Congressional Hearings, Scandal — the Shredding Business is Hot

PITTSBURGH – John Wagner built his first paper shredder 35 years ago and sold less than a dozen a year before President Nixon released transcripts showing he ordered federal agents to cease their investigation of the Watergate break-in.

The next year, in 1975, Wagner sold 400 shredders out of his shop in Delmont, about 25 miles east of Pittsburgh.

"A lot of people are under the impression that this Enron thing is going to hurt business," Wagner said. "Conversely, it's a huge boost. It just keeps getting bigger and bigger and bigger."

Since the Enron debacle the shredding business has been sizzling, following a historical pattern that's seen other scandal-fueled booms.

"You might say it's been pretty brisk around here," said David Culbertson, president of Houston-based Texas Shredding Company Inc. "I think you could say most people in our industry are seeing the same sort of thing."

The shredding business has seen a decade-long expansion that industry experts expect to continue.

Shredding companies have experienced an estimated annual growth rate of 20 percent to 30 percent, according to the National Association for Information Destruction.

Not only are shredding companies doing more business, but there are an increasing number of them each year. There are about 500 document destruction companies in the United States today, compared with about 20 in the early 1980s, said Robert Johnson, the executive director of the Information Destruction Association.

"I've advised six or seven people in the last several years that the industry has become saturated — to look into another line of business," Johnson said. "Thankfully, those people didn't take my advice and they're all very successful right now."

Exactly how many businesses contract with shredding companies is unknown. Shredding companies contacted by The Associated Press would not reveal who their clients are nor the volume of documents destroyed for a particular company.

"Business has been growing steadily over the last decade because of concerns over privacy and because of increasingly competitive markets," Johnson said. "There is also a legal obligation by insurance and medical companies to destroy personal records, which has really driven the industry."

There are laws regulating when certain documents can be destroyed legally, said Bob Tillman, a spokesman for the Association for Information Management Association.

"Insurance documents are typically regulated at the state level and their destruction dates vary, whereas the documents from the nuclear industry are highly regulated in regard to detention and when those documents can be destroyed, if ever."

Tillman said it is unclear whether the destruction of documents for private industries will be more highly regulated in light of the Enron scandal.

"I don't think anybody knows at this point, and there are already some pretty strict regulations in place," he said.

Texas Shredding destroys between 20 to 30 tons of documents each day, paper that is resold to recycling companies, Culbertson said. Like Wagner, Culbertson said he started his business out of a garage in 1986 when "we were lucky if we got 1,000 pounds of business in one day."

Wagner, 73, said shredding technology has advanced dramatically since he build his first shredder in 1967 — a 15 horsepower machine that could destroy 350 hand-fed pages at a time.

Machines developed by Wagner's Allegheny Paper Shredders Corp. can now automatically destroy 38,000 pounds of documents in an hour.

"I expect a 50 percent increase industry wide (after Enron)," Wagner said. "Everybody talks about a paperless society. Forget about it. There's more paper out there than ever and it's more important than ever to private business that it's not fished out of a Dumpster somewhere."