Keystone State’s natural-gas boom lifts Payne’s Cranes

BAINBRIDGE — Pennsylvania led the country in spawning the oil business at Titusville in 1859. Today, the northeastern counties of the state are enjoying a natural-gas boom.

According to the Monthly Labor Review (February 2014) published by the U.S. Bureau of Labor Statistics, employment in the industry rose 259.3 percent between 2006 and 2012. The financial impact of the gas boom has spilled over the border into New York state.

“The drilling in the Marcellus Shale [formation] just over the [state] border has been the mainstay of our business since 2010,” says John W. Payne, the president of Payne’s Cranes, located in Bainbridge (Chenango County). “Our crane service is needed to remove and install large compressors [that are required to pump the gas through pipelines], and our trucking service is required to haul the compressors back to the factory for repair and rebuilding. The future of drilling in Pennsylvania is bright for the next 20-30 years, because there are multiple shale layers and the amount of gas available from drilling increases over time rather than decreases, which is the reverse of what usually occurs in a gas well.”

Payne’s enterprise includes the original company founded in 1970 — JWP Construction, Inc. — and several other corporations. They are Payne’s Cranes, Inc.; Construction Services of Chenango, Inc.; Delaware Equipment, Inc.; and the newest addition, Dexheimer Building Movers and Riggers, Inc. Payne is also the owner of Bob’s Diner, Inc., the watering hole located on North Main Street in the village of Bainbridge. All of the companies are incorporated as “sub-S” entities. The consolidated operation employs 38 people and includes 26,500 square feet of covered space sited on a total of 17 acres. Payne is the sole stockholder with locations in Bainbridge and Guilford. The Business Journal News Network estimates annual consolidated income at $7 million.

“I thought I was going to be an industrial-arts teacher,” muses Payne. “After graduating Morrisville [College] in 1968, I took a teaching job in Philadelphia, N.Y. (Jefferson County). That year, I felt more like a baby sitter than a teacher. I came back to my hometown (Bainbridge) and worked some construction jobs. One day I was in Bob’s Diner, and Jess Hayes, a local contractor, asked me to buy his business. I walked across the street to borrow $12,000, and based on a handshake with a banker, I had a loan. I returned to Bob’s Diner before Jess had finished his coffee and told him we had a deal. As the owner of a dump truck, backhoe, and trailer, I earned $50 from my first customer unloading some top soil. Unfortunately, I backed over the family’s septic system, which I had to replace. This was the beginning of my on-the-job training.”

The initial capital investment soon grew as the companies added trucks, cranes, bulldozers, and other equipment. “We now own 12 cranes,” adds Payne, “ranging in size from 20 tons to 350 tons and booms that extend from 144 to 400 feet. Most of the cranes are mounted on all-terrain vehicles. For years, we have worked closely with UNA-LAM, a division of Unadilla Silo Co. located in Sydney, which manufactures engineered beams for large structures such as churches, equestrian riding rings, and college gymnasiums. Our work has taken us up and down the East Coast and as far away as Texas, although lately we limit most of our travel to adjoining states such as Pennsylvania and Vermont. A 400-mile radius is an optimal distance for a crane, because you can drive the rig there in one day.”

Acquisition 
Payne’s growth had been organic, until last November when he bought L.D. Dexheimer & Son, Inc. in neighboring Guilford. “I have had a long working relationship with the Dexheimer brothers. The oldest, John, was ready to retire. I bought the rolling stock and rigging and leased the Guilford property for five years. The employees all remained with the company and so did most of the customer base. Dexheimer has had a market niche in moving buildings, which complements our business. You really need a specialty in this business to make money.” Guilford is located about 10 miles from Bainbridge.

When asked whether Payne is in a competitive business, the president smiles. “We have crane competitors as close as Binghamton and in nearby cities such as Syracuse, Utica, and Elmira,” asserts Payne. “But our biggest competitors are from outside the area. We really need to run a lean business to compete, and we need competent employees. It’s difficult to find trained crane operators, and many states, including New York, require that they be licensed. Every operator in this state needs at least three years before he can take a written exam, followed by a practical exam. There is no licensing reciprocity, so our operators have to be licensed in each state where we work. [Add to this that] … a crane operator is a dangerous profession, which discourages some people from even considering taking the position.”

Payne, 66, is planning to sell the rigging, transportation, and construction businesses to Gregg Eldridge, a 25-year employee with the business. Eldridge is currently the company vice president. “We’re just in the preliminary stages of putting together a deal, notes Payne, “which I assume will be a deferred-compensation arrangement. The idea is to transfer stock over a few years. I assume I will continue to be active after the sale, retaining the diner, which I bought and rebuilt 20 years ago and continuing as the president of the local chamber of commerce.” 

Regarding the area’s business climate, Payne says, “I don’t expect to see the area attract major businesses such as Borden and NYSEG (New York State Electric & Gas), which had a major presence in the community, but we can help the businesses that are here with efforts like a buy-local program. We can also support the building by Leatherstocking Gas Co., [a joint-venture between Corning Natural Gas Corp. and Mirabito Regulated Industries], of a major, natural-gas line into the area which should continue to supply local businesses with an inexpensive and plentiful form of energy and help to attract some new business to the area.”

In America, the national bird is the bald eagle. In Bainbridge, the official bird is the crane.