RANCHESTER — Owning and operating a family business can lead to unique challenges, but Padlock Ranch has managed to do it for three quarters of a decade.
The company celebrated its 75th anniversary with a dinner party Friday evening for several hundred people — employees, friends, family — at its offices near Dayton. Padlock Ranch Chairman John Heyneman said the ranch celebrated the anniversary as a way to acknowledge the company’s history.
“The ranch doesn’t do anything different than every ranch up and down this creek,” Heyneman said. “We’re celebrating 75 (years). That’s a milestone and it’s important to us. We’re very proud of this place … but it’s not even the oldest ranch on the creek.”
Padlock runs from Ranchester to Hardin, Montana, and spans around 400,000 acres with about 12,000 cattle. It is not the oldest ranch in the area but does the most annual business and employs 36 full-time workers.
Homer and Mildred Scott founded the company in 1943 with 3,000 acres and 300 cows. Heyneman, a maternal grandson of the Scotts, said Homer Scott was part of the Microsoft or Facebook of his day, getting in on the ground floor of agriculture, business and technology.
“He thought about things very logically and built systems,” Heyneman said. “He had unique skills and access to tools that others did not.”
Today, the ranch has evolved into an integrated cow-calf farm and feedlot operation. Padlock Ranch CEO and President Trey Patterson said the company mainly sells 800-pound yearling calves to feeders who then place them into feedlots in Kansas, Colorado and Nebraska. Padlock also sells to larger companies like Meyer Natural Angus and Agri-Beef.
“Our ranch is a combination of tradition and innovation,” Patterson said.
Many of the employees ride horseback when working with cattle, but the cattle have electronic ID tags, and Padlock tractors include GPS and auto-steering. Padlock also uses precision fertilization to help crops grow as effectively as possible.
Patterson has been in his his current role since 2014. For nine years before that, he served as the Padlock Ranch chief operating officer. He said the job has gone about how he expected over the past four years, with several ups and downs.
“Like always in agriculture, we’ve had some trials,” Patterson said. “We’ve had some large fires, some short-term drought situations. We saw some of the best cattle markets we’ve ever seen in my lifetime and we saw those completely collapse.”
Patterson said his favorite part is working with others and seeing them grow, personally and professionally.
“We take a lot of pride in the people at Padlock,” Patterson said. “Being around good people is contagious. It makes you better.”
To keep the company in business long term, Patterson mentioned a few key components.
“You have to be able to adapt to changing conditions in the marketplace and weather patterns,” Patterson said. “You have got to be willing to change and you’ve got to be willing to learn. It’s a lifelong process of learning and growing.”
Going forward, Patterson said increasing world population — and an increase in the demand for food along with it — and various global and political events create upheaval but also room for growth.
“I think there’s going to be a lot of volatility in markets and political situations and regulations that may affect our business, but it also will create some exciting opportunities,” Patterson said.
Heyneman has been chairman for a year and was a board member for several years prior. He worked as a manager at Padlock from 1998 to 2006 and learned a lot about the business.
“Gaining insight on how decisions are made at this kind of scale was very different than anything I had done,” Heyneman said. “(It was) intriguing, difficult, complex and fascinating.”
Heyneman returned to the area in 2011 and has been involved with the Padlock board ever since. He said the ranching industry has become more mechanized and capital-intensive, thus more risky in the last 20 years.
“I think we’re in a constant state of trying to refine what we do,” Heyneman said. “Agriculture historically has been a business of maximization, trying to maximize output, and (now) we are trying to optimize input.”
Challenges includes working with different mineral companies that want to work in the same area. The company also utilizes a lot of land on the Crow Reservation in southern Montana, which brings its own complexities.
“We’re faced with very interesting things,” Heyneman said. “It’s a dynamic industry. It’s a difficult industry. We have a number of challenges that are outside of our norm that continue to be complex and challenging.”
Meanwhile, Padlock Ranch is still family-owned, meaning there are dozens of different owners who have inherited the company. Some family members still live in the area, but many reside all over the country.
“We need to keep the owners engaged and connected to this place, which is hard as the ownership base becomes younger and more diverse, both geographically and culturally,” Heyneman said.
It can be tough to keep everyone’s interest, especially since there isn’t much short-term financial benefit to being part-owner of a ranching company. Heyneman said he and some of his relatives have spent significant amounts of time studying family businesses to learn how to best move forward.
“How do we keep [owners] incentivized in a very, very low-margin industry that doesn’t pay dividends?” Heyneman said. “There’s not a financial reward to being an owner of an agriculture operation most of the time, but there’s a tremendous emotional connection. But that will only go so far.”
Padlock Ranch has sustained 75 years of business so far, and Patterson and Heyneman hope the history and lessons learned lead to many more flourishing years for the ranch.