Housing slowdown spurs auction of construction equipment
Sellers dump equipment to pull in capital. Buyers are lured by cheap prices, although some are reluctant to spend on equipment that could remain idle for months.
Robert Anderson, 70, wandered the huge auction yard in Perris, inspecting his fleet of excavators, backhoes and other heavy construction machines, including the first crane he ever owned.
For four decades, he ran Desert Pipeline Inc. out of Thermal, near Palm Springs, building sewers and storm drains for new housing projects. But when the housing bubble burst, Anderson went from a backlog of contracts to no job orders at all.
"If we had been getting jobs, I might have stayed on a while longer, but we knew it was coming, that the work was going to shut down," he said. "It was time, and it was a good, clean way to get out."
Anderson was among the hundreds of heavy equipment owners selling off their rigs to the highest bidders at the two-day auction, which ended Wednesday. The auctioneer, Ritchie Bros., said the more than 2,000 pieces being sold would probably fetch a combined $20 million or more.
Sellers said they were purging their inventories to pull in operating capital. Buyers said they were lured by cheap prices, although several expressed reluctance to spend money on equipment that could remain idle for months.
"These are the worst prices I've ever seen," said Steve Thompson, 52, who was there to make bids for Chuck Green & Associates Inc., a San Diego County company that buys, resells and rents heavy equipment.
Back in 2005, during the boom, the company sold a used hydraulic dirt excavator for $309,000. That same excavator changed hands Tuesday for just $50,000.
Another excavator, worth $1.4 million new, sold for $150,000, said Sean Green, Thompson's colleague.
Later, a Volvo wheel loader, a type of earth-moving equipment that once could have fetched $112,000, went for $60,000.
"Auctions set the price, and traders can try to sell stuff sitting there for a year, but if it's not priced right it won't move," Thompson said.
Bidders had little cause to spend freely. The Commerce Department reported Wednesday that new home construction and building permits dived last month to their lowest level since the government began keeping records nearly 50 years ago.
From the glass booth overseeing the action, an auctioneer named Butch kept up a singsong staccato, pausing only to nudge bidders with "Gentlemen, it's showtime!" or, "You snooze, you lose" as a pageant of tractors, water trucks and other equipment were driven onto the stage.
