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Editor's Note Sending Tier-4 Back to the Future As used machines they may be made saleable, but what's going to happen to the oh-so-primo value of those mean, clean digging machines? By kIM pHELAN Is it just me or does anyone market, can they possibly hold their else see the supreme irony (or idiocy?) T-4 value – for which the owner paid in the total and costly overhaul of a premium – when T-4 is not valued equipment as we've known it, transor even useable by most countries of formed for the purpose of eliminating the world?" emissions that are bad for our lungs "I'll give you my view," he replied. and climate, when most of the rest of "I don't think anybody knows." the world will continue using all the And it's going to be one gnarly "bad" equipment and emitting pollut- knot to sort out, we inferred, as he ants into the Earth's atmosphere? Did held up a jumble of cords and cables anyone stop to consider that maybe lying on the table nearby to illustrate. some international diplomacy and Nevertheless, Mackay is optimistic consensus on the subject might have that there will be a solution to the ensured a more successful global outmyriad questions and problems that come before inflicting so great an R&D lie ahead – he just doesn't know what burden upon U.S. manufacturing? that will be yet. A sign of how the Tier-4 engines are of course going thinking is evolving, however, is that to eventually bring about some meawhereas no one was talking about sure of cleaner air, but you can probde-rating or de-tiering machinery ably think of lots of things that stink a year ago, today, he said, most about North America's mandated manufacturers are indicating they are metamorphosis of the construction working on some kind of de-tiering equipment industry. A big issue on mechanism. The ability to undo the my mind (and probably yours) is goT-4 functionality would, of course, ing to be the ability, or lack thereof, solve the No. 1 dilemma of North for a T-4 equipped machine to hold American owners of used T-4 equipits value once the original owner is ment being barred from the global ready to sell it. So for kicks, I lobbed used equipment market – in other that question to a guy who knows words, de-tiering would enable these the used machine market about as machines to continue their useful life well as anyone I can think of – elsewhere in the world where low-sulRob Mackay, president of Ritchie fur fuel and the know-how to repair Bros. Auctioneers (RBA). T-4 engines is likely to be absent. The setting for the conversation The big caveat to this remedy is was RBA's monster-sized Orlando that once you de-tier an engine, says auction the third week of February. Mackay, you can't reverse it back to Mackay was laying out facts and figT-4, and it won't come back to the U.S. ures about the company, the industry, What's more, one manufacturer global demand and so forth for a told Mackay this possible approach: group of editors, and when he was "We'll create a de-tiering mechanism, finished I said something like: "Tier-4 but we won't allow anybody in the final machines are going to carry a exporting country to put it on; only hefty price tag, Rob, but when they the dealer of the receiving country enter the global used equipment can put it on." If that sounds like a recipe for a fight to you, you're probably right. Suppose U.S. Dealer A sells a used excavator to, say, a contractor in Argentina, and, because A isn't allowed to de-tier it, he picks up the phone and calls Argentina Dealer B and says, 'Hola Señor, I just sold a machine to your customer so please de-tier it when it arrives to your country.' That's when the mierda will really hit the fan, because B didn't make a dime on the deal and now he's supposed to alter the T-4 equipment that comes chugging down into his territory? Cover your ears when he calls the "mothership" about this one. Another fundamental speed bump in the de-tiering path to freedom is the fact that some machines have been designed in such a way that their very frames are different from those on pre-T-4 machines – "so that's even a bigger problem," said Mackay. So, what was the question again? Ah yes, can used T-4 equipment hold its primo value when it ultimately hits the used market? "The reality is," Mackay mused, "a buyer is going to pay [more] upfront today to own a T-4 engine, and the typical valuation of it at some point in time is a significant unknown." As always, I'm happy to clear things up for you! And as always, thanks for reading. (Do let me know if you've got some thoughts on this issue.) Kim Phelan (kphelan@aednet.org) is the executive editor of Construction Equipment Distribution and director of programs for AED. March 2013 | Construction Equipment Distribution | www.cedmag.com | 7 7_editors note_KP.indd 7 2/27/13 11:39 AM