Used plant sector in better shape than predicted
Ritchie Bros. say record-breaking equipment auctions show strength of pre-Brexit construction sector
ACCORDING to Ritchie Bros., one part of the economy for which doom and gloom predictions have not materialized is the used construction plant sector, as witnessed at the company’s recent auctions in the UK and The Netherlands in September.
Having switched to online-only auctions during the pandemic, the world’s largest heavy equipment auctioneers say they have seen record-breaking auctions all over Europe, including in the UK, indicating equipment utilization is at peak levels, with the market showing a strong appetite for used machinery.
According to Rupert Craven from Ritchie Bros. UK, the high level of auction lots has been driven by the need to release capital for fleet renewals and a change in focus for an industry that is now increasingly driven by asset utilization.
‘With infrastructure and housing projects driving demand for plant, and HS2, in particular, focusing on emissions and productivity, we are seeing a need for plant operators to invest in new equipment and a reduction in the average fleet renewal cycle,’ he said.
‘Also, when it comes to buyers, due to a squeeze on the availability of new equipment with factories catching up from lockdowns, there has been a surge in demand for younger equipment which meets the emissions standards demanded by larger projects.
‘This favourably impacts bidding activity and, therefore, the returns for articulated dumptrucks, technology-enabled excavators from 20 tones and above, and other in-demand items.’
Mr Craven, who has worked in the heavy machinery industry for 20 years, says he has seen the mentality of the market change during the COVID-19 pandemic. ‘Businesses now look much harder at lifecycle costs, utilization and equipment valuation.
‘Particularly with the latter, more businesses are calling us to guide them through the process of fleet evaluation and disposition options, which can include selling newer equipment by utilizing our data to obtain the best prices.’
He added: ‘An interesting new phenomenon is that companies in the UK and Europe ‘buy for the job’ and resell. We have witnessed plant being bought for a 6–12-month job and then being resold at our Maltby auction with residuals holding up very well.’
Whereas auctions pre-COVID were attended both in person and online, they are now only held online with an easy-to-use bidding system that is open for several days. Although born out of necessity, Ritchie Bros. say the online-only auction format has attracted a record number of participants and generated strong returns for sellers.
‘What is also interesting is the change in the online bidder profile, which again has been dramatic, as more people get comfortable with doing business online,’ continued Mr Craven. ‘There are now many more bidders globally and a large increase in individual bidders, following the other trends we are seeing.
‘What is clear is that the construction and plant sector is in much better shape than most commentators predicted, and in some cases with large infrastructure projects we are even into boom times, the likes of which have not been seen since the motorway-building era. And of course, we can’t underestimate the continued global demand for equipment that has been well looked after by UK plant operators.’
Ritchie Bros. are currently in the final stages of a major redevelopment of their new 20ha site at the old Maltby Colliery, in South Yorkshire, where auctions will continue to be held online only for the time being, with interested buyers viewing items both on the website and at the auction yard. The next auction at Maltby will take place from 26–27 November 2020.