Construction Machinery Prices Rise in 2011

According to Nevada Contractors Association, rising commodity costs, scaled-back production and scant availability of late model used equipment have bumped-up construction equipment prices. Cash-strapped contractors thinned-out fleets as jobs became scarce, with much of the construction machinery being shipped abroad as auction houses offered lucrative paydays due to high demand in developing countries as a weak dollar created greater buying power.

“We saw an exodus of equipment leaving North America over the last five years due because it was cheaper to buy here,” says John Crum, national sales manager for Wells Fargo Equipment Finance Inc., Dublin, Penn. “The auction market has become well known, enabling people to see prices and easily sell in this recession. It’s now perceived as a smart move as an asset manager.”

Ritchie Bros. Auctioneers, for example, saw a record $2 billion in proceeds for the first half of 2011, which is 16% more than the same period last year and the largest six-month haul in company history. “More equipment owners chose our unreserved auctions to access the global marketplace,” says Vancouver-based Ritchie Bros. CEO Peter Blake. “Competition for late model equipment remains intense.”

Iron Planet similarly saw robust bidding activity this year with $162 million in gross auction sales for the first quarter for a 25% year-to-year increase. The Pleasanton, Calif.-based firm was aided by a 21 global auctions in the first three months of 2011, 61% more than last year. Enhanced online access and greater resale pricing transparency have ratcheted auction activity, observers say, as rental companies and contractors replenish aging and diminished fleets while simultaneously taking advantage of the federal stimulus bill’s accelerated depreciation through year’s end.

Caterpillar, meanwhile, in August announced plans for a 40,000-sq-ft work tools building in Wamego, Kansas, for churning out buckets and blades, among other things, as part of $3 billion in capital expenditures this year, half of which will be spent in the U.S. While the Peoria, Ill.-based equipment maker ramps-up long-term production capacity, rental companies reap short-term rewards. High prices, market uncertainty and anxiety over looming Tier IV Final emission standards have many contractors thinking twice about big out-of-pocket purchases, resulting in more equipment rentals as stopgap solutions.

Source: nevadacontractors.org/component/content/article/4-main-articles/124-construction-machinery-prices-inch-upward-in-2011