When Opportunity Knocks

Jason Radtke and his partners, John and Laura Daly, recognize a good opportunity when they see one.

The trio were working for Royal Paper Stock, Jason’s father’s recycling business, in the mid-’90s when recovered paper prices started to take off. The rising price of recovered paper and the fact that Royal Paper Stock already had an operational shredder were all the incentives Jason and the Dalys needed to start up Royal Document Destruction in 1995.

John, Laura and Jason’s ability to recognize a good opportunity when they see one has helped make Royal Document Destruction what it is today: a full-service document destruction company operating out of a 24,000-square-foot facility in Gahanna, Ohio.

But reaching this level of success hasn’t been easy. It has taken years of hard work and a couple of relocations and equipment upgrades for the company to get to this point. In the end, Jason says he, John and Laura owe the company’s overall success to three things: their relationship with Royal Paper Stock, their employees and their instincts.

As the saying goes, "It’s not what you know, it’s who you know," and in Jason’s case, having connections in the recycling industry has helped Royal Document Destruction.

For one thing, the relationship has made it easier for Royal Document Destruction to retain customers and recovered fiber consumers. "We were able to use the relationship we had with [Royal Paper Stock’s] existing customers to help grow our business fairly quickly," Jason says.

Royal Document Destruction also has benefited from Royal Paper Stock’s mill connections. "We have been able to gain consistent movement through Royal Paper Stock’s connections to mill buyers," Jason says. "We even have the opportunity to tag along on some of their orders, reducing our transportation costs," he adds.

Jason, John and Laura also were able to reduce Royal Document Destruction’s rent in the beginning by running the operation out of Royal Paper Stock’s facility. The founders didn’t know it at the time, but this co-location arrangement also would help Royal Document Destruction survive its first market downturn.

At the end of 1995, recovered paper prices started dropping, and many destruction firms were struggling. Jason says Royal Document Destruction’s relationship with Royal Paper Stock helped the company’s founders diversify their business. "Royal Paper Stock was able to supply us with paper that maybe we wouldn’t have had just to keep our machines and employees busy," Jason says.

Jason notes that even though he and the Dalys had help from Royal Paper Stock, they still did most of the work themselves. "There were many times when John and I had to pitch in to help shred paper or drive the truck," Jason says.

This experience taught Jason a very important lesson. "Don’t build your business model based on paper prices," he says. Instead, Jason recommends destruction firms look at recovered paper prices over a historical range. "This is how we do it, so we have a price that is sustainable and fair to our customers."

Additionally, Jason says destruction firms should plan for lower recovered fiber prices. "This way, when the prices get there, it won’t be such a shock."

In 2001, Jason says Royal Document Destruction was bursting at the seams, processing more than 150 tons of paper per month with no room to store the finished bales. After six years of sharing space with Royal Paper Stock, the company moved into its own 5,000-square-foot facility.

When looking for a location, Jason says he, John and Laura wanted to make sure the company would have room to expand. "We didn’t want to move into a space that we would have to move out of in a year," he says. In the end, the founders’ choice of location paid off when a neighbor moved out, allowing Royal Document Destruction to double its square footage. But within the next couple of years, Jason says he and the Dalys were once again looking for a bigger space to handle the 500 tons of paper coming into the facility each month.

Today, the company processes approximately 800 tons of paper per month in its 24,000-square-foot facility in Gahanna. Royal Document Destruction moved into the facility almost two years ago, and on a good day Jason says the company can process approximately 8 tons of paper per hour. Along with paper, the company also accepts a wide variety of non-paper media, including compact discs, hard drives, credit cards, microfilm and microfiche.

For destruction firms looking to establish a plant-based facility, Jason says it’s important to consider the volume of shredded material they are currently producing. "They have to be processing at least 150 tons of paper per month to really cost justify moving into their own facility," he says.

He adds that timing is also important. "We got into the business at the right time," Jason says. "Now, with the weak economy and dropping paper prices, it’s really tough for people to get into this market."

Royal Document Destruction has come a long way since its early days of processing paper with a 75-horsepower strip shredder from Allegheny Shredders Corp., Delmont, Pa.

Today, the company operates two cross-cut shredders from Allegheny offering 150 and 200 horsepower, along with a horizontal auto-tie baler and three shred trucks. "We have always gone with Allegheny because our employees know the equipment and because we think they have the best equipment in the industry," Jason says.

Jason says Royal Document Destruction gradually stepped up the size of its shredding equipment to match the volume of material regularly coming into the facility. "In the beginning, we weren’t generating the volume needed to justify going from a 75-horsepower to a 200-horsepower shredder," he says.

In terms of when a destruction firm should upgrade its shredding equipment, Jason replies, "I cannot tell you at 200 tons you need a 20-horspower shredder and over that you need a 50 horsepower."

He adds, "We just never had a set formula for when to upgrade equipment. We just made sure that we had enough capacity to best utilize our baler and our shredding system at the same time."

Royal also recently installed a dust collection system to manage the dust generated from unloading material from its shred trucks.

Royal used to operate a shred truck earlier in its history, but Jason says it was too slow, so the company got rid of it. The company re-entered the on-site shredding business five years ago with the purchase of two shred trucks from ShredFast, Airway Heights, Wash., and one from Allegheny Shredders. Each shred truck can hold nearly 8,000 pounds of shredded paper.

"Today, about 70 percent of our business is plant based and the other 30 percent is mobile," Jason says.

Even in today’s tough economy, Jason says he, John and Laura are always looking for ways to expand the company’s business. Even though Royal’s overall revenue is down, Jason says these difficult economic times could benefit the company to a certain extent.

"Downturns really weed out the weak players, and we have never considered ourselves to be a weak player," Jason says.