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Volume 9, Issue 5

September / October 2012

Security Shredding Storage News

Serving the Security Shredding & Paper Recovery Markets Visit us online at www.securityshreddingnews.com

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Are you looking for Products, Equipment or Services for your business? If so, please check out these leading companies advertised in this issue: Collection & Storage Containers Big Dog Shred Bins – 10 Bomac Carts – pg 5 Jake, Connor & Crew – pg 12 Mobile Truck Shredders Alpine Shredders Ltd – pg 3 Shred-Tech Limited – pg 5 ShredFast – pg 8 Vecoplan LLC – pg 10

Shred Companies Sound Off Over Cut-Rate Shredding Services

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D

By P.J. Heller

PRSRT STD U.S. Postage

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Mentor, OH Permit No. 2

ocument destruction companies have been doing more than shredding papers in recent years. They have also been shredding their prices in an effort to attract new customers and keep existing business, hoping to make up the revenue shortfall with the resale value of the paper they collect. “We actually have people bidding to do the shredding free, with only the value of the recycled paper as revenue,” says Ray Linzy, chief financial officer at Absolute Secured Shredding near Sacramento, Calif. In one case, he reports, a document destruction company won a state contract in California by actually offering to pay the agency for its shredded paper. “This is obviously a foolish strategy when paper prices are so volatile,” Linzy warns. “They seem to ignore the fact that it is easy to lower prices but difficult to raise them back to profitable levels as paper loses value.” Both large national document destruction companies and small local shredding businesses come in for criticism by some in the industry for driving down prices to near unsustainable levels. Such moves are driven by a variety of factors including growing competition by national and local firms, high paper prices and a tough economy where document destruction companies are struggling to survive and their customers are looking for rock-bottom prices. As soon as one shredding company cuts its prices, others tend to follow, slashing prices even further to remain competitive and to get work.

“You can go broke for a lot of reasons, and having your trucks sit idle because you never get any work would be the biggest one,” says Linzy, who admits that prices at his company have dropped 25 percent to 30 percent in some cases but adds, “We’ve never done a job for free and we‘re not going to.” “Some document destruction companies in my opinion are irresponsible,” he says, noting that they fail to take a long-term view of the industry. “They’re all short-term oriented. It makes it real tough. It’s easy to push prices down but it’s going to be hard to get the prices back up.” “Our problem has been major companies offering free service for paper, rebates for market share and small owners at 50 cents a box to stay alive,” says Dale Kasel, director of sales and

Continued on page 3

Inside This Issue

4 Cold Comfort The U.S. market for recovered

paper is shrinking but still sizable. Tissue products are one bright spot on the horizon for recyclers seeking domestic consumers

12 HSS to Collect $3 Million for HIPAA Violations 13 U.S. EPA Challenge Stimulates E-Waste Recycling Industry 14 Military Medalist Social Security Numbers Found Posted Online

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Security Shredding & Storage News

Shred Companies Sound Off Continued from page 1

PUBLICATION STAFF Publisher / Editor Rick Downing

Contributing Editors / Writers P. J. Heller Ken McEntee

Production / Layout Barb Fontanelle Christine Pavelka

Advertising Sales Rick Downing

Subscription / Circulation Donna Downing

Editorial, Circulation & Advertising Office 6075 Hopkins Road Mentor, OH 44060 Ph: 440-257-6453 Fax: 440-257-6459 Email: downassoc2@oh.rr.com www.sssnews.com For subscription information, please call 440-257-6453 Security Shredding & Storage News (ISSN #1549-8654) is published bimonthly by Downing & Associates. Reproductions or transmission of Security Shredding & Storage News, in whole or in part, without written permission of the publisher is prohibited. Annual subscription rate U.S. is $19.95. Outside of the U.S. add $10.00 ($29.95). Contact our main office, or mail-in the subscription form with payment.  ©Copyright 2012 by Downing & Associates.

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marketing for ASDD Document Destruction in Tempe, Ariz. “Metro markets have become saturated with providers and basic scheduled service fees have been cut by 50 percent.” Not everyone, however, is willing to go the lowcost route. “I am in business to make money, not lose it,” says John E. Miller, president and chief executive officer of WesTex Document in Lubbock, Texas. Miller tells his staff to concentrate on good paying customers and let the competition have the rest. “Concentrate on density of route to reduce operating costs and we will be more profitable than chasing every contract,” he recommends. Burley J. Pellerin, regional manager for On-Site Document Destruction in Louisiana (a division of 3GS LLC in Knoxville, Tenn., which provides document destruction services in nine states), readily admits that he is, by far, “the most expensive provider in my market. “I don’t hide it,” he says. Instead, Pellerin works to educate potential customers about the services he provides. When they telephone shopping around for prices, he’ll tell them to call other shred companies and ask their questions. He also tells them that he’ll be happy to answer their questions but advises them: “I’m telling you right now I’m not the cheapest and I don’t want to be the cheapest. I’ll be happy to compete if and where I can. “One thing you‘re going to find is I know more about what you need than most other people,” he tells callers. “Ask me the questions, ask me about the certifications and the insurance coverage and the experience I have and so on and so forth and if any of that matters to you, then it will put me back at the top of your list even though my price might have been higher than somebody else. “Cheap ain’t good and good ain’t cheap,” Pellerin is fond of saying. Pellerin is even willing to help potential customers understand — or as he puts it “to dissect” — a best price quote from another vendor to ensure it’s really a good value. “It’s not always what it seems,” he says of some rock-bottom quotes. “If they’re telling you $3 a box, does it really mean $3 a box? Or is there a $200 upfront fee no matter what, plus $3 a box plus a fuel surcharge plus an average daily rate of four hours with anything over that billed at $100 an hour. “What I’m trying to do is give people information in a good sense without necessarily changing my prices,” he explains. “We’re a service industry,” Pellerin says. “We‘re dealing with sensitive material and people who are concerned about that need to know the provider that they are using has that first and foremost. The bottom line is I can’t do it cheaper and not sacrifice some of those safeguards that are in place. “I tell people the reason why we charge what we charge is because the truck that’s parked outside the door here is a quarter of a million dollars. It’s designed to do what you’re asking me to do in the most efficient, most effective and most secure and

Continued on page 11

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Security Shredding & Storage News

Cold Comfort The U.S. market for recovered paper is shrinking but still sizable. Tissue products are one bright spot on the horizon for recyclers seeking domestic consumers. By Ken McEntee

Q

uick, what country is the top consumer of U.S. recovered fiber? If you said China, you’re wrong. Despite the strong and growing demand in that country, a majority of U.S. recovered fiber still gets consumed right here at home. Just ask National Fiber Supply Co. (Chicago), which sells 80 to 85 percent of its recovered paper to U.S. mill consumers. The domestic market has become increasingly challenging, says National Fiber broker Tom Wood, but it remains important. “Because the U.S. paper industry has been shrinking for the last 10 years, people seem to discount it,” he says, but “it puts bread on my table.” The first of the domestic challenges, recyclers say, is the market’s consolidation through mergers, acquisitions, and bankruptcies. “With all the acquisitions, it’s getting harder to navigate the domestic market,” Wood says. “With the [International Paper] acquisition of Temple-Inland and RockTenn’s acquisition of Smurfit Stone Container Corp. [in 2011], the playing field is getting narrower.” He calls the trend “discouraging for private companies like ours because you’re dealing with fewer and fewer people. IP and Temple were both among our biggest customers, and now they’re shutting down mills and changing their production patterns. The bigger a company gets, the more purchasing power it has, and the more power it has to dictate the market.” Also, though U.S. buyers still purchase more material, China has seen the greatest increase in demand. Thus, Chinese buyers are setting the price. These days, “I think the domestic price is just a default of what the pier price would be,” says Steve

Wilson, western region marketing director for Waste Management Recycle America (Houston). “You take the export price at the pier, deduct the freight [cost] to get the material there, and that’s generally what the domestics will pay.” And the domestic market is not uniformly strong across all geographic regions and paper grades. In Southern California, for example, there are virtually no domestic consumers of old newspaper, mixed paper, and other grades. That said, U.S. mills’ consumption of about 90 million short tons of domestic recovered fiber in 2011 is nothing to sneeze at—unless you’re producing tissue, of course. That range of products is one of the brighter spots for the U.S. industry as it looks ahead.

A Shrinking Market

T

here’s no denying that U.S. paper and paperboard manufacturing capacity is on the decline. U.S. production capacity peaked at nearly 104 million short tons in 2000, falling to 89.7 million tons in 2011, a 1.4-percent decline from 2010, according to the American Forest & Paper Association (Washington, D.C.). It expects paper and paperboard production capacity to decline another 1 percent this year before growing 0.6 percent and 0.5 percent in 2013 and 2014, respectively. New mill and machine announcements came frequently a decade ago; now AF&PA can point only to the start or planned start of “several” new tissue-paper machines in the 20112014 period and a single new recycled linerboard mill that it expects to come online in mid-2013. The latter project—the first greenfield containerboard startup in years—is the 540,000 ton-per-year Greenpac recycled

linerboard mill that Cascades (Kingsey Falls, Québec) is constructing in Niagara Falls, N.Y. Domestic consumption of recovered paper dropped last year as well, AF&PA reports, falling 3.2 percent, from about 31.5 million tons in 2010 to about 30.4 million tons in 2011. U.S. consumption was lower both in absolute terms and as a proportion of all consumption, as more U.S. recovered fiber was exported. About 57 percent of U.S. paper recovered in 2011 was consumed domestically, down from 60 percent in 2010 and 64.2 percent in 2007. Total consumption of U.S. recovered paper was up about 3 percent, or 1.5 million tons, in 2011, to 53.6 million tons, according to calculations by The Paper Stock Report (Strongsville, Ohio) based on AF&PA domestic mill consumption data and export data from the U.S. Department of Commerce (Washington, D.C.). Here’s what those data have to say about domestic recovered fiber consumption by grade. (Note that exports include shipments to Canadian mills.) Old corrugated containers. A majority of U.S. OCC is consumed domestically, though the proportion fell from 70.4 percent in 2010 to 65.2 percent in 2011. That’s despite a slight increase in the domestic volume consumed, to 19.3 million tons. In 2007, the earliest year for which data are readily available, 78 percent of all U.S. OCC was consumed domestically. Mixed paper. U.S. mills consumed a little less than half of U.S. mixed paper collected in recent years: Continued on next page

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Security Shredding & Storage News Continued from previous page 46.5 percent in 2011, down from 47.1 percent in 2010. Domestic consumption is up from 2007, however, when only 38.5 percent went to U.S. mills. Overall, 8.5 million tons of mixed paper was consumed in 2011, down 10 percent from the 9.3 million tons consumed in 2010. Groundwood. Groundwood grades, including old newspaper, also are more often going overseas. Domestic consumption was 38.5 percent of the total in 2011, down from 43.5 percent in 2010 and 55 percent in 2007. U.S. consumption of groundwood grades declined 13 percent in 2011, to 3.4 million tons, compared with 2010. Chemical deinking grades. These grades, which include sorted office paper and sorted ledgers, seem to be the domestic darlings, with a far higher proportion of them remaining in the United States than other grades, though the proportion of exports is growing. In 2011, U.S. mills consumed almost 80 percent of the deinking grades generated, down from 82 percent in 2010. Overall, 3.2 million tons of deinking grades was recovered in 2011, down 0.5 percent from 2010, with 2.6 million tons used domestically and about 660,000 tons exported. Pulp substitutes. In contrast with the deinking grades, pulp subs are generally an export grade. In 2011, U.S. mills consumed 35.7 percent of all pulp subs collected, down from 38.5 percent in 2010. Almost 3.4 million tons of pulp subs were collected in the United States in 2011, up 1.2 percent from 2010, but domestic consumption dropped 6 percent, to 1.2 million tons.

No News is Bad News

I

n both supply and demand terms, no other recovered paper grade is as vulnerable as old newspaper. “The declining consumption of paper is a challenge to the industry, but newsprint has been a horrible story in terms of shrinking demand,” says Wilson of Waste Management Recycle America. The increasing use of the Internet has led to the decline of newspapers, and with them, newsprint manufacturing. Just compare the size of your Sunday newspaper now—if you still get one—to the newspaper of five to 10 years ago to get an indication of the industry’s woes. Ken Rasmussen, market development manager for Cascades Recovery (Vancouver, British Columbia), says the big plummet in the newsprint market came after the Beijing Olympic Games in 2008. “The global demand for news was dropping, but because of the Olympics there was a heightened demand in China,” Rasmussen recalls. “They were buying a lot of roll stock as furnish. But once the Olympics were over, [demand] just died overnight.” RISI (Bedford, Mass.) expects North American newsprint demand to contract by 11 percent from 2011 to 2013, according to a presentation by Ken Waghorne, vice president of the firm’s global packaging practice, at the 2012 ISRI convention. A Nova Scotia newsprint mill that Resolute Forest Products (Montréal) shuttered in June was a recent casualty of this trend. Resolute, the new name of the company formed from the merger of newsprint giants Bowater and AbitibiConsolidated, emerged from bankruptcy in December 2010. Two months later the company closed its recycled newsprint operation in Coosa Pines, Ala. Resolute isn’t the only newsprint producer in trouble, either. “It seems that every company that has been making newsprint has gone bankrupt,” Wood says. “It’s rough to sell to those mills because of their financial situations.” These bankruptcies have included Blue Heron Paper (Oregon City, Ore.), Bear Island Paper (Ashland, Va.), and its parent, White Birch Newsprint (Greenwich, Conn.), all of which have shut down their operations. (In mid-July, White Birch announced its Stadacona newsprint mill in Québec City would reopen in August.) SP Newsprint, another White Birch subsidiary, has kept its mills in Dublin, Ga., and Newberg, Ore., open while reorganizing. Catalyst Paper (Richmond, British Columbia) emerged from bankruptcy in June, but it no longer produces recycled newsprint at its British Columbia mills; in August it announced it’s shutting down its recycled newsprint mill in Snowflake, Ariz., at the end of September. The reduction in newsprint production has led to a decline in old newspapers available for recycling, and those that are available more often are collected via single-stream recycling, which increases their contamination levels and decreases the material’s desirability to consumers. “The biggest problem with commingled collection [such as single-stream] is that the more materials we mix together, the more difficult it is to take them back apart,” explains John Lucini, Pacific region vice president for SP Recycling (Clackamas, Ore.). “We have seen an increase in our feedstock of other kinds of recyclables that aren’t compatible with our newsprint process. It affects the yield of the material we buy, and it increases our cost; plus, we have higher disposal costs to get rid of the unwanted materials.” SP’s Newberg, Ore., operation has the option of switching its feedstock to wood fiber when the price of ONP gets too high—or when the quality gets too low. “We

Continued on page 6

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Security Shredding & Storage News

Cold Comfort Continued from page 5

have the capability to run thermomechanical pulp lines “... the newspaper industry faces substantial challenges, but he that make pulp from residual wood chips,” Lucini says. (Warren Buffett) asserted that in “Over the last year or so, we have increased our use of wood fiber as opposed to recovered fiber because there towns and cities where there is a is a lot better yield on the wood side. We tend to look at strong sense of community, ‘there the cost of our fiber at the headbox.” is no more important institution Some recovery facilities are finding it more than the local paper’.” economical to leave ONP in with mixed paper rather than incur the added costs of sorting it out into a separate grade. The result could be the eventual death of ONP as a major grade. Lucini doesn’t think the grade will completely go away, but he is concerned about the loss of ONP fiber that happens when newspaper is baled with mixed paper. “Mixed paper is primarily an export grade,” he says. “Once it is shipped overseas, you’re not going to get it back in the form of newsprint.” The declining quality of ONP from single-stream residential collections reduces Media General (Richmond, Va.) for $142 million. At the time of the purchase, Buffett its value not only to newsprint mills but also to other users, such as cellulose insulation publicly acknowledged that the newspaper industry faces substantial challenges, producers. The contaminants are even more detrimental for cellulose plants than paper but he asserted that in towns and cities where there is a strong sense of community, mills, Rasmussen says. “At the pulper [at a paper mill], they can take out the glass “there is no more important institution than the local paper.” and the other materials, but if you run that stuff through a mulcher [at an insulation plant] you’ll destroy the equipment.” Besides, he says, the low price of natural gas The Office-Tissue Link is making fiberglass insulation cheaper to produce than cellulose insulation. hile lamenting the decline of ONP as a major recovered paper grade, some Despite the pessimism in the newsprint market, one big name is banking on traders have expressed similar concerns about the future availability of the survival of the newspaper—at least the news-collecting end of the business. office paper, which is an important furnish for the tissue business. The Billionaire investor Warren Buffett, CEO of Berkshire Hathaway (Omaha, Neb.), concern is that the growing use of electronic communications could reduce the supply shocked the market with his purchase in May of 63 daily and weekly newspapers from Continued on next page

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Security Shredding & Storage News Continued from previous page of office paper. Scott Fasken, owner of Colorado Document Security (Grand Junction, Colo.) and president of the National Association for Information Destruction (Phoenix), doesn’t buy it. “I don’t think we’re seeing a decline in paper use in offices,” he says. “Yes, there is a lot of information exchanged electronically. Then it’s printed out. Everybody prints out e-mails and other electronic files. I agree with the person who once said that we’ll have a paperless office when we have a paperless bathroom.” NAID signed up more new members in the first quarter of 2012 than in any other quarter in the organization’s history, Fasken points out, indicating growth in the document destruction business, with the potential of even more growth to come. Despite laws and regulations that mandate consumer privacy and information security, a lot of businesses still are not shredding their office paper, he says. “As an industry, document destruction services need to talk to people not about shredding, but about compliance,” he says. “When people understand their liability, they realize that they need to start shredding. That will result in more office paper being recovered. Running out of scrap paper is not one of my biggest concerns.” That’s good news because one U.S. paper production category that shows the promise of short-term growth is tissue, Wood says. Wausau Paper (Mosinee, Wis.), for example, plans to start a new production line for recycled tissue products next spring at its converting facility in Harrodsburg, Ky. That line will have a 75,000ton annual capacity. RISI expects North American tissue demand to grow by about 1.5 percent a year over the next several years, said Esko Uutela, a Hamburg, Germany-based economist for the company who specializes in the tissue sector. In today’s tissue market, mills generally use recycled fiber more heavily in commercial, away-from-home products. If producers begin to substantially increase the recycled content of home-based tissue products, it would make a substantial change in demand for office paper, Wilson says. “If the environmental movement pushes consumers to demand recycled content in retail tissue, it would put a tremendous crunch on supply because demand would go through the roof. Right now there seems to be enough to go around.” Uutela isn’t so sure of that, however. Though tissue producers do want to meet the requirements of “green” certification programs by using more recovered fiber, they’ll find a diminishing supply of that material, he says. “The tissue sector is growing, but the availability of recovered printing and writing paper needed to make tissue is declining,” he says, which will be “a big challenge for tissue companies.” Major tissue producer Kimberly-Clark (Dallas) recently announced plans to cut its consumption of virgin wood fiber in half by 2025, he noted, but it won’t necessarily replace that material with recovered fiber. Instead, the company plans to test alternatives such as bamboo and wheat straw. Cascades’ mills are committed to using secondary materials to produce value-added papers and packaging products, Rasmussen says. He expects consumer interest in sustainability to make its commitment to using recovered fiber worthwhile. “Some mills have the flexibility to switch to virgin pulp if the cost of recycled fiber gets too high,” he says. “But when you make guarantees of a certain percentage of recycled content, you’re locked in.”

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Pragmatic About Packaging

A

long with tissue, the packaging sector seems to hold the most growth potential of any grade on a global scale, market watchers and participants say. Though the recession took its toll on North American packaging production, production has rebounded somewhat in the past couple of years, says Rachel Kenyon, vice president of the Fibre Box Association (Elk Grove Village, Ill.). Despite a reduction in the number of box plants from 2010 to 2011, production of corrugated boxes increased 0.5 percent. Box shipments declined 8 percent from 2008 to 2009, but they grew 3.5 percent in 2010 before last year’s half-percent gain, she says. (The association only disseminates historical data, she points out—it does not create industry forecasts, thus it cannot comment

jim.mcguire@shotguncapital.com www.shotguncapital.com

Continued on page 10

Security Shredding & Storage News. September / October 2012

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Cold Comfort Continued from page 7

on whether such growth will continue.) adjust the proportion of primary and secondary material With the bulk of the growth in packaging “reduces these companies’ exposure to volatility in production coming from China, which relies on the marketplace,” Kenyon says. OCC recyclers also imported recycled fiber to make containerboard, should not worry about competition some traders question whether U.S. mills from virgin material, Wood will be squeezed for OCC. Wilson says. That flexibility at says U.S. producers need the mills is the free not be overly concerned. market at work. “If “There absolutely will be the price of OCC gets enough fiber in total too high, the mills use to go around,” he wood, and the price says. “Whether it comes down,” he says. will all be OCC, I don’t “It’s as pure an example of know. North American a supply-and-demand market [packaging] producers can as you can find. Wood isn’t a always increase production threat to OCC. It’s a complement from wood if the supply of to OCC.” recycled fiber is tight and if RISI saw a contraction in North the price gets too high. … It is not a American demand for containerboard in problem here to make linerboard out of 2011, but it expects demand to rebound this trees. In some ways there is an economic year and next year, growing about 3 percent and 2.5 incentive to do it. If power is expensive, percent, respectively. Research it conducted for the making containerboard out of trees provides a financial Paperboard Packaging Council (Springfield, Mass.) put incentive over OCC.” The average U.S. corrugated box those numbers in perspective, creating a bearish outlook contains 46 percent recycled content, Kenyon says. for U.S. boxboard producers globally. North American “Most mills in the U.S. are swing mills, so they can use demand for cartonboard will continue to grow very a portion of virgin fiber—byproducts of dimensional slowly, “perhaps as much as 11 percent below prelumberSSSN production—and a portion of recycled fiber,” recession peaks, and production is likewise expected to - Mobile she says. “The [proportion of each] they use depends on remain stagnant. We expect very slow growth in folding Message - “Sometimes Big Is Just...Weird!” the market price of those raw materials.” That ability to carton production through 2016,” says Kim Guarnaccia,

Sometimes big is just....weird!

director of marketing and communications for PPC. Further, “Asia has a huge oversupply in boxboard right now, so we expect that [Asian companies] will be exporting a lot of that to the U.S. and elsewhere— including to some of our traditional export markets,” Guarnaccia says. “Unfortunately, we expect that to cut down on U.S. exports.” Even worse, she says, the council’s economists are predicting another recession will hit in 2015. “We’re struggling out of what our economists feel is a depression over the last few years, and as soon as we get a foothold and start a little growth, we’re going to be hit again,” she says. “So their long-term predictions are not very encouraging.” Another wave of economic tumult could trump all other variables in determining the near-term fortunes of the North American paper industry. Ken McEntee is editor and publisher of The Paper Stock Report and Paper Recycling Online (www. recycle.cc). This article originally appeared in the Sep/ Oct 2012 issue of Scrap magazine (www.scrap.org). Reprinted with permission.

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Security Shredding & Storage News

Shred Companies Sound Off Over Cut-Rate Shredding Services Continued from page 3

confidential way possible. It’s not a $30,000 truck that I jimmy-rigged. It’s a truck designed to do what you asked me to do,” he adds. “The guy I have operating the truck is well instructed, well educated and looks professional, acts professional, talks professional. He can come into an attorney’s office and converse with you and your staff and then go on and do a warehouse job down at the dock. He’s that flexible. In order to be able to do that, I have to pay him right and have to be able to pay for that truck.” Linzy says Absolute Secured Shredding, which is run by his two sons, also strives to show potential customers what sets the company apart from the competition. “What you try to do is differentiate yourself with the quality of the work and the quality of the service,” he says. WesTex Document follows a similar path. “Most people who choose a shredding company are not aware that there are major differences between companies in terms of information security, price and customer service,” it says on its website. Both Linzy and Pellerin agree that pegging shredding prices to paper prices makes bad business sense. That’s especially true when locking in a multi-year contract based on paper prices which can fluctuate widely. “That would be foolish,” Pellerin says. “I’ve seen many companies come and go because of that. “I am, first and foremost, a paper shredding company,” he adds. “We do on-site document destruction. It’s not on-site paper recycling. It’s not on-site paper selling. It’s not ‘have paper will travel.’ Unfortunately, many businesses have come into the fray simply to become paper movers.” Linzy suggests that some smaller document destruction companies may be using high paper prices and low shredding fees to land new contracts as a way to lure potential buyers. “This would seem a poor strategy with any astute buyer,” he says. “While the big players, especially those with storage facilities, imaging, uniforms or other services to prop up their shredding business, seem to be attempting to use lower pricing to put smaller shredding businesses out of business or in a position to become motivated to sell. “As a result of these strategies, as well as the failure of many companies to take a long-term look at the future of the industry, we are shredding paper for rates much lower than necessary or that would be indicated by the capital cost required to get into business and operate with a high standard of customer service,” Linzy says. “The only answer that I can come up with is for owners and managers of shredding companies to become more responsible by taking a logical long-term view of where they want the industry to be in the future.” Pellerin‘s answer is for shredding companies to better understand the competition in the market they serve and to stop severely undercutting one another on price. He questions why one company can charge $30 and be successful, while a competitor may charge only $10. “Why would anybody want to offer the service for $10 and leave $20 on the table,” he asks. “If they want to be cheaper, do it for $28. Or do it for $29.50. You can still say you’re the cheapest in town. You’ll still get all those people who are shopping for price.” Miller of WesTex Document also questions the way the industry has moved, describing it as “madness.” And he notes that the cost to destroy documents is a tiny fraction of the fines companies could face if that information was accidentally disclosed. “Many women pay more for a hairdo and manicure than they want to pay to have a box of vital records destroyed,” he says. “The medical industry is wanting us to assume more and more of their risk due to new HIPAA/HITECH (Health Insurance Portability and Accountability Act/Health Information Technology for Economic and Clinical Health Act) rules and at the same time for us to lower their costs for destruction of this material. “This industry is in the security business and yet as business owners keep offering ‘blue light’ K-mart specials on our work,” he laments. “It is a recipe for failure. “We spent so much time and effort building this industry and getting the state and federal regulations on our side only to price our work to the point [where] we are doing more for less and not having the income to keep the heavy demand on our personnel and equipment up and serviceable. Madness . . .”

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Security Shredding & Storage News. September / October 2012 11

In the News PA Law to Keep Consumer Electronics out of Landfills

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arrisburg, PA—As of January 24, 2013, discarding certain consumer electronics in the normal trash stream will be prohibited in the state of Pennsylvania, according to an article on Examiner.com. The rule, part of the Pennsylvania Covered Device Recycling Act that was enacted in 2010, requires that residents bring computers, televisions and other consumer electronics to recycling centers. It also mandates manufacturers play a key role in collection of various devices by instituting their own programs. “Proper recycling is important because there are millions and millions of devices,” DEP Secretary Mike Krancer says. They have a limited useful life span.” The legislation addresses concerns about heavy metals such as lead, cadmium and mercury in landfills. Unsafe or environmentally toxic materials in electronic waste (e-waste) include Americium, a radioactive source used in smoke alarms; Mercury, used in fluorescent lights and many other electronic gadgets; BFRs (brominated flame retardants), used in plastics and known to cause problems in the nervous system or thyroid gland; Cadmium, used in a wide variety of electric components, and known to cause lung or kidney damage. Keeping those materials out of landfills is crucial to environmental health and safety. Valuable elements such as gold, silver, copper, aluminum and others can be recovered through the recycling process, as well. Details of the new law and related information can be found on the Department of Environmental Protection website (www.dep.state.pa.us).

HSS to Collect $3 Million for HIPAA Violations

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oston, MA—Threatpost.com reports that Boston-based Massachusetts Eye and Ear Infirmary (MEEI) and Blue Cross Blue Shield of Tennessee each will have to pay the U.S. Department of Health and Human Services (HSS) $1.5 million to settle HIPAA violations. A laptop containing unencrypted information for approximately 3,500 MEEI patients was stolen in 2010 and never recovered. Then, in 2009, Blue Cross Blue Shield of Tennessee reported a data breach that compromised the information of one million of its customers. Both the hospital and the insurance company filed incident reports with HSS, which then conducted investigations and found numerous noncompliance issues. Despite the inadvertent release of patient data, no evidence to date has indicated misuse in either case. MEEI has been required to follow a new Corrective Action Plan (CAP) that outlines steps to ensure it complies with HIPAA, performs a risk assessment and conducts staff training. Also, HHS will make semi-annual audits of the hospital for three years. The Department of Health and Human Services has had its own troubles. Last summer, a Government Accountability Office audit determined that HHS needs to improve its audit functions, as well as guidance and oversight.

Near-Term U.S. Gains Tempered by Asia-Pacific Slowdown

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ew York, NY—According to a Bloomberg’s Business Week online article, the negative effects of China’s economic slowdown are reverberating in its corner of the world, while the U.S. economy shows signs of improvement. The U.S. job market turned upward at the beginning of the final quarter as its manufacturing sector revived noticeably. Central banks in Japan, South Korea, Indonesia, Thailand, India and the Philippines began looking at policy adjustments to offset the lessening demand for Asian goods and to stimulate business there. Under consideration are cuts in the reserves required of lenders and lower interest rates intended to stimulate money flow throughout the region. South Korea announced 5.9 trillion won ($5.3 billion) in spending and tax relief for its people. Separate economic reports fueled ongoing concerns about the strength of the Australian economy as its imports exceeded exports by A$2.03 billion ($2.08 billion) in August and the country’s new home sales dropped to the lowest level on record. In the U.S., Federal Reserve Chairman Ben S. Bernanke voiced support of the Fed’s stimulus measures even after the expansion gains strength. He added that policy makers don’t expect the economy to remain weak through 2015.

1:59 PM / October 2012 12 Security Shredding & Storage News. September12-08-30

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In the News U.S. EPA Challenge Stimulates E-Waste Recycling Industry

Lehigh Valley Business Honors the Regions Fastest Growing Companies

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ITAN Mobile Shredding, LLC, of Pipersville, PA, has been named one of the Greater Lehigh Valley’s inaugural Fastest Growing Companies. The award program produced by Lehigh Valley Business, the Greater Lehigh Valley’s premiere business news publication, is presented by ParenteBeard. The Lehigh Valley Business Fastest Growing Companies awards program celebrates the Greater Lehigh Valley’s most dynamic companies who progressively contribute to the success of the regions economic growth and stability. To qualify, companies had to meet selection criteria that included a revenue size of at least $500,000 within the past three out of four years and growth in revenue over a four year period, dating from fiscal year 2008 to 2011. Presenting sponsor, ParenteBeard, calculated the nominations and then ranked the companies according to revenue growth over the four-year period. Both dollar and percentage increases were taken into consideration.

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omeoville, IL—According to an article on SustainablePlant.com, the U.S. Environmental Protection Agency (EPA) Sustainable Materials Management (SMM) Electronics Challenge launch is underway. The goal of the initiative is establishing electronics recycling and refurbishing as an industry standard and drastically reducing toxic landfill waste. EPA officials announced the challenge last September at Vintage Tech Recyclers, a certified electronics recycling facility in Romeoville, Illinois. EPA Administrator Lisa Jackson underscored the importance of stimulating a robust recycling market in the United States. “Already, the United States generates almost 2.5 million tons of electronic waste per year – and that number will only grow,” Jackson said. “Used electronics have materials in them that can be recovered and recycled, reducing the economic costs and environmental impacts of securing and processing new materials for new products.” As demand for the latest electronics products causes consumers to discard relatively new models, there’s a huge supply of used electronic devices that can be refurbished, remarketed and recycled. Aftermarket uses for the precious metals, copper, plastic and glass is increasing as is the number of metal “scrappers.” The burgeoning recycling industry is adopting standards such as Responsible Recycling (R2) and Recycling Industry Operating Standard (RIOS), both set down by the Institute of Scrap Recycling Industries, Inc. (ISRI). Some facilities are going for ISO 14001 certification and meeting OHSAS 18001, along with the more rigorous e-Stewards and its related R2 electronic recycling standards. R2, e-Stewards and RIOS are becoming accepted electronic recycling industry standards, focusing on the electronic recycling industry-specific issues of data security, environmental accountability, worker and public health, and material accountability through final disposition.

COR365 Information Solutions Invests in New Charlotte Facility

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inston-Salem, N.C.—COR365 Information Solutions, a North Carolina-based firm specializing in the management and storage of business records, recently announced it has purchased an 81,000-square-foot building in Charlotte’s Hart Business Park. The company has invested an estimated $4.8 million in the site, including $3.3 million for the initial purchase and another $1.5 million for renovations and upgrades.   With nearly 1,200 clients, COR365 Information Solutions is one of the largest records management businesses in the industry.  The company stores and manages more than 1.3 million cubic feet of paper records and 250,000 electronic backup tapes. It shreds and recycles 2,400 tons of paper annually and can capture and store more than 18 million document images each year, accessible via secure online access.  Chris Kelley, CEO of COR365 Information Solutions, says the investment in Charlotte is driven by demand from the company’s clients for document imaging, tape vaulting, shredding, file management and storage. 

www.cwre.ca

Security Shredding & Storage News. September / October 2012 13

In the News Electronics Retailers and OEMs on Board with EPA Challenge

Military Medalist Social Security Numbers Found Posted Online

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ashington, DC—According to an article on LATimes.com, a Vietnam War veteran and military honors buff discovered the Social Security numbers of 31 Medal of Honor and Distinguished Service Cross recipients posted online last September. The Social Security numbers were listed along with names, ranks, units and brief narratives of the soldiers’ battlefield heroics in Iraq and Afghanistan. A Pentagon official says the link to a file with the confidential identification numbers was inadvertently included on a web page developed by one of its contractors. The contractor, Alexandria, VA-based Brightline Interactive, had created the “Gallery of Heroes” web page for display on a kiosk. The kiosk was among the exhibits at the October 2011conference of the Association of the United States Army (a nonprofit educational organization). Brightline removed the link immediately upon notification and began investigating the cause of the breach. Doug Sterner, the Vietnam veteran and Bronze Star recipient who discovered the breach, says he was surprised to see the Social Security numbers when his Google searches of several medal winners’ names led him to the web page in question. The Pentagon says the data were publicly viewable for less than a year, and it is conducting an investigation to learn how the numbers were released from government records.

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Shred-It Acquires Super Shred

US Economy Improves, Economists Predict Global Slowdown

nvironmentalLeader.com reports that retailers, Best Buy and Staples, and manufacturers including Dell, Sony, LG Electronics, Panasonic, Samsung, Sharp and Sprint have joined the EPA’s Sustainable Materials Management Electronics Challenge. The agency created the initiative to prevent all manner of consumer electronics—computers, TVs and other devices—from going to landfills, as well as to stimulate growth of the electronics recycling industry here in the United States. The stores and manufacturers will be ramping up collection programs. Eventually, all used electronics will go to third-party refurbishers and recyclers. To become part of the program, recyclers must meet environmental safety standards and have their operations certified by independent auditors. “The US generates nearly 2.5 million tons of electronic waste per year and that number will only grow,” says EPA administrator Lisa Jackson. Consumer awareness and demand for recycling options are on the rise. Six in 10 consumer electronics owners removed at least one device from their homes in the past year. This statistic is according to a recently-released EPA study that also reports nearly half (48 percent) of those owners donated the device for reuse and 26 percent recycled the device. Of the 12 percent who reported putting a used device in the trash in the past 12 months, most cited convenience as the primary factor for their choice.

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ttawa, Canada—The Ottawa Business Journal reports the 18th acquisition by Toronto-based Shred-It in two years has been completed. The company says it plans to continue to grow by acquiring more companies. Shred-it has purchased Super Shred Document Destruction for an undisclosed amount. Both Shred-it and Super Shred have headquarters in the Greater Toronto Area and also run local operations in Ottawa. The Toronto Super Shred facility will continue to operate independently. “This acquisition supports our corporate growth strategy, and will significantly enhance our presence and density in key Canadian markets including the GTA, Cambridge and Ottawa,” says Shred-it CEO, Vince De Palma. Shred-it is owned by Securit, an Oakville-based records management, data security and document destruction company.

Electronic Device Recycling Ramps Up, Thanks to USPS/ MaxBack Partnership

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rie, PA—According to reports on MotherNatureNews.com and Marketwatch.com, a new partnership between the electronics recycling program, MaxBack, and The United States Postal Service (USPS) makes trading in cell phones, smart phones, PDAs, and digital cameras a cinch. With many states enacting laws against discarding consumer electronics devices in regular trash, there’s been a need for easy and convenient ways to recycle or dispose of these items. Now you can stop by any USPS retail location or visit a website to quickly find the trade-in value. To get your money, you just complete a form, place the device in a pre-paid Priority Mail envelope and the Postal Service sends it off for inspection. Once the device checks out, you get paid. If the gadget is inoperable, it goes to a zero-waste landfill company for recycling. Involving 3,100 USPS retail locations nationwide and the use of RapidQuote TechnologyTM, customers can learn smart phone trade-in values by scanning the “CA$H CODE” QR code on any one of the Recycling Campaign displays inside Postal Service stores. Or, they can search a database for their device model by going to the Recycle Through USPS website. (https://www.usps.com/ship/recyclethrough-usps.htm). MaxBack promises to complete inspection within two days. Customers receive payment for smart phones, tablets and iPods, via PayPal, Amazon, or check. RapidQuote is a proprietary, cloud-based technology developed by the Erie, PAbased MaxBack unit of Environmental Reclamation Services, LLC, a division of Clover Environmental Solutions. Devices that pass inspection are remarketed. Damaged or unusable items are properly recycled. Customers who simply want their broken devices recycled can pick up a free recycling mail-back envelope at any USPS retail location.

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ondon—An Economy Watch article on the NBCNews.com website reports positive economic signs for the United States as its job market improves, while economists and financial analysts caution that a global economic slowdown could occur. Indicators such as flagging growth in the Euro Zone, Britain and Asia, and tapering demand for Australian coal are cited in the article. Overall, consumer spending is not picking up, despite the actions taken by the world’s central banks toward the end of last summer. Fewer orders, as indicated by Purchasing Manager Indexes (PMIs), have led to layoffs at Euro Zone companies, further causing consumers to be more frugal. Meanwhile, the lessening pace of Chinese growth in its services, construction and manufacturing sectors is contributing to generally downward trend in that country through the end of 2012. “Is the global economy heading into another recession? This is now becoming a genuine possibility, given events in recent months,” said Gerard Lyons, chief economist at Standard Chartered in London, in a research note. “The inability of European politicians to address their problems suggests that uncertainty about the euro area will persist, with the periphery remaining in recession.”

NAID Board Approves $2.8 Million Budget

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hoenix, AZ—In mid-August, members of the National Association for Information Destruction (NAID) Board of Directors met for their annual meeting in Ourey, Colo., which is the home of NAID President Scott Fasken. Among the many accomplishments at this face-to-face meeting, the board approved a $2.8 million budget. This budget includes allocations for a new, larger website; an online memberemployee training interface; international industry research; a new multiyear ad campaign; and several video productions. “From a marketing perspective, this budget is the most aggressive in the association’s history,” said NAID CEO Bob Johnson. “We have traditionally concentrated on a few consumer-related association publications. Our future efforts are designed to make a much bigger impression on a much larger audience.” Johnson declined to provide more details about the marketing initiative but said members will “know it when they see it.” He added, “It is completely different from anything we’ve tried before.” Also, the new website will have a number of enhanced features for members, including an online application process that streamlines recertification for both the applicant and the association. “Online processing of dues, registrations, applications and ordering marketing materials will provide on-the-go, flexible options for members moving at the speed of business,” said Marley Day, NAID’s Chief Information Officer. “NAID’s newly renovated website will also provide all of these features in the languages represented by NAID chapters for a global solution.”

14 Security Shredding & Storage News. September / October 2012

Product/Equipment Profiles

MOD Company Introduces Poly-Trux® Recycling Truck

UNTHA Introduces RS 150 Shredder

he PolyTr u x ® 54P-26R recycling truck from material h a n d l i n g p r o d u c t manufacturer Meese Orbitron D u n n e C o. , Ashtabula, O h i o ( w w w. Recycleosaurus. com) features a clever design based on the interior width of standard trailers to permit loading the collection carts three across and unloading without rotating or turning them around for maximum space efficiency and simplicity during transport. Cubing out a variety of box trucks, trailers and other collection and delivery vehicles, the space-saving Poly-Trux 54P-26R allows nearly 100 of the recycling carts to fit on a single 53’ trailer load, often enabling recycling companies to consolidate routes and/or reduce the number of trips required while saving on fuel costs.

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NTHA shredding technology America, Inc. of Hampton, NH recently l a u n c h e d i t s l at e s t shredding equipment, the RS 150, in the States. At 500 horsepower and standing 30 feet tall, the RS 150 has a four-shaft shredding system that coarse-shreds material and then fineshreds material in one single operation. The RS 150 handles products as diverse as sheet metal, electronic WEE scrap, IT and telecommunications equipment, consumer electronics and tools, hazardous waste, tires, copper and aluminum cables, plus spring mattresses, ropes, carpets and GoreTex rolls. Its unique flanged cutter reduces the load on the shaft and makes it difficult for debris to get past the cutter. A ventilated shaft also keeps debris away from the cutter; both features significantly reduce down time. The cutters are held in place by heavy-duty springs which evenly disperse load. This reduces stress on the machine and extends the life of the drive shaft. The RS 150 also has UNTHA’s patented Torque Drive System.

For more information, contact David McHugh at 800-829-4535, dmchugh@modroto.com or visit www.Recycleosaurus.com.

For more information about UNTHA America and UNTHA shredding equipment, visit www.untha-america.com or call 603-601-2304.

L&P Wire-Tie Launches Pinnacle II™ Recycling and Waste Bundling System

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&P Wire-Tie Systems recently i n t ro d u c e d t h e Pinnacle II™ WireTie System with CORE™ Modular Te c h n o l o g y. Pinnacle II offers the modularity functions introduced in the original Pinnacle system in 2010 and adds advancements that make it more robust. It is ideal for high-volume recycling centers that produce 200 to 400 bales per day. The Pinnacle II offers greater accessibility. The tying head is fully serviceable from the front and can be completely disassembled in as little as 15 minutes, significantly reducing the time a technician needs to make repairs and adjustments. The Pinnacle II’s sequential segment gear offers variable speed, minimizing wear by gaining momentum as the machine cycles in the tying process and reducing speed at the end of the cycle. This is unique to four-twist knot machines, providing durability, while lowering maintenance expenses. Operators can also use a lower wire gauge, lowering costs without compromising quality. For more information, visit www.lpwiretie.com.

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Maren Introduces ProPak60 Full Eject Baler

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he ProPak60 Full Eject Baler from Maren Engineering can bale a wide variety of material, including OCC, UBC, PET, HDPE and mixed-grade papers. The baler is designed to take the guess work out of baling by intelligently customizing bale size and weight to meet shipping methods. It features a mechanism that can communicate directly to production personnel with up-to-the-minute notifications on throughput, jams and productivity. The baler can even keep track of its own maintenance schedule. It features a 54 inch-by-40 inch feed opening, a 102 PSI platen force and 450 Brinell wear liners. Also included is a 27-point chassis shear blade, a progressive platen shear and special bale chamber geometry meant to eliminate shear jams. The easy tie system is meant to allow for easy feed of bale wire without debris obstructing wire travel path. The baler’s automatic bale decompression will automatically decompress prior to the operator being able to open the bale door after it has been tied off. Its streamlined hydraulic system uses high-efficiency pumps and minimizes hydraulic components, hoses and leak points. For more information contact Maren Engineering at 708-333-6250 or visit www.marenengineering.com.

Security Shredding & Storage News. September / October 2012 15

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UNTHA shredding technology America Inc. 5 Merrill Industrial Drive, Hampton, NH 03842 Phone 603 601 2304, Fax 603 601 2423