Highway Contractor: Open for bids
A sense of pride
“You have to keep in mind that when someone is selling that piece of equipment at the auction he is saying goodbye to it, but there is another person there who is saying hello to it. That’s a brand new piece of equipment in that new person’s fleet, and there’s a sense of pride that you just can’t measure,” says Blake. “That’s why the guys want to come and inspect and test the equipment. These are income-producing assets, but they have the guys’ names on the side of them as well.” Equipped with “sophisticated business acumen,” these equipment owners and managers have a very real understanding of their assets.
“Business is run today based on more information, transparent data, a global market view … and really these are things we’ve been talking about since Dave Ritchie and his brother started the company in 1958.”
The philosophy may not have changed in the past 50-plus years, but some of the tools have.
“That connectivity of the Internet world and the real world – that coming together – has been a real positive for us,” says Ritchie Bros.’ Blake. “You’ve got data at hand now that you can help your customers manage their fleets all the better, and the transparency of information out there is exactly what we’re all about.”
On the eve of this April’s launch of an updated website with additional customer services, Blake noted that www.rbauction.com drew 2.8 million unique visitors in 2009, during the worst recession since The Great Depression. Those visitors made 30 million inventory searches, up from the “low 20 millions” made by 2.2 million unique visitors in 2008.
“What we’re able to do is look at the level of interest on various kinds of product, including where that’s coming from and how that measures up,” says Blake. “It’s a pleasure to be able to provide even more information to some of our customers who need it and use it, and help them run their businesses better.”
There is more partnering happening between fleet managers and auction companies, agrees IronPlanet’s Hendrix.
“We tout it every time we walk into a contractor’s office: Faster time to market. We allow you the flexibility of putting out a piece on your timetable instead of forcing you to dance to our music.
“That last leg of the equipment management stool – the asset disposal part of that – over time has been a little bit of an afterthought. Now, there’s a lot more thought going into that from the very beginning, from the time they buy the asset, through the management of it,” he says. “Take the life cycle of a dozer, for instance, says Hendrix. If a fleet manager has to replace the machine’s undercarriage before auction, he’s probably spending any potential return he’ll get on the piece. By acting sooner, both he and the buyer can win. Advises Hendrix: “Plan so that you can sell that dozer where it’s got anywhere from 30- to 50-percent of the undercarriage on there, so that the guy who’s purchasing that realizes that he doesn’t immediately have to go and capitalize an expense on a machine he just purchased at auction. He can immediately take it a job and go to work with it without having to worry about a large undercarriage expense. On the other hand, you have received some benefit from the expense that you have put into it,” says Hendrix, whose history prior to IronPlanet includes in the traditional auction business and at the equipment dealership level. “This is a real management and real timing issue with equipment managers.”
Set your own pace
With the weekly live unreserved Featured Auctions and the ongoing reserved Daily Auctions offered by www.ironplanet.com, “you can time it with us,” says Hendrix. “You can sell that dozer this week because it’s ready. And you can sell another dozer a month from now or two months from now whenever it’s ready. You can trickle the stuff in.”
IronPlanet’s Featured Auctions operate “much like the traditional auction business does,” he says. “Everything sells on that day. It’s an absolute auction: We don’t allow any minimums; we don’t allow any reserves. There is a sense of urgency about the sale of that piece. Every buyer knows, every potential buyer knows, that piece is going to sell that day.”
This service works well for commonplace equipment types and makes, be they Case 580 backhoe loaders or John Deere 724 wheel loaders or Komatsu PC300 excavators, all examples of machines that are operated in most if not all applications and geographical markets. And later-model gear is bringing very good money right now,” says Hendrix.
As part of a giant Featured Auction held March 25-26, six-digit sales were literally jumping off computer screens worldwide. A 2007 Komatsu PC400LC-7E0 excavator based in Maryland drew 54 bids over 16 minutes, before selling for $170,000 to a bidder in Quebec. A 2006 model of the same machine, based in Georgia, sold for $122,000 to a buyer in the United Arab Emirates. Four 2007 Caterpillar 345C L excavators based in Ohio sold for $152,000, $168,000 $162,000 and $168,000 respectively: three went to Tennessee; the other, one of the two top money draws, to Colombia in South America.
If the asset’s “clean and ready to sell,” the process from the seller contracting IronPlanet to that seller receiving his money for the asset runs 45-55 days. This includes equipment inspection, processing, report uploading and posting for usually at least two weeks of online previewing, actual auction day, and then payment within two weeks of sale.
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