has been on both the buy and sell side of mobile shredding truck transactions and says that there are a number of benefits to be found in favor of buying on the used equipment market.

"Buying a used truck is a way to get a reliable truck from a name-brand manufacturer," he says. "When we sold our trucks, we got a number of calls from existing and start-up companies. For the start-ups, calling up and getting feedback from the seller who is already in the business is a good way to find out if your business is going to be viable. And, buying a used truck helps ease that entry cost."

At the same time, though, in the past couple of years, Infoshred.net has upgraded its trucks to include newer, larger ShredTech models that offer faster throughput. "By going to two higher-speed trucks, we replaced two trucks for two trucks, but we have the capacity of six of those older trucks," Medlar comments.

Reasoning such as Medlar’s regarding the bottom-line efficiency of two larger trucks rather than several smaller ones involves another calculated decision-making process.

Even if owners and operations managers are confident that their business can absorb more collection or mobile shredding capacity, they have to consider how to divide up that capacity.

In the parts of Wisconsin served by IROW, Tomczyk says larger trucks can be used for many jobs. "Because we also serve recycling accounts, we have the ability to send tractor-trailers if need be to handle the largest jobs," he notes. "We can size the truck to the job," he says of a fleet that includes tractor-trailers as well as 24-foot straight trucks.

For Capital Shredding, serving tighter-fitting spaces accessible via alleys in the District of Columbia offers a different consideration. "In D.C., we might need to get into those alleys, so some of our routes might be best served by cargo vans similar to what a carpet company would use," notes Pratt.

The logistics of a secure destruction company’s current and potential customer base is just one more factor that creates a significant amount of important homework for company managers to do before expanding their truck capacity.