Issue link: http://read.dmtmag.com/i/287259
April 2014 | Construction Equipment Distribution | www.cedmag.com | 27 One-On-One as well. It's really high energy and a lot of fun." Do you have any advice for your successor? Robert Murdoch, chairman of the board of director at Ritchie Bros., has called Blake "an outstanding leader." Asked about this, Blake remarked, "I have no magical wisdom from the mountain. Just pay attention to what your mom and dad told you and what you learned in kindergarten. Listen to others, work as a team, and have good core values. That's what will drive success." However, he is determined to make sure the organization is in good hands. "I've already told the board that I'd stay around for the landing of the new leader," Blake said. The Used Equipment Prices Up in 'Tight Marketplace' Tier-4 Final makes an impact. The current used equipment marketplace has been relatively tight and flat, with inventory in short supply because the amount of equipment moving into this space, explains Jeff Jeter, IronPlanet's president of the Americas. As companies went through the recession, new production and the demand for equipment declined, and lenders were not as eager to finance equipment. This means the amount of machinery moving into the marketplace is reduced and, throughout time, affects inventory, Jeter explains. Supply in the used equipment market also remains tight, Jeter says, because equipment owners who have been unable to purchase new machines are hanging on longer to their inventory. "Even as people can afford to buy new, lenders won't give them the credit," Jeter said. "Instead of replacing equipment after three to four years, it may be five to eight before they replace it – especially for contrac- tors who don't have the confidence to buy new after the backdrop of what has happened [with the economy] during the last few years." However, at the same time there is less supply there are also still buyers, Jeter says. "There is a tightening of supply as work comes in and things are starting to get better," he said. "This demand for equipment means prices are strong." This demand is also coming from outside the U.S. Jeter says about 33 percent of IronPlanet's equipment has left the United States, with the highest percentage going to South America, Latin America, Canada, Africa, and the Middle East. Buying used equipment online via an auction isn't going to slow down. According to the Wells Fargo Construction Quarterly Newsletter for Q3 2013, one-fourth of contrac- tors said that within the past 12 months (from when the report was published), they have acquired equipment from the Internet without first inspecting it in person and that it was a positive experience. "Broadly, people are more comfortable now conducting commerce over the Internet," Jeter said. "Whether it's eBay or Netflix, we are all consum- ers and all have a great appreciation for efficiency." Now that Tier-4 Final emissions laws are in full effect, it remains to be seen what the implications will be for used equipment pricing – especially since so much used iron is sold into countries without easy access to ultra-low sulfur diesel fuel. "Some 'de-tiering' solutions will be needed," Jeter said. And, he says, as T4F iron gains domination, older equip- ment will be viewed as premium product. Equipment market expert Frank Manfredi, president of Manfredi & Associates, a consulting firm and publisher of Machinery Outlook, says prices on Tier-3 equipment have been very strong because people are putting off the purchase of Tier-4 machines. "This has kept prices of Tier-3 machines at a pretty high level," he said. "The cost of Tier-4 machines is quite a bit higher than the old machines." Just how much more, though, really depends on the type of equipment and size of the machine. A machine valued at $50,000 is impacted more noticeably than a machine worth $300,000, because the T4F engine in a smaller unit is a smaller part of the purchase price. Tier-4 engines cost more, and manu- facturers are increasing prices because of the higher cost of Tier-4 engines, Manfredi says. "It is impacting smaller machines more than the bigger machines. The percent increase for Tier-4 Interim is about 12 to 15 percent more compared to Tier-3 machines. For a Tier-4 Final, the impact will be closer to 15 to 25 percent when compared to a Tier-3." "Used equipment prices are certainly elevated, especially the older equipment technology engines," Manfredi said. "People are holding on to them and rebuilding them. Prices are higher than they might normally be because there is a disruption in the marketplace with this technology change." Jeff Jeter Frank Manfredi (continued on next page) 24_Peter_Blake_Feature_KP.indd 27 3/27/14 4:27 PM