RERMAG

A Big Auction and a Bigger Year for Ritchie Bros.

The fast-paced thrill and feel to a live auction compares to nothing else. Ritchie Bros. Auctioneers expounded on this thrill times five at its five-day auction this past February in Orlando, Fla. RER escaped the blustery cold of the Midwestern winter and journeyed down to warmer temperatures to witness one day of the largest auction in Ritchie Bros.' 50-year history. The company conducted the unreserved public auction at its permanent auction site in Orlando on Feb. 19-23.

Almost 6,200 lots were sold during the five days for a total gross auction proceeds of more than $190 million, which surpassed the company's previous record auction total of $172 million at the same location in February 2007. On day three of the auction, more than $51 million of trucks and heavy equipment were sold, the most equipment ever sold at a Ritchie Bros. auction in one day.

The five-day auction also set new company Internet bidding records. More than 2,000 of the registered bidders participated online using the Ritchie Bros. real-time Internet bidding service, rbauctionBid-Live, purchasing close to $30 million of equipment. These Internet bidders were also either the winner or runner-up on 30 percent of the lots available online.

To set up for an auction of this scale, Ritchie Bros. spent the previous months preparing and getting all of its ducks in a row. Ritchie Bros. employees met with interested vendors to begin preparations for the sale of their equipment. Contracts were agreed upon and details were settled based on the requests of the sellers. The consignor has the option of a straight commission (the most common choice), the minimum sales proceeds or an outright purchase contract.

Because the auction site in Orlando is a permanent site for Ritchie Bros., the company can host more than one auction event at that location each year. Equipment consignors bring their auction items to the fenced and gated facility at any time throughout the year to await the next auction. This is also the case for other permanent auction sites located throughout the country. Once the equipment is in the auction yard, Ritchie Bros. employees facilitate equipment appraisals for the sellers, if required, and offer suggestions on refurbishing the equipment, such as repainting the unit or repairing a cracked window.

Ritchie Bros. does not perform mechanical inspections on equipment; the company just takes inventory of the existing condition of the unit through a visual inspection. Because all equipment is sold at the auction “as is,” bidders are highly encouraged to inspect the equipment themselves, send a mechanic or third party to perform a thorough inspection, or call Ritchie Bros. before the auction date and ask specific questions. However, there is no substitute for inspecting the machine with one's own eyes.

Promotion for the Orlando auction began about 45 days prior to the event with the mailing of small brochures to targeted Ritchie Bros. registered auction clients. Larger brochures were sent three weeks preceding the auction; and the Ritchie Bros. website was constantly updated to feature descriptions and photos of the items up for sale.

In the days leading up to the sale, bidders registered and also visited the auction yard to inspect equipment. “All of the equipment is grouped and organized together in the same location so that potential buyers can compare similar pieces of equipment,” says Rory Mullarney, manager, national rental sector for Ritchie Bros. “If a bidder is trying to decide between a grouping of skid steers, he can visually compare them because all of the skid steers are organized together sequentially in the auction yard.”

During the actual auction, Ritchie Bros. employees were on hand to answer questions from potential buyers in the yard, and were participating in the auction itself. A team of bid catchers helped conduct the professional auction by not only calling on bidders but encouraging people to keep bidding throughout the fast-paced auction. The main auction ring featured smaller equipment such as dozers and mini-excavators, while the auction out in the yard featured cranes, scissorlifts and telehandlers that were easier to auction off in a stationary place.

Once the auction was completed, Ritchie Bros. assisted with collection of the money from the buyer and ensured that the vendor received payment within 21 days of the auction. “From the time the equipment is dropped off at the Ritchie Bros. sale site to the time the equipment is sold at the next auction and they receive a check, the seller can leave the details up to us,” says Mullarney. “Ritchie Bros. handles everything, which is a definite value to the seller. It doesn't take people away from their jobs to sell equipment. And because everything sells at a Ritchie Bros. auction, rental store owners can depend on equipment selling quickly and conveniently without their timely involvement. It allows their business to run more efficiently.”

The auction featured equipment from more than 550 sellers, including Jacksonville, Fla.-based Ring Power Corp., one of the largest Caterpillar equipment dealers and rental companies in the Southeastern United States. Ring Power sold more than 140 items in this auction.

Among the equipment sold in the five-day auction was more than 70 cranes, 340 hydraulic excavators, 290 wheel loaders, 180 articulated dump trucks, 350 crawler tractors, 130 loader backhoes, 30 pavers, 140 drum rollers, 130 truck tractors, 230 boomlifts, 90 scissorlifts, 290 telescopic forklifts and 180 forklifts.

Not only was there a strong nationwide presence at the Ritchie Bros. auction, there were also many global bidders in attendance. More than 6,000 people from 71 countries, including all 50 U.S. states, registered to bid in the auction either on site or online. Almost $159 million of equipment was sold to buyers outside the state of Florida, including more than $68 million of equipment that was sold to out-of-country bidders.

With the increase in online bidders, one might think that the number of bidders at the physical auction would in turn decrease. That is not the case for Ritchie Bros. “The number of bidders isn't dropping at the physical auction site, some people are just doing both,” says Mullarney. “A potential bidder can come out to the site before the auction, check on specific equipment and then go home or back to the office and bid from his computer when the item is up for sale.”

Ritchie Bros, meanwhile, is celebrating its 50-year anniversary by doing what it does best — holding close to 200 auctions in 2008. The number of auctions held has been increasing annually for the past several years. In 2005, Ritchie Bros. held 153 unreserved industrial auctions. In 2006, that number grew to 177. And last year, 183 auctions were held. It looks to be another big year.

The Ritchie Bros. Auction Process

Step 1: Getting to know the owner and his equipment

The auction process begins when an equipment owner meets with one of Ritchie Bros.' territory managers. The owner's needs are discussed and, if necessary, an equipment appraisal is performed.

Step 2: Drafting the auction contract

Next, Ritchie Bros. and the owner meet to work out the details of the auction contract. Straight commission contracts are the most common, but depending on the circumstances, Ritchie Bros. may offer the seller alternatives such as a guarantee of minimum sales proceeds or an outright purchase contract.

Step 3: Getting the equipment ready for the auction

Once the equipment arrives at the auction site, Ritchie Bros. coordinates any cleaning, refurbishing, repair work or painting that the seller requires in order to get the equipment ready for auction.

Step 4: Marketing the equipment around the world

Ritchie Bros. markets the equipment by sending out an average of 50,000, full-color auction brochures to a targeted selection of customers from its extensive database. In addition, every piece of equipment is posted on its website, rbauction.com.

Step 5: Searching the equipment for liens

To ensure that its customers can bid with confidence, Ritchie Bros. guarantees to give the buyer a full refund if it isn't able to delivers clear title. The search department identifies and arranges for the release of all liens and encumbrances so buyers are assured of acquiring good and marketable title to items purchased at auctions.

Step 6: Setting up the auction yard

The equipment is organized and displayed in groupings so prospective buyers can easily inspect, test and compare similar pieces. Ritchie Bros. also has knowledgeable staff on hand to answer bidders' questions.

Step 7: Conducting the auction

On auction day, the auctioneers, ring men, yard staff, Internet services team and customer service staff conduct efficient and completely unreserved auctions.

Step 8: Taking care of business

After the auction is finished, Ritchie Bros. collects the proceeds from the buyers, including all relevant sales taxes (which it administers and remits to proper authorities), coordinates the release of the equipment to its new owners and disburses the proceeds, along with detailed settlement statements, to the sellers.

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