DCN ARCHIVES

October 30, 2009

ILDAR SAGDEJEV

Global demand along with stimulus funding has helped to support prices for used construction equipment in Ontario.

General and trade contracting

Used construction equipment market ’very active’

While Ontario buyers may be picking up a few bargains, a rising Canadian dollar and a relatively buoyant construction market has seen prices on used construction equipment here remain somewhat stable, according to a survey.

“The market is very active in my opinion,” says Bill Burnett, Used Equipment Manager for Nortrax, which sells new and used construction equipment at locations in Ontario, Quebec and Newfoundland. “Although the Quebec market is hotter than Ontario, the pricing is down a bit here from where it’s been in the past few years because the supply is greater than the demand. But we aren’t seeing any huge two-day auctions like we’re seeing in Florida.”

An October auction operated by Ritchie Bros. Auctioneers in Orlando, Fla. moved more than 2,700 items and netted US$34 million in sales.

Nortrax sells trade-ins on its new sales and, as North America’s largest John Deere construction retailer, has access to John Deere’s off-lease, returned or repossessed equipment.

“We used to sell a lot of equipment to the U.S. when the Canadian dollar was weaker, but that’s died down in the last few months,” says Burnett. “Now, we might go to a dealership in the U.S. to purchase on behalf of Canadian clients looking for a particular piece of equipment.”

Interest from foreign buyers helps to keep used vehicle prices up in Ontario, says Burnett. Nortrax has sold used equipment to clients as far away as Saudi Arabia, Pakistan, Africa and Scandinavia.

Brian Dykstra, Regional Manger for Ritchie Bros. in Ontario, notes that its last auction in Bolton, Ont. netted 11 international buyers and 62 runners-up from countries including Lebanon, Mexico, Congo, and Italy. The company has held four construction equipment auctions at its Bolton facility this year and is scheduling a fifth in December.

“The Internet is really helping us,” says Dykstra. “It gives us access to a global marketplace. Even a runner-up from outside the country assists in driving prices up. But we’re also noticing a tremendous amount of optimism in the Ontario market. While construction isn’t overheated, the market is strong and contractors are busy with the work they have — and some of them are looking for good used equipment. New bidders usually make up 10 per cent of our bidding pool. That’s doubled this year, indicating that people are keen to buy.”

Unlike in Florida or parts of California, Dykstra says the Ontario used construction equipment market isn’t glutted by distress or bankruptcy sales. The vehicles being assembled for the December sale are primarily from large fleets that are being reorganized, or from vehicles being replaced with new purchases.

But the large volume of used equipment available in the U.S. and the record number of pieces going through Florida auction houses has had an effect on the Ontario market, says Ric Thomson, Sales Manager with Advance Construction Equipment Limited in Kitchener.

“The used market is a mixed bag right now,” he says. “Local auctions of fleet vehicles for rental companies that are downsizing are also putting downward pressure on prices. The price is down locally on equipment like a conventional tractor loader backhoe with four-wheel drive, cab and extendible dipper, but we’re still getting a good dollar for specialized equipment.”

As a JCB and Kobelco excavator dealer, much of the company’s used product is derived from trade-ins. “Often the used equipment comes from the guy we originally sold it to,” says Thomson. “We have a full service file on it. We can still get a premium dollar for used construction vehicles with a detailed history.”

Amaco Construction Equipment, Inc. of Mississauga specializes in new and used road building equipment. “We don’t deal in a lot of used equipment, but we’ve been able to maintain our prices,” says Cameron MacRae, the company’s territory manager.

“With the higher Canadian dollar we’ve also seen people choosing to buy new as the gap in price between new and used equipment narrows.”

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