Everything Sells: The Ritchie Bros. auction begins
Posted: July 9, 2016 by John G. Smith
EDMONTON, AB – Everything sells. It’s a firm rule at Ritchie Bros. Auctioneers, and there is plenty on hand for the highest bidder. About 10,600 pieces of equipment will move through the company’s sprawling Edmonton complex this week, easily setting a sales record and eclipsing last April’s numbers by about 35%.
Trucks dominated most of the sales on Tuesday, when close to 10,000 bidders had already registered for a piece of the action. Equipment such as cranes, rock catchers, and trailers will follow.
The April auction, which runs until this Saturday, is always the biggest one of the year because it aligns with the time when many resource businesses are waiting out the spring thaw and retooling for summer. Last month, however, it became obvious that records were going to fall. This sale is approaching numbers normally seen during an annual Ritchie Bros. event in Orlando, Florida. Single-event numbers are still higher there, but Edmonton has six sales a year.
Once sold, much of this equipment will also leave Canada’s famed oil patch in the rearview mirror, as the price of crude oil remains stubbornly low. About 80% of equipment sold through the Edmonton auction remained in the province three years ago. Now Alberta buyers will take home half of it.
“What we’ve seen is a lot of redistribution of assets,” says Randy Wall, president of Ritchie Bros.’ Canadian business. Trucks originally used in energy-related applications are being repurposed to haul logs, agricultural goods, and other freight. Companies in B.C., Ontario and Quebec have been some of the hungriest buyers. And close to 15% of the sales will be completed by U.S. customers who are leveraging the value of a strong dollar. “It’s by no means a flood like many people presume it is,” he says of the latter market.
Wall also stresses that most of the sales have nothing to do with outright bankruptcies. Many of the sellers are just divesting assets to support other activities. Over the last 18 months, he has seen sellers making “rational decisions” based on the assets on hand and the projected business to come. The fleets are still there. Just smaller. “Some people use these market changes as reasons to trigger a personal decision: ‘I’ve had enough. I’m tired. I’ve made a lot of money in my last 10 years. It’s a good time to retire,'” he adds.
It all contributes to one of the biggest spectacles in equipment sales – one that even supported a two-season reality TV show.
A BIG ORANGE SPECTACLE
The speed of the transactions is shocking when you consider the money changing hands.
A truck rolls up the ramp as the auctioneer describes what’s on display. The bidders, resting in their orange stadium-style seats, review notes in the massive coil-bound books filled with information on every item. Others watch the action online, knowing their bids are just a click away.
Then it begins. “Boys, let’s go now,” the auctioneer says. “Who’ll give me 50?” His numbers then intermingle with the filler. “Fifty-one-ah-one-ah-one…” Orange-clad bid catchers standing in front of the bay doors, between the trucks and the crowd, watch the crowd for the hand gestures.
“Yee-ah!” one of the catchers yells.
The bid climbs higher. “Don’t quit now,” the auctioneer says, egging on a bidder who begins to hesitate. The price on a screen overhead inches $1,000 higher in response. The hope is the bid will be high enough, but not too high.
It typically takes less than two minutes for the bids to finish, depending on the prices. A 2013 tri-drive International Paystar sells for $60,000. Its counterpart, with about 6,000 extra kilometers on the odometer, goes for $57,000.
Ultimately, the market prices usually prevail.
“It speaks to the psychology. Because when you’re buying something, what do you want to do as a buyer? You always want to buy cheap and negotiate your best deal. And as a seller, you always want to sell for the highest price,” Wall says. The buyers’ psychology takes center stage on auction day. “You want to get the maximum number of people in your facility, competing head to head with each other … You bring them in with the allure of a potential bargain.” Bargain-basement prices are admittedly few and far between, but they do happen, Wall says. “That’s what keeps people coming back.”
Kevin Bochurka, with Eddy’s Gravel Supply in Winnipeg Beach, Manitoba, has been attending the auctions since the 1970s. This time he is in the market for pavers, rollers and service trucks, and he’s hoping for a deal. “Sometimes the auction brings higher prices, depending on what the economy’s like,” Bochurka says. Maybe a struggling oil sector will keep some competing bidders at home.
Rob Luoma from Rocky Mountain House, Alberta, is using the auction to prepare for the future. He and his partners left the forest products industry, but plan to shift to trucking in the next two or three years. That’s when he expects the economy to recover. “We think the pricing will be good today, and there’s lots of good equipment available,” he says. “Me, my dad and my brother used to come to these all the time.”
Maybe it’s just the spectacle of the thing that attracts some buyers. “It’s the biggest auction in Alberta history. Canadian history,” says Tim Olson of Manitoba’s St. Martin Fish, referring to why he came. What does he think about the event’s scale? “Terrifying,” he says with a laugh. He covers his eyes, because he knows the right deal will send him home a little cash poorer and a dump truck richer.
But some of the equipment will roll right back into the oil patch where it began. Chris Loeppky, an owner-operator from Edson, Alberta, is still hauling fluids, even if business continues to slump. For the right price, he is still willing to upgrade his truck or even add another.
The business will return, he says. Maybe by June. “Hopefully.”