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Equipment Strategies: Why Buy Used?

COVER STORY NEW USED RENTAL by Mike Anderson WHY BUY USED? Smart used iron acquisition a good way for contractors to tackle work as it comes A s a surviving contractor, Tom Pank has learned to be quick on his feet. Dealing with matters as they arise, and adjusting accordingly, took him from a regular equipment buyer to a self-imposed, 250-piece ﬂeet liquidator in 2011, “just because I didn’t have the work” with his former company, AccuBid Excavation. With his new company, AccuBid Civil Construction, the Mount Airy, Maryland, contractor simply goes looking for equipment as he needs it. The used market, speciﬁcally the auction route, allows him to do that, he says. “With the frequency of these auctions and the amount of equipment companies like Ritchie Bros. now control in the marketplace, it enables us to adapt to our particular projects quickly,” says Pank. “In other words, I can get an award and, in a month or less, I can acquire, service and have the added needed iron on the job.” A recent job he landed required a soil stabilizer – a niche piece not exactly parked on every street corner. “On a Monday morning, I got on the Ritchie website and located one coming up for bid in Texas; over the next two days, I did some phone research on it; on that Wednesday, I purchased the machine from the auction via online bidding; and on the following Monday, it was sitting in my yard!” The most compelling reason to buy used equipment in 2012 – the ability to quickly add to ﬂeet as required – is the way more contractors must go today to stay ﬂuid, says Pank. “We don’t park underutilized equipment, but rather convert it to cash and then buy speciﬁcally what we need when we need it.” The purchase of the 1997 Caterpillar soil stabilizer, while admittedly costing Pank a bit more than he intended to pay and thus making the seller happy, is likewise a win for the buyer, says Pank. He’s able to immediately equip the job and then, when it’s time to park the unit, he’ll simply call up Ritchie Bros. and put the piece back on the market. “I’ll be way ahead, as long as I was smart about what I bought and I took care of what I bought,” he says. “I’m not going to trash it and get the money back for it.” Pank was forRitchie Bros. auction tunate, say other industry observers, that he wasn’t necessarily looking for crown jewel of used equipment – the classic latemodel, low-hour piece, particularly those going to work in the energy sector domestically. “It is harder to come by that young, low-hour machine,” says Kurt Tisdale, manager of Caterpillar’s Used Equipment Services Division. “Those don’t last long, and often they’re gone before people even know they’re available, so you have to take your chances on a little bit older, higher-hour equipment, and that means you have to study it a lot harder.” Prices on some prime used equipment can even approach that of a new piece, primarily for two reasons: It is available now; and, notes equipment pricing analyst Paul Hendrix of online auctioneer IronPlanet, more OEM dealers looking to stock their yards are bidding on used equipment beyond the wholesale price level – their traditional opt-out point. In other words, there’s plenty of EquipmentWorld.com 29

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