Weighing Your Options

As shredding companies become more of an integral part of the normal business culture, one of the biggest issues confronting companies is the difference between plant-based and mobile-based shredding operations. Both approaches offer advantages and disadvantages.

Companies choosing a document destruction service must consider many issues. These should undoubtedly include security, service, price, reliability and volume. Other factors to weigh when selecting between mobile or plant-based services could include the need to destroy material other than paper or if large-scale purging of records will be required. Entrepreneurs entering the secure shredding industry must also take similar factors into consideration.

A number of companies that provide stationary shredding equipment as well as mobile shredders say that while the overall demand for their equipment is growing, most of the growth is on the mobile side.

While much of the analysis is anecdotal, some equipment companies say that an interested party often will opt to begin with a mobile shredding truck. Once the company gains a certain volume, it may consider adding a plant-based operation.

A number of factors contribute to the greater interest in establishing mobile shredding operations rather than plant-based facilities. The most obvious reason is the comparatively lower upfront capital investment. A company may need only to purchase a box truck with a shredder and a generator to service smaller accounts. However, to establish a plant-based shredding business, which includes a shredder, conveyors, balers and other equipment, the capital costs can be considerably higher.

For AXO Shredders, a shredding equipment supplier based in Wellington, New Zealand, with a North American office in Kitchener, Ontario, the difference is significant. Mike Berry, the company’s director of sales, estimates that as much as 80 percent of the interest AXO presently sees comes from companies looking for a mobile shredder. While the upfront cost is one advantage, Berry also says mobile shredders may instill customers of a document destruction firm with more confidence, knowing that material is being shredded on site as opposed to hauled to another location, reducing the companies’ exposure to potential loss or theft.

He says that the more people who touch the container, the greater the likelihood of a security breach. With growing concern about theft of documents, many companies are opting to have their fibrous materials shredded on site.

Evelyn Jefferson, sales manager for Allegheny Shredders, Delmont, Pa., a manufacturer of shredding equipment for plant and mobile operations, also sees this trend. With a mobile shredding operation, a company can begin operating quickly without significant overhead.

Additionally, Jefferson says more secure shredding companies are seeking more automation from their shredding trucks, which can reduce their labor costs.

The fairly large margins that many companies have enjoyed are being eroded as more companies enter the market, increasing competition and driving down prices.

David Murray is president of Evergreen Financial, which assists in financing shredding companies, and is founder of Document Destruction Companies of America, a marketing alliance of document destruction firms. He says he sees a role for on-site and off-site shredding companies.

For customers who look at the cost of the service as the most important deciding factor, off-site shredding often will make more sense. "The big guys are looking to pay pennies per pound. They are going to drive someone to the lowest price. These guys will typically be stationary shredders," Murray says.

However, he adds, another set of customers who are more concerned with the assured destruction aspect will opt to pay more for the mobile services. "What matters to them is that the material gets shredded. Mobile shredding companies that sell the security aspect as the major component to their business have found success."

While equipment companies see larger growth in mobile shredding operations, not all mobile operations are the same. Murray says some companies will add on other services, such as a large purge job, to ensure they maintain accounts. While a mobile shredding vehicle will routinely handle steady shredding loads, if there is a large purge order (perhaps 38,000 pounds or more of documents) a company operating a small 1,000-pound-per-hour vehicle would have to run the shredder for a full week to handle the purge. A small shred truck would find such a job nearly cost prohibitive.

Terry Medlar with InfoShred.Net, based in the Cleveland area, says that his company has contemplated offering off-site shredding. However, he questions how a company positions one against the other. "Margins are better with on site." That is a great incentive for the company to continue with its mobile shredding operations.

However, large plant-based shredding operations may seek to deliver much lower prices to customers and offer ancillary services to attract a greater amount of business. Some shredding firms note that plant-based operations are more likely to be able to command a higher value for their shredded paper. Because of their ability to sort the different types of paper, a plant-based shredding operation typically will deliver a more consistent load to a paper mill or to other end consumers. However, while a company installing a plant-based operation can realize more revenue for the fiber on the back end, there is the added cost of balers, conveyors and warehouse space.

While the ability to command higher prices for fiber can be a key advantage of plant-based operations compared to mobile operations, there are other scenarios where a shredding company can take advantage of its fixed shredding operations, such as the ability to handle a wider range of materials. While paper is still the predominant material shredded by document destruction companies, the growth of product destruction could complicate the overall business.

Mobile shredding companies with shredders capable of handling such material may dedicate one day per week (or even less time) to shredding non-fibrous materials, but companies with a plant-based shredder can more quickly handle the destruction. This, some say, gives the plant-based operations a better opportunity.