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Shredding industry benefits from Fed regulations
The Business Review (Albany)

 

Ned Berkowitz left a six-figure salary in the pharmaceutical industry to get into the shredding business, an industry that has grown thanks to federal laws forcing financial institutions and health care providers to properly destroy sensitive documents.

 

Berkowitz, president of Proshred Security Inc., said laws such as the Health Insurance Portability and Accountability Act are creating a cottage industry for shredders. Health care providers are striving to be in compliance with HIPAA, which provides standards on how to destroy certain medical records.

 

Identity theft and corporate espionage have also caused companies to reconsider how they handle their records, which include everything from paper documents and e-mail to voice-mail and instant messaging.

According to Proshred Security International Inc., an Ontario, Canada, franchise, identity theft affects as many as 700,000 people a year and costs the economy an estimated $3 billion. The American Society for Industrial Security, based in Alexandria, Va., estimates corporate espionage--stealing marketing plans, customer lists and other proprietary information--costs another $45 billion a year in lost profits and opportunities.

 

"Shredding has become a big deal," said Nikki Swartz of ARMA International, a nonprofit association based in Lenexa, Kan., that serves more than 10,000 information management professionals in the United States. Swartz is the publications editor of the association's Information Management Journals.

 

Swartz said more and more companies are creating policies on how to handle proprietary information, or beefing up existing policies.

To capitalize on that market, Berkowitz opened up Proshred in March, a mobile shredding company. Proshred is part of Proshred Security International.

 

"I was the first U.S. franchisee," said Berkowitz.

 

Berkowitz quit his job as an area sales manager for Merck & Co. Inc. and left behind the company car, the stock options and pension.

"By all accounts, I was very successful," he said. "I wasn't fulfilled. I wanted to control my own destiny."

 

He began to research the shredding industry after reading a magazine about the business during a plane trip.

 

Two months later, he paid $35,000 to open the franchise and paid $120,000 for a truck equipped with an industrial shredder with a capacity of up to 1,500 pounds of paper an hour. He had his first customers a week and a half later.

 

"I probably won't pay myself for a year," Berkowitz said, but he is not concerned.

 

Douglas Nord, president of the National Association for Information Destruction Inc., a Phoenix-based trade organization made up of 300 shredding companies, said shredding is now a $300 million to $600 million business. His association grew by more than 50 companies just this year, he said.

 

Nord said the increased interest in shredding started a couple of years ago as a result of the Gramm-Leach-Bliley Act, which required financial institutions to put in place safeguards to protect personal financial records. Hiring a shredding company puts the liability on the shredding company once the documents are turned over.

 

David Neville, co-owner of family-owned 3N Document Destruction Inc. in Clifton Park, which provides shredding off-site and on-site, said it would not be difficult to find proprietary information in local Dumpsters behind businesses and believes local businesses do scour competitors' garbage.

Local shredding companies quickly learned about Proshred opening for business in the Capital Region.

 

"We've been doing this here for almost nine years," Neville said. "When the new phone books came out, we saw there was a new competitor. We've had competitors come and go."

 

Jim Divers, owner of shredding company Alternate Way II of Cohoes, isn't worried about the added competition.

 

"There's plenty of business for everyone," he said.

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Confidata document destruction located in Utica New York, is a member of NAID and follows FACTA and HIPAA records destruction requirements. CONFIDATA is a division of Empire Recycling Corporation

 

 

Confidata
N. Genesee & Lee Streets
PO Box 353 | Utica, NY 13503

 

Hours of Operation
Monday - Friday 7:30 to 4 PM

 

Phone: 1-800-62-SHRED
Fax: (315) 724-0167