Resale of plant from the construction and industrial sectors is
entering a whole new phase, as economic contraction in the UK means
that auction houses are flooded with used assets, and question
marks have been raised over foreign demand.
A weak pound, along with continued growth of
infrastructure projects in the developing world, have caused
volumes of machinery going under the hammer to double for many
auctioneers over the last 18 months – but how long will the rush
All companies surveyed noted a significant
increase in international sales across the plant sector, prompted
by the decline of sterling against the euro and the dollar. Euro
Auctions reported that its last Irish auction saw 70 percent of
sales go to overseas buyers, with an auction in Leeds seeing 55
percent of stock sold to non UK-based purchasers.
Interestingly, many resellers saw significant
attention from dealership buyers in the United States during 2008
for the first time in more than five years, as the pound moved ever
closer to the dollar in value.
In terms of mobile construction plant, more
movement has been seen at the heavier end of the market. Several
companies noted robust sales of earth-moving equipment in the
20-tonne-plus range, due to major infrastructure and commercial
construction work still ongoing in the Middle East and Eastern
Light contractor’s plant in the sub-13-tonne
range, however, usually associated with residential construction,
has had a much harder time internationally, said John Tallon of
auctioneers Tallon & Associates. With house-building virtually
dead across much of Europe, most markets have reached overcapacity
in these assets, causing residual values to drop by over 30 percent
in the last 18 months.
Crane resale too has followed the same
downward trend, with 100-tonne-plus models seeing decent movement
to the Middle East, but smaller models being harder to place.
Despite the resilience of construction demand in eastern and
south-eastern Europe, contraction of the crane market in Spain,
Germany, Ireland and Italy has caused an influx to the resale
market that Europe’s developing markets are too small to absorb
International resale opportunities for static
plant assets are looking healthy – a good thing, considering the
influx of mid-ticket assets from insolvencies over the last year,
which all companies surveyed agreed had been an increasingly
important source of business.
The print sector has been the biggest source
of assets for resale, while woodworking and glassmaking machines –
linked to activity in residential construction – have also seen a
lot of movement.
Due to the smaller volume of machinery
produced in 2008, prices of many newer static plant assets have
risen in the last six months. Older assets, by contrast, have seen
values drop, with Chris Price of static plant specialist Edward
Symmons noting high capacity automotive industry production
machinery as having seen particularly sharp falls.
Whereas, historically, China has been a good
buyer for resold manufacturing plant, demand has largely dried up
through the development of Chinese industry to the point where
domestically-produced plant is cheaper to acquire than used British
assets. Nevertheless, this decline has been mitigated by an upsurge
in interest from India, despite the huge country’s increasingly
selective attitude towards bespoke requirements in plant
specification. North Africa, too, was mentioned as a fledgling
market for plant assets in 2008.
With the international resale market growing
ever more important, it is no surprise that online auctions are
seeing more and more uptake.
Roy Tubman of Sanderson Weatherall – which
only conducted two onsite auctions in 2008 out of a total 25 –
estimated that 80 percent of the UK’s industrial auctions now took
place online, in contrast to the US market’s continued attachment
to traditional auctions. Even Euro Auctions, which only conducted
15 percent of sales online in 2008, has seen an increase in its
online transactions so far in 2009.
As the internet allows more sophisticated and
widespread routes to market, and developing economies continue to
hunger for industrial plant, there seems to be a possibility that
the UK’s industrial auction houses may sustain increased sales
volume for long enough to ride out the current recession. But with
even the most resilient global economies poised on the edge of
contraction, it seems too early to say for sure how asset resellers
will fare in 2010 and beyond.