One of Chicago's nicknames is the City of Big Shoulders and that's what it takes to do business here. Also required are expansive visions and attitudes, giant earth-moving machines and generators the size of trucks that provide power to big clients, including one of the biggest utilities in North America. Caterpillar dealer Patten Industries, which includes Patten Tractor and Equipment, Patten Power Systems and Patten Rental Services, headquartered on a 35-acre facility in the Chicago suburb of Elmhurst, offers as wide a range of products and services as just about any company in the rental arena.
Big has always been synonymous with Caterpillar. Its buildings and offices have always looked overwhelming, foreboding and even remote. But that image has been changing over the past decade as the big Cat has gone after an entirely different customer base, and come up with a new, small-is-beautiful business emphasis.
In recent years, Caterpillar has discovered and reached out to a new customer — the small contractor, particularly those that specialize in niche markets such as underground fiber/optics contractors or plumbing, heating or ventilation installation specialists. Imagine 10 years ago, if a customer had walked into all but a few Caterpillar dealerships, and asked to rent a cutoff saw for a day. Not likely. But 70-year-old Patten Equipment, like many other Caterpillar dealers, has made the transition, having set up dedicated Cat Rental Store facilities that offer such small items as submersible pumps and cutoff saws and small generators that fit in the back of pickup trucks.
“We've always been known as a large dealership tied to the dirt business and now we're marketing ourselves differently to end users,” says light construction division manager John Loftus, who manages Patten's rental services division. “If they want a 14-inch gas-powered cut-off saw, we've got it. And although that rental is small, it gives us an opening for the next rental, which might be light towers, or air compressors or skid-steer loaders.”
Patten has hired a lot of young sales staff, many new to rentals, and they are taking the approach that Patten's rental service division will grow with its customers.
“Many of our customers are smaller and more specialized, and we work to help them grow to where they can bid on bigger jobs,” says Loftus. “We deal a lot with landscape contractors, promoting our skid-steer loader business. Many of them have grown from residential landscaping into commercial. They start small, and then they look at bigger jobs with bigger equipment and we've played a role in helping them grow on to that next level.”
The rental services division has great growth potential, but Patten isn't dependent on that business segment. In a period of economic uncertainty, Patten's diversity is an advantage. In addition to its rental services division, and its tractor rental division with its fleet of nearly 500 pieces of earthmoving equipment, Patten's power systems unit has generators ranging in size from 15 kilowatts all the way up to 2000 kilowatts. It also has a complete line of temperature control equipment, chillers and engines.
Its generators are installed in hospitals, schools, data centers, high-rise buildings, telecommunications operations, manufacturing facilities, workboats on the Great Lakes and a variety of other applications. It provides power to a variety of sporting and entertainment events as well as motion picture and television production. Patten Power backs up its units with more than 40 field-service technicians equipped with their own field service vehicles with tools to diagnose, repair, replace and do all the preparation necessary for complex power-generation jobs.
In addition to providing support that inspires customer confidence, Patten's service department directly brings in business. “If a company brings us its generator for service and it's going to be out for three weeks, they'll call us for the rental,” says Bana Dominick, rental representative for Patten's Power Systems division. “We offer them the generator at a reduced rate because our service department is doing the work for them. We get a good bit of our business that way.”
Patten's service capability helps Dominick and his sales team offer a complete package to customers. It has one of the largest service departments in the power services industry and is able to draw upon the rest of the dealership for support. If additional service help is needed for a large project or if service needs are extra during peak periods, Patten Power Systems can draw mechanics from other branches or from other divisions, such as the tractor or rental services divisions. Its large pool of mechanics makes it easy to provide service on a 24/7 basis.
“If one of our mechanics has a family commitment, as we all do from time to time, we have nearly 75 mechanics we can draw from,” says Dominick. “We never have a problem finding service help, no matter what time it is or what the weather is like.”
Patten Power's ability to offer a full-service package has helped it become a major player in northern Illinois and Indiana's power generation market, one whose expertise is often sought by other power rental companies.
The big job
Patten's biggest job was a three-year project providing more than 160 1,750-kilowatt generators to utility Commonwealth Edison over eight sites in the Chicago area. “It was the world's largest distributed power generation job for sole source,” says Dominick. “It was a huge undertaking. The first year we had 60 units, the next year it was 96 and the third year we had 160 units on the job, plus six floaters. We had 18 technicians on call all the time that did nothing but run the units, and we had another six or seven that did nothing but work on repair. Some sites had 30 generators on them, some 20, and we had a minimum of two technicians on each site.”
The Commonwealth Edison project took months of planning. The units ran primarily during the summer months, but the logistical planning required months of advance preparation. Mike Matias, now rental manager of the power systems division, handled the job full time, scheduling run times with Commonwealth Edison, and planning and coordinating equipment delivery, testing and paralleling, and safety precautions. Another Patten technician worked full time arranging servicing, load sizing, preventive maintenance and repair and warranty issues.
The job required extensive budgeting and cost control as well as a large fleet of back-up equipment including a wide variety of tools, forklifts and transformers. Patten generators remained at the sites full time and were used primarily during peak hours and on hot days when high temperatures led to overloading because of excessive air conditioning usage.
Although the Commonwealth Edison project — which was not renewed after Commonwealth merged with another utility — provided as much as $14 million in annual revenue during the contract's final year and was a substantial boost forward for Patten Power Systems, PPS still has a wide range of clients and services.
“We can do distributed power, backup power and supplemental power for utilities,” says Dominick. “We also offer standby power for companies that want generators on site as security in case of need.”
Although the recent terrorist attacks have made many companies more security conscious and aware of the possibility of disruptions to their energy supplies, Patten sales people don't believe in trying to take advantage of people's fears, Dominick says. “We tell them that we have it if they need it, but we don't try to instill fear,” he says. “We worked the same way when there were concerns over Y2K.”
Patten also provides peak shaving services, helping customers to control costs by generating their own power during peak utility usage periods. Patten Power's specialists also design cogeneration solutions to help companies combine heat and power needs. By recovering and reusing as much as 60 percent of heat wasted from generator engines, Patten enables companies to reduce costs significantly through this process. Patten also carries related equipment such as switchgears, fuel tanks, heat recovery equipment, weatherproof enclosures and electrical equipment, and offers sound-attenuated units for noise control and trailer-mounting for transporting.
Patten Power Systems has about 100 generators, 30 1600-cfm oil-free compressors, and about 15 1-million-bpu heaters in its inventory.
Being part of a large dealership, with tractor and rental divisions, helps Patten Power because it enhances its ability to offer a complete package.
“When you bid on a big maintenance project on a big plant, they want you to have a full line of products, including aerials, skid-steers, pumps, light towers, air compressors, and tools,” says Dominick. “We have to re-rent aerials, but we have everything else. In the past, we couldn't participate because our fleet wasn't complete enough. You have to list what you have and where you'll get that which you don't have. No one vendor can have absolutely everything, but we are more of a viable player than we've ever been before.”
Having access to parts also helps Patten Power and all of Patten's rental services. With more than 90,000 parts available on the property, Patten has the ability to quickly obtain almost any part it needs. Caterpillar manufacturers a wide variety of engines and its service department performs such services as preventive maintenance programs, load testing, vibration analysis, emission checking, electronic engine interfacing, failure analysis, engine overhaul, switchgear and cooling system maintenance. It sets up customer support agreements with customers to offer fixed costs on scheduled maintenance, thus helping customers to manage costs more effectively.
Being part of the world's largest construction manufacturer provides other advantages to the Patten Power staff. Caterpillar has a dealer advisory committee that regularly offers feedback to the manufacturing staff on product development and customer reaction to product. Dominick, chairman of the product development committee, says this gives the dealership an important advantage in terms of communication with customers.
“Before they come out with a unit, we do a survey within the constituency of our region and ask our customers' opinions about that particular configuration of generator, everything from the water heater to the controls to the meters,” says Dominick. “We put together a critique and give it back to Caterpillar before the unit goes into production. There wasn't a cohesive dealer and customer voice before but there is now.” When Caterpillar bought generator manufacturer FG Wilson, the dealer advisory team examined the unit and recommended a number of changes to its products to make them more rental-friendly.
Patten has become more rental friendly in a number of ways in recent years. In addition to the significant growth of Patten Power Systems, its rental services division has embraced the Cat Rental Store concept. In October of 1997, Patten hired John Loftus, who had a strong background in rentals and light construction equipment with 20 years experience with Portable Tools Sales and Service, Ingersoll-Rand Air Compressors and Westside Tractor Sales. All Chicago area companies with strength in rentals and light construction, Loftus' experience enabled him to design a plan to develop Patten's short-term rental strategy.
“The rent-to-rent business was gaining a lot of steam in 1996 and 1997, with so many owners realizing that owning machinery and not having appropriate utilization was a luxury they couldn't afford any longer,” Loftus says. “We increased our prime rental fleet substantially, and we're attracting a lot of new customers, getting new people walking through the door all the time.”
This past spring Patten further developed its commitment to rental with a branch in Joliet that is primarily devoted to the rental business, with a lot of floor space that enables it to showcase allied small products in addition to the Caterpillar lines. Caterpillar has expanded its rental presence in its other branches as well. Its Grayslake branch has a 1,500-square-foot area with a rental counter and inside coordinator. Patten put in counters and rental coordinators in its Rockford, Hammond and Oglesby branches as well. Loftus says the company will determine, depending on its growth, whether or not it will expand into separate Cat Rental Store facilities in these branches.
Despite the current uncertain economic environment, Loftus is optimistic about the rental program's potential for growth. “Probably the biggest challenge is recruiting, finding the right people that really want to learn the rental business,” Loftus says. “But we feel that Cat dealerships have the advantage of being well-established nationwide, with third-generation ownership in many cases and a lot of familiarity with all facets of the equipment business.”
Loftus is bullish about the potential for growth in the Chicago market.
“There's a lot of work going on in urban Chicago,” he says. “There is reconstruction of the southern half of Lakeshore Drive, of Wacker Drive and the renovation of Soldier field. A lot of people are moving into the downtown area so there's a lot of rehab work going on.”
Between the growing Cat rental services division with its light construction equipment and Patten's long-established tractor rental sector, Patten is one of the leading construction rental players in the region. “We like to think that we have the largest rental fleet in the Chicago area,” says rental fleet supervisor Tony Mattingly.
From big power systems to big earthmoving equipment to a growing ability to handle small items, it's becoming increasingly clear that Patten is able to play a broad role in carrying the city of big shoulders.
An RER Capsule
Patten Tractor & Equipment Co.
History: Patten Industries was established by B.C. Patten in 1933. Current owner Crane Patten is the third generation of the Patten family to own the company.
Locations: Headquarters in Elmhurst; branches in Joliet, Grayslake, Richmond, Oglesby, Ill.; and Hammond, Ind.
Equipment Lines: Patten's tractor division features the complete range of Caterpillar earthmoving equipment from small wheel loaders to large excavators and bulldozers. Patten Power Systems has Caterpillar generators; Allmand Bros. heaters; Caterpillar engines from 20 to 6,600 horsepower; oil free air compressors and air conditioning units. The rental services division has Caterpillar light construction equipment, small Multiquip generators, Compair Leroi air compressors; Allmand light towers; Flygt submersible pumps; Stihl cutoff saws; MBW compaction equipment; Target walk-behind saws and blades; Koshin pumps; Miller welders. Patten also has an agricultural equipment division.