RITCHIE Bros' sales manager in Orlando. Credit: Ritchie Bros.

RITCHIE Bros' sales manager in Orlando. Credit: Ritchie Bros.

Ritchie Bros. Auction Frenzy Closes in Orlando

Issue 75, February 2014

On Saturday, more than four thousand buyers disbanded from the Ritchie Bros. showroom in Florida, the world’s largest dealership for secondhand industrial machinery. Another four thousand had been lined up on telephones and online, with over 8,800 pieces of heavy equipment changing hands in six frenzied days.

Dubbed “the Big One”, Ritchie’s February auction in Florida’s Orlando is the world’s largest auction of its kind, filling a yard larger than the carpark of the NSA, just off the interchange of an interstate highway.

Less than one per cent of Ritchie’s wares rank as specialist mining equipment, but alongside construction and agriculture, the mining industry is one of the biggest buyers and suppliers of Ritchie’s goods, from excavators to 60-tonne trucks, the detritus of projects finished and failed.

Interpreting Ritchie’s auction data is open to abuse. Superficially the company thrives when heavy industry fails, sending distressed goods and bargain-hunting buyers out in equal measure; in a nod to botched capital budgets, all of its lots are secondhand, but many are unused.

Short of distress however, in tough markets operators hold onto their old equipment, whilst that which does come to market fetches lower prices with lower commission.

Reflecting a 5-year dearth of investment in new machinery, the average age of Ritchie’s lots has nearly doubled since 2009, from 3-years to between 5 and 6 years. The group is meanwhile breaking records for its number of lots sold, but lower prices have weighed on volume gains.

This month’s auction fetched $166m versus $203m in 2012, whilst Ritchie’s gross auction proceeds slipped 7 per cent last quarter to $790m, in part due to lower coal mining sales.

A rise in Ritchie’s revenue and auction proceeds would signal an uptick in mining demand and could presage any uptick in the order books of equipment manufacturers like Caterpillar, Volvo and Atlas Copco. But until then, the scale and frenzy of its auctions remains a scrapyard for confidence of the past.

“The selection is like something I’ve never seen before,” said one buyer who had flown in from Colombia. “The yard is huge and is completely packed with equipment. If I need it, I know I will find it here.” 

“If I need it, I know I will find it here.”

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