The Downturn: Bidders from around the world crowd Yolo construction-equipment auction
The global economy rumbled through rural Yolo County on Wednesday as bidders from six continents snapped up California's dump trucks and front-loaders at the Ritchie Bros. auction house near Dunnigan.
With new home construction down more than 50 percent from last year, contractors and equipment brokers across the state are unloading idle machines that not long ago were moving earth for subdivisions and shopping centers.
Bargain-hunters from around the world were combing the more than 900 items displayed in the Ritchie Bros. lot along Interstate 5 on Wednesday. They revved engines from the cabs of bulldozers and kicked the 8-foot-tall tires on earth scrapers the size of small houses.
By 4 p.m., the list of winning bidders included buyers from 37 states and 25 foreign countries.
While British Columbia-based Ritchie Bros. offers bidding via the Internet from anywhere in the world, some buyers traveled to Dunnigan from as far away as Asia and Africa.
Ermiyas Beraki, who runs a construction firm in Ethiopia, picked up a loader for $10,500 – a great price, he said, hurrying off to bid on a 25-ton dump truck.
Nazmi Arslan, who wore sleek brown loafers amid a crowd mostly in boots, was looking to buy bulldozers and graders for his family's equipment business in central Turkey.
Construction isn't exactly booming back home, Arslan said, but he's always looking for a deal. A good buy could make up for his travel costs and more than cover the $30,000 or so it would cost to deliver a purchase to Turkey.
Even 100-ton machines sold in less than a minute on the auction stage. Five "bid catchers" scanned the crowd for offers, while Ritchie Bros. staff watched for Internet bids.
At one point, the crowd in Dunnigan sat and waited as two bidders in Egypt chased a mammoth front-loader. A woman in pigtails and a hard hat idled the machine on the stage.
An auction house profits every time an item changes hands, so Ritchie Bros. does best during times of tumult.
"Whether the economy is up or down, our business works," said Stephen Branch, marketing director for Ritchie Bros. The company is the world's largest industrial auctioneer.
Ritchie Bros. scheduled four sales for the Dunnigan site this year, Branch said. But after one of the region's big equipment brokers announced it would be liquidating its stock, the company was happy to add a fifth auction. Ritchie Bros. makes a commission of as much as 15 percent on each transaction. By day's end, Wednesday's sales totaled more than $22 million.
With abundant supply and relatively weak demand in California, the going rate for some machines has dropped by half, said equipment brokers at the auction. Many in the business say prices also are being depressed by new state air-quality regulations, which will make the polluting engines in many old machines obsolete starting in 2010.
For some California buyers, the auction was a bet on the construction industry's recovery.
Tony Harris, who runs an earth-moving and gravel company in Riverside, was inspecting a scraper that sells for $1 million new. He figured the used model on the Ritchie Bros. lot might go for as little as $100,000. Even if the machine has to sit idle occasionally as the economic downturn plays out, Harris said, buying now at the bottom of the market could put him in a good position when work – and the price of equipment – picks up again.
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