Security Bonds

The paper shredder took on mythical status during the Enron saga. Who shredded what and when they shredded it became pertinent information in unraveling the company’s alleged misdeeds. Contacted for a column in a regional newspaper at the time investigators were looking into Enron-related shredder shenanigans, Willie Geiser of Allshred Services, Toledo, Ohio, acknowledged that the document destruction-related news was helping his business.

As the scandal was making headlines, Geiser told Detroit News columnist Laura Berman that while the fraud-related shredding may have been gaining attention, it helped many other companies realize they needed to address the more "routine and appropriate" shredding of private and secure papers.

Legitimate security factors—not cover-ups—are the main reasons companies like Allshred have grown in importance. Identity theft has mushroomed as a white-collar crime, and thorough information and document destruction services can help prevent identify theft’s spread.

"The way I look at it, the two aren’t even related," he remarks. "Document destruction is actually more closely related to the security industry. Armed couriers, security guards, security systems, protecting top-secret information, preventing industrial espionage, protecting consumers from identity theft—the fastest growing crime in America—that’s what the document destruction industry is all about. If all you can think about is the paper coming in the door, you’re going to get yourself in trouble and it could cost you thousands of dollars in fines and civil penalties," he adds.

Geiser’s views are not those of a recycling outsider. In 1992, Geiser started Recycling Services Inc. in Toledo, focusing on office paper recycling.

He purchased the existing Allshred Services company from its founder in 1995, and from that point on saw the shredding service as having a better fit with his operating philosophy.

"During 1996 and 1997, we phased out the recycling completely," says Geiser. "Now, all we do is secure shredding. We found that we couldn’t do both." Geiser doesn’t believe this was a problem unique to his situation, but rather that the two industries have different focal points.

"If you’re going to run a recycling plant like a high security shredding plant, you won’t be cost competitive with your fellow recyclers," he states. "And if you’re going to run a shredding facility like a typical recycling operation, you won’t have the security that your destruction customers need and expect. Since we couldn’t do both and we only had one facility, we decided to get out of recycling."

The distinctions have not stopped recycling companies from branching into document destruction, but Geiser is skeptical whether some of these recycling companies are devoting the necessary attention to security and service that is needed.

Recyclers, he notes, will focus on attracting a premium price for their material, whether they are shredded documents or cardboard boxes.

Geiser notes that at Allshred, material grading is not even considered. "Due to security concerns, we don’t sort the paper that comes in," he remarks. "We dump the containers of paper directly into the shredder hopper. From the time our customers place paper into our locked containers, that paper is not touched by human hands until after it’s shredded and baled."

Ultimately, Allshred’s attitude toward the paper it handles bears more similarity to how recovered fiber generators think of their product as opposed to recyclers.

Thus, Allshred ends up with what Geiser acknowledges is a "relatively low grade of paper." He remarks, "we get whatever the mills pay and we don’t worry about it. We just happen to have a byproduct of our security shredding systems that paper mills can use."

The federal Health Insurance Portability and Accountability Act (HIPAA) and Gramm-Leach-Bliley Act have dictated how the medical and financial services industries, respectively, handle personal information. Sections of those comprehensive acts touch upon the need for secure document destruction.

In addition to compliance, liability is another reason virtually any company that has records with Social Security numbers, credit and bank account numbers and other information that can be used fraudulently are contracting for document destruction.

"Our customers are liable if that information gets out," notes Geiser. "With the Federal government, and now in some cases, states, mandating that certain information and documents be destroyed when disposed of, that increases the degree of liability. If it’s our fault that the information got out, our customer is still liable for whatever fines are assessed, but if we’re found grossly negligent, we’re probably subject to substantial fines also."

With legal compliance and financial liability on the line, Geiser is having little trouble convincing new customers that document destruction is in their interest.

An existing market is one thing, but gaining and retaining market share is another, and this is where a philosophy of thoroughness and hard work is paying off for Allshred.

"I don’t know that we really do anything original," Geiser answers when asked what separates Allshred from other document destruction firms. "We just try very, very hard to do what we do, and do it well. We don’t have a lot of different business lines to distract us. We have just one core competency and that is to properly handle and destroy our client’s confidential information. We focus 100 percent of our energies on that."

"Business conditions are good," he notes. "More and more businesses realize the need to destroy their documents prior to disposal. When you suggest that they should shred their documents, they no longer look at you like you’re crazy."

Allshred vice president of operations Gil Culka, who was with the firm even before Geiser purchased it, agrees with Geiser’s assessment. "Customers today are a lot more educated about this then they were 10 years ago."

In addition to trends driving Allshred’s growth, Geiser’s ability to forge alliances and significant contract arrangements are helping Allshred employees feel secure.

Geiser currently serves as the president of the National Association of Information Destruction (NAID), a Phoenix-based trade group that provides certification and networking opportunities for document destruction companies.

Geiser credits NAID for helping him learn industry best practices, and also for helping establish business contacts in other parts of the country that have opened doors.

Recently Geiser and two other NAID member firms banded together to forge a winning bid for the document destruction business of a major Midwestern financial institution.