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December 2005
Elevating the Elevator Business
By Susanne Deitzel

     As the skyline of Charlotte becomes more mature, with both commercial buildings and uptown residences growing skyward, one axiom becomes more evident than ever: whatever goes up must come down, and vice versa. At least the elevators within them, that is.

And because every single commercial building over two stories is required to have an elevator, this translates into a slew of moving parts, which are responsible for getting people and equipment up and down quickly and safely.

Fortunately for Rodney Pitts, owner and chairman of Southern Elevator Group, the holding company of Southern Elevator Company, the trend is more than ever, onward and upward for Charlotte and for the surrounding region as well.

 

Getting In on the Ground Floor

Founded in Greensboro in1949 by a man named M.B. Toler, Southern Elevator Company began as an elevator manufacturer. Seated in the hotbed of the then healthy textile manufacturing industry, Southern Elevator grew and prospered in concert with the mills.

However, when manufacturing began to enter its decline, it became more and more difficult to justify the expense of regional elevator manufacturing, and Southern Elevator succumbed in a similar decline until, as current owner Rodney Pitts says, “It looked to most people like a hunk of junk, or a pile of old elevator parts.”

But Pitts saw a genuine opportunity to turn famine into feast.

Carrying degrees from Duke University and the University of Chicago Business School and armed with a wealth of experience from the New York private equity firm AEA Investors, Pitts was trained to look past appearances to discover the growth potential of companies for investors.

Pitts had had some knowledge of elevator companies, so when he was approached to invest in Southern Elevator in 1991 after he had left AEA, he embraced the opportunity and, in fact, bought the company.

Pitts immediately promoted Bryant Aydelette, grandson of Southern Elevator’s founder, to executive vice president and later to president. The partners began a major paradigm shift to heal the ailing company.

Explains Pitts, “Elevators may not be ‘sexy,’ per se, but Southern Elevator has a client list that reads like a ‘Who’s Who’ of business and industry of the Carolinas. Coupled with top shelf mechanics and an effective, streamlined administrative core, we knew we could bring the company back to a position of strength.”

To do this, Pitts and his partner put their fingers on the pulse of the industry. “What we were seeing from the four major international competitors was a slowing down in manufacturing. Since we are a regional company, it made sense for us to get out of it altogether.”

However, the genius was not simply cutting out the costs involved in manufacturing, but rather building the face-to-face contact with customers by providing service, repair and modernization. “It became our mission to become the best provider of service in the region and have the broadest coverage of towns and communities throughout North and South Carolina, as well as southern Virginia,” explains Pitts.

While it might sound simple in today’s business climate, Pitts says that the change in focus was a radical departure for the industry. By building upon its hallmark, broad coverage of the region and of the brands of equipment it would service, the company took its first major step toward recovery. Yet as Pitts explains, Southern Elevator would make an even more dramatic departure.

“The most radical shift we took was the decision not to be a major installer of elevators for commercial construction. The old industry practice was to install elevators in order to solidify the five-year service contracts after warrantied service, and we were saying, ‘Let’s get out of that altogether.’”

Looking back, this seems like a giant leap of faith. By reducing face time with new customers, how could the business sustain its service focus?

Pitts replies, “At the time we made this decision, there were a few other trends emerging in the industry: growth in modernization and new ADA (Americans with Disabilities Act) implementation and modification, as well as a growth in the residential market.”

Taking It to Another Level

By addressing these seemingly more ‘niche’ demands, Southern Elevator platformed its strategy, and then took it to the next level: acquisition.

“Consolidation has been the name of the game in this industry for a while, and Southern Elevator has been an active participant in that process,” says Pitts. “As the regional elevator businesses and the owners in the industry have gotten older, many seek retirement, or are interested less in the business aspect and more in the technical aspects of the job. When that happens, we are happy to assume new locations and expand our reach.”

Southern Elevator has grown from two to six branches since Pitts purchased the company and acquired Mountain Elevator in Asheville, N.C.; Washington Elevator in Little Washington, N.C.; Piedmont Elevator in Danville, Va.; Quality Elevators in Wilson, N.C.; and Atlantic Elevator in Myrtle Beach, S.C.

Comments Pitts, “The most intriguing part of acquisition is the strategy involved. We have been able to grow in areas where we were previously weak, and as a result the whole has become much more than just the sum of its parts.”

Pitts also credits his partner, Bryant Aydelette, with bringing the new companies into the fold and molding the former businesses into Southern Elevator’s culture. “There is no question that independent elevator companies have a wholly different culture than our four major international competitors. To me it appears that regional companies focus on getting closer to the customer, by educating, empowering and choosing talented and trustful technicians to represent the company. Conversely, it seems the big players move further and further away from the customer.”

He adds, “While expanding has complicated our business somewhat, centralizing our administrative functions makes it easy to keep all our balls in the air, and having such a breadth of coverage, we can easily and quickly provide the best service for our customers. In this way, we have the heart of a family-owned business, while also implementing the organization of corporate management.”

This formula has made Southern Elevator a force to be reckoned with. Now the largest regional elevator service and repair company in the Carolinas, it boasts clients like Duke University, UNC Charlotte, CPCC, and Duke Energy, as well as several property management companies like the Keith Corporation and Trinity Partners. Recently, Southern Elevator was awarded the first elevator service contract for Duke Medical Center since it opened in 1930.

“By being able to service a huge variety of elevator brands and models, we have been able to accommodate major clients like universities, hospitals, and federal, state, and municipal government buildings. That previously wasn’t our focus.”

“Fortunately, he adds, “Our current focus seems to be working.”

Pushing Buttons

But, where there is a winner, there are also losers trying to regain their yardage. Therein lies the shaft (ahem) from the competition. In the elevator biz, this takes the shape of proprietary versus non-proprietary controls.

To wit: when a regional company is called in to replace obsolete or worn parts, modernize cabs or update ADA compliance, it is usually pursuant to the customer’s three to five-year service contract. Service contracts are the bread and butter of the industry.

To counter the ability of the “little guy” to win over service contracts, some players in the industry began the practice of installing proprietary controls, i.e. control units which require a special tool for access from the company which manufactured it. This prevents independent service companies, like Southern Elevator, from servicing the equipment.

The product is not better. It just requires proprietary software to service it, available only from its manufacturer. Pitts explains: “This enables the manufacturer to charge more for service since there is no competition for the service contract. The owners of the buildings end up having to pay top dollar.

In a city like Charlotte, this can really become a hot button (ahem) issue. Several new high-rise condos in particular are in the works and making sure everything operates safely, smoothly and quickly is a critical concern.

Pitts continues, “Like I said, as a rule, we don’t do new installation. That is not in our dominion. However, we want to be sure that our valued clients know the difference between proprietary and non-proprietary controllers, and what that means to them in the long run.”

The debate is necessarily contentious, yet Pitts simplifies the equation to dollars and sense. “As Charlotte matures and the initial service contracts for high-rises come up for renewal, there will be plenty of opportunity for Southern Elevator to service new customers. But I think it is necessary to say that beyond our own interest concerning proprietary and non-proprietary controls, it is an important decision that will determine whether or not the owners can seek a competitive contract for future service.”

Taking It to New Heights

New construction and its incumbent issues aside, there are more than enough vertical avenues to keep Southern Elevator occupied. Apart from routine maintenance and repair throughout the region, the company keeps busy up-fitting units to comply with the constant evolution of the elevator code and access, changing aesthetic ideals of older buildings and compatible elevator décor, as well as increased traffic capacity and speed between floors. Pitts makes sure that his company stays flexible, positive, and well trained to answer any need that arises.

Plus, new trends have emerged in the industry, such as advertising and entertainment in elevator cabs themselves. The standard Muzak is being eclipsed by flat screen TVs, and some of the jazzier cities like Las Vegas promise to take this concept to new heights. For its part, Southern Elevator has embarked on a relationship with The Elevator Channel, offering it as an option in client modernization packages.

Other innovations that have been driven by the public in this post 9-11 culture include central monitoring to improve security and monitor access and egress, particularly in government buildings. Also being requested is limited access to certain floors.

Comments Pitts, “We try to anticipate the industry innovations and completely embrace new developments and new technology, and strive to make sure we can accommodate them. Not only are our mechanics trained to the highest of standards, but we provide ample opportunity for them to grow, and for our business to grow.”

He adds, “It is our goal to provide the best service and the greatest assurance for safety and security for our employees and the public.”

In the meantime, Pitts scans the industry for those new opportunities. Not bashful to make a pun, he smiles, “Charlotte is becoming a major city on the rise – for that matter, so is the entire region – and we’d like to see our business rise with it – or at least our people take it to new heights!”

 

Susanne Deitzel is a Charlotte-based freelance writer.
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