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SHRED takes a 3D point cloud as input and uses learned local operations to produce a segmentation that approximates fine-grained part instances. We endow SHRED with three decomposition operations: splitting regions, fixing the boundaries between regions, and merging regions together. Modules are trained independently and locally, allowing SHRED to generate high-quality segmentations for categories not seen during training. We train and evaluate SHRED with fine-grained segmentations from PartNet; using its merge-threshold hyperparameter, we show that SHRED produces segmentations that better respect ground-truth annotations compared with baseline methods, at any desired decomposition granularity. 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