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"Years ago in the auction business, if we got bids from four or five states, we thought we were doing pretty well," says Chris Bair, territory manager for Ritchie Bros. in North Dakota. "Then it grew into getting people from all over the United States, and if we ever got a buyer from Canada, we thought were doing well."
But that was before people were talking about that global marketplace, before the Internet had matured into a mainstream marketing arena.
"Now, we're touching on a global marketplace, and that's where Ritchie Bros. focus is," Bair says. "They want to able to market machinery all over the world, and they're doing it."
Case in point: "We sold a tractor clear into Germany on our last sale," he says. "They will eventually come in, tear the tractor down, put it in a container and ship it overseas."
Just like that. With the U.S. dollar in the doldrums, foreign buyers are gobbling up U.S. products, regardless of whether it's in Buxton or Boston. Foreign buyers want this old stuff, and Ritchie Bros. can put those at an Internet terminal, anywhere on the globe, into the bidding gallery at its auctions.
"We had a sale in Minneapolis last week, and we sold stuff into Egypt and all over," he says.
In 1958, Dave Ritchie and his brothers owned a furniture store and a couple other small stores in Kelowna, British Columbia. According to Scott Forke, vice president of U.S. agriculture for Ritchie Bros., the store was in a tight spot with the banker.
"They needed some cash, so they organized an auction," he says. "They hired an auctioneer, but on the appointed day, the auctioneer didn't show up, so they conducted the auction themselves."
The Ritchies not only generated enough cash to get the furniture store out of the financial difficulty it was in, but the next thing they knew, they were receiving calls from other people wanting them to conduct auctions for them, too. It wasn't just that they were doing auctions, it also was how they ran them.
"The original premise -- and sort of the foundational philosophy of the company -- was to only conduct absolute auctions," Forke says. "There are no reserves, no minimums and the owners can't bid on their own equipment."
At the end of the day, he says, everything sells to new owners, regardless of price. The Ritchies grew their business, and five years later, conducted their first construction equipment auction, selling $600,000 of equipment.
They expanded their construction equipment auctions throughout western Canada and into the eastern provinces, then held their first U.S. auction in 1970 in Washington state.
"One thing led to another and they established a U.S. operation and then established an overseas operation, staring the first European sales office in England," Forke says. "Today, the company is global."
The company, which is celebrating its 50th anniversary, has 110 offices in more than 25 countries.
Why are they so successful?
"I think several reasons, one of which is the absolute sale," Forke says. "That is really the foundational premise of the whole business.
It's an honest, above-board transaction. It's very transparent, and people know who they're bidding against."
A lot of smaller, more regional companies allow owners to bid on their own equipment, he says.
"They allow some games to be played, and it becomes very difficult," he says. "As a buyer who's planning on spending the money in traveling any distance and time away from the business, the last thing you want to do is have the sellers or the auctioneers playing games with you."
Rule No. 1, according to Forke, is the sellers agreement.
"The sellers sign an agreement stating they will not bid on their own equipment, and in instances where we catch someone bidding or buying back their own equipment, we'd prosecute, so that telegraphs pretty strongly into the industry that we don't allow games to be played," he says. "People that come to the auction know that they're going to gat a fair shake."
Forke says marketing is another strength of the Ritchie Bros. business.
"We stress, quite a bit, marketing the equipment and marketing it globally," he says.
Recent advances in Internet technology have allowed auctions to be broadcast live to bidders around the world.
"That's really caught on. A lot of the equipment that's selling right now, because of the weak dollar, is going overseas," Forke says. "If you're spending 60-plus cents on the dollar (buying U.S. equipment) right now because of the weak dollar, that's a real strong impact on the auction and where this equipment is migrating to."
The auction company has facilities established near several major U.S. port cities including Baltimore, Houston, Los Angeles and Orlando, Fla.
Ritchie Bros also has set a standard, built through the years of auctioning construction equipment.
"There is a kind of a tradition for the pace and timing of the auction," Forke says. "One of our main goals is to have the look and feel and auction pace the same . . . whether you're in the Middle East or Australia or the United States."
The Ritchies' premium industry still is construction equipment, which is what got them on the path to globalization, but they probably also are the largest over-the-road truck and trailer auction company, according to Forke.
"We sell a fair amount of real estate, by virtue of farm sales, and also some of our own properties we've sold at auction," he says.
And then there's the agricultural sales.
Ag sales About six years ago, Ritchie Bros. acquired a company in northern Alberta that had an agricultural division and tasked one of its owners with expanding that business.
"They've been very successful in western and central Canada and (in) increasing our ag business," Forke says. "I think we're probably one of the largest, if not the largest, ag auction companies in western Canada.
Now the next step is to bring that down in the United States."
Enter Chris Bair and the Buxton facility.
"The reason why they bought this facility is, as they move across the Canadian provinces, they wanted to have an ag presence here and establish an ag presence in the United States to go along with their industrial facilities," Bair says.
The Ritchies bought the facility in January 2006 with the intent to grow throughout the United States until they have ag representatives in every state. They also are in the process of building a new facility just south of Minneapolis and have just finished a facility in Kansas City, Mo., both of which will auction ag equipment and construction equipment.
"So we've got big plans to move throughout the United States and be aggressive in agricultural growth," Bair says.
Ritchie Bros. did not build the Buxton facility, but with 25 acres to work with, it's got plenty of room to grow.
"It's a fairly large facility here. It's the only facility I know of in the region that has the capacity to handle the type of equipment that we have to sell. We have four auctions a year, here, plus all of our what we call 'off-site farm sales.' So we go out and do farm sales, and we also go out and help other facilities, too, when they have their sales."
Depending on the sale, the company will have 300 to 800 major pieces of equipment to sell in one day. That includes four-wheel-drive tractors, combines, combine headers and tillage and planting equipment. It also handles crop-specific equipment.
"We've always had one-day events here, and if we have an excess of equipment, more than we can sell in one ring, we'll run multiple rings," Bair says. "We sometimes use three rings here, in order to sell all the equipment that we have."
The company will get equipment from North Dakota, South Dakota, parts of Minnesota and as far west as Idaho. Some equipment will come in from Montana, Iowa, Nebraska, Kansas and parts of Manitoba and Saskatchewan.
"So we're drawing equipment, basically, from all over the Midwest," he says.
Once the equipment is delivered to the yard, it is cleaned and detailed at the detailing shop. New photographs are taken and posted on the Web site, and the equipment is parked until sale day, when things get real busy.
"We'll fill this entire facility with people and equipment and cars and the whole nine yards," Bair says.
There will be anywhere from 800 to 1,200 buyers vying for some 500 pieces of equipment at the next auction. Four auctioneers will take turns at the microphone.
Can the Buxton facility handle 500 pieces of equipment in one day
"Easy," he says.
RITCHIE BROS. FACTS
Equipment auctions for:
Agriculture.
Construction.
Forestry.
Marine.
Material handling.
Mining.
Petroleum.
Real estate.
Transportation.
2007 BUSINESS STATS:
Gross auction proceeds in excess of $3.18 billion.
More than 350 auctions.
More than 254,000 bidder registrations.
More than 80,000 buyers.
Nearly 35,000 consignments.
2007 live Internet bidding:
More than $600 million worth of purchases.
More than 77,000 registered customers from 170 countries.
Largest auction to date (February):
Five-day event in Orlando, Fla.
Gross auction proceeds in excess of $190 million.
More than 6,000 registered bidders from 71 countries.
To see more of Agweek, or to subscribe to the magazine, go to http://www.agweek.com. Copyright (c) 2008, Agweek Magazine Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
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