Spectacular. It’s the only word that can sum up the scene as the unitiated walks into the auction hall.
Bidders sit in rows and the callers stand on stage rattling numbers off as digital counters tick upwards. Behind them there’s a massive open vista to hundreds of machines all neatly fixed into rows that trail to the horizon. When the time is right giant excavators and cranes roll from stage-right to left like elephants in a Cecile B De Mille epic. Part cackling cattle market, part golden age cinema; the noise in the hall is deafening, the view mind boggling and in technicolour.
The greatest show on earth needs a ring master and today it’s Guylain Turgeon, the managing director of Ritchie Bros. for the EMEA (Europe, Middle East and Asia) region. However the star of the show doesn’t seem to have made his curtain call when PMV arrives on the scene. That is until there’s a tug on the shirt.
“I think that’s the guy you’re here to interview,” someone says pointing to the stage. Of the four callers standing up front, one is spitting numbers like a tommy gun. “That’s your guy.”
Within minutes of the bid session ending, Turgeon is sitting in an office up in the rafters overlooking the auction hall. Despite what seemed like a frantic start to his afternoon he sits looking relaxed.
Thankfully, his speech is considerately many times slower than the moments before.
“I was scheduled for four shifts today and I’ve done three already,” he says and then looks down onto the hall below, “but it looks like I won’t have to do the last one.”
It’s quickly apparent that Turgeon has an enduring and almost lifelong love of the auction business.
“I’ve been in this business since a very young age,” he explains. “My father used to bring me to auctions when I six or seven years old. Today I saw a boy walking around. It reminded me of when my father used to drag me around sites like this. It used to be me as a young boy jumping all over the machines. You can say auctions are in my blood.”
Despite his early exposure to the industry, he didn’t go straight into the auction business.
“I was about 26 when I joined the company...I sort of went: ‘well, there’s my road, let’s get on it and ride,” he laughs.
As an interviewee, Turgeon comes across as a measured well-pressed performer – much like anyone who has reached a senior position in a global corporation. However there’s much more to him than that. Now a seasoned campaigner – his time with Ritchie now stretches back 22 years – there’s still a touch of the enthusiast when he talks about planning auctions.
“When it’s time to put the auction together it’s like a big event,” he enthuses.
“Everybody has to chip in because unfortunately you don’t have a chance to do it again the next day.”
“It’s a lot of fun. It keeps you close to the customer and the market. And you can see what the market is like and what the equipment is worth. That’s the real interesting part for me.”
Now 22 years down the line, Turgeon says he has a treasure trove of experience and knowledge to draw on.
“It helps. You can ask the right questions. Auctions are places where you can find what you need to know about the market, trends, and what projects are happening and what machines are needed.”
It’s half-way through the second day of the three-day auction, with a bank of machines worth $26 million all going on day one, it would appear everything is going to plan: “We are very pleased. Yesterday was a sign that there is some recovery and some confidence returning to the market. People were bidding quite actively.”
Active is an apt word to define Turgeon’s hand’s on role during the event. The suggestion that his role should be just to meet and greet is met with a soft chuckle.
“I can see you were surprised to see me up there. My role is to take care of customers and find out what’s going on in the market, to help us forecast the trends,” he says.
As the man that oversees Ritchie’s operation in Europe, Middle East, Africa and “parts of Asia”, it is fair to say that Turgeon enjoys a broad remit. Nine auction sites fall under his auspices which are serviced by 60 sales representatives. Across the year that translates to 39 auctions, a figure that Turgeon stresses is a manageable frequency: “It’s a regular schedule – with one or two smaller shows moving,” he says.
“In this particular site you have five auctions a year. That roughly equates to one every two months and that is the amount of time you have to move the equipment out and then move the equipment back in.”
This constant ebb and flow of the machinery is something that Turgeon says has speeded up during his time in the industry. As if it to cue, a new run of machines starts to move behind the stage.
“In those days it was a completely different way of selling,” he says. “Today there is a completely different way of doing business. It has become like a production line.”
Although the auction is barely over its mid-way point, Turgeon explains that it is possible to see some themes emerging.
One major trend is the shortening of inventories through the downturn that is now having a rebounding effect on the market. An effect that is highly visible during the auction, he says.
“We’re always thinking in a global fashion as our customers are from all over the place,” he says. “At this particular auction there are people from 40-45 different countries. And of course the needs are different from, say, Africa and Europe. However, there’s been a huge pull back from owners across the world. Right now we’re at a point where their fleets are getting older. It’s not like they can wait, they have to change. This has created a huge vacuum and used equipment is in short supply,” he says. “We saw that yesterday. Prices are through the roof.”
Turgeon explains that end-users or contractors make up 80 percent of Ritchie’s buyers, with the remainder mostly being made up of retailers. He says that the reduction in contracts and projects has had an effect on the equipment that is available and being bought but that isn’t the entire story.
“A lot of the equipment is the newer equipment from 2007 and 2008 that has been sitting,” he says. “There are also large end-users that have a little less work and have re-aligned their fleet, and it is now time to change it.
“We often say: the last thing you’ll get out of an end-user is hope. Very few of them were willing to make a shift at the beginning of the downturn as they were always hopeful of the next project. But now we can see them realise it’s time to make a decision and move on. There are also entrepreneurs that have enough work, but they’re selling their equipment to make up new inventories.”
The deep ‘financial distress’ that has restricted the flow of money through the market has had a profound effect on the new machine market, effectively floating the rental market in the GCC. Likewise Turgeon says that people are at the auction because they are looking for value from machines that haven’t undergone the same mileage they may have expected to have reached in the past.
“They need equipment but are unwilling to buy new because they can’t get financing,” he says. “While they can’t get their own financing they need they are willing to buy 40-50 percent of value to get the contract moving and finance their purchasing with their own cash flow.”
“I would say that we’re starting to climb out. We’re seeing more projects coming, end-users starting to make a profit but we’re still hearing there’s ‘no margin, we’re doing it to keep our people going’.”
Interestingly he argues that, as there as the demand is high for used equipment in the market people but the supply is lower, buyers are becoming “less fussy” in favour of “jumping on what’s available.”
Bricks and mortar
If this interview had taken place a few months ago, it would have been natural to have ended the discussion there but the incoming launch of online auction house Iron Planet in the market has thrown open the debate about whether the Middle East is ready for such a service.
In contrast to Iron Planet’s online model, Ritchie Bros has bolted on its service to its existing physical line-up of events. Around the hall are terminals set-up showing off Ritchie’s Timed Auction service. First seen in the region at 2007’s Big 5, participants can join in from across the world during the auction and bid in real-time with the bidders in the hall.
“The live internet auctions was a concept we started to work on since when we were listed in 1998. At that time there was a lot of debate of bricks and mortar versus online models,” he explains. “As a company it was necessary for us to ask ourselves the question: Where are we going?”
“Still to this day we feel it is necessary to have a live auction and our customers are telling us loudly that they have a need to see and feel the equipment. We are selling 25 percent of our turnover on the internet, however, we’ve made some surveys and we are quite sure that 90 percent of our customers have come to the site or have someone at the auction to make sure of the quality before they start bidding.”
He continues: “There are not two pieces of used equipment that are the same. They can be the same year, same model, have done the same hours, but they could be in completely different condition.”
The last issue of PMV asked whether the Middle East is ready to buy online, Turgeon argues that there is no reason why it shouldn’t. Especially those that have spared time to see the equipment before the auction starts.
“You can’t say that people in the Middle East are computer unfriendly compared to Europe. I think they are quite good actually. Our Middle East auctions have more people bidding online than any others.”
With Ritchie running unreserved auctions things often get heated on the floor below and with bids coming fast from here, there and, with the internet community watching, everywhere. While Ritchie is running an open house to bidders across the globe, it is
obvious that those in the hall have the advantage.
“The internet was not very successful yesterday,” he says. “The majority of items were bought on site with 4 percent of the purchases online – that’s quite low. We had so many great items yesterday people made the effort to come. Although you can’t say that will happen at every auction.”
Ritchie may be evolving but it is built on getting machines through its auction house (and the capital and logistics costs that implies), not by functioning as a trading platform. You sense Turgeon prefers it that way: “Like I say every auction is an event. Every one is different.”For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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