COVID-related disruptions to the construction-equipment manufacturing sector are limiting supplies of new equipment, a supply chain expert said during a recent Ritchie Bros. virtual panel.
Ritchie Bros. is active in buying and selling used equipment, trucks and other assets in the construction, transportation and other sectors but reached outside of the auction business to invite Michael Vazquez, a board member with Associated Equipment Distributors (AED), to discuss sales and pricing of new equipment over the past year.
Matt Ackley, chief marketing officer for Ritchie Bros., served as moderator of the U.S.-focused event, which was billed as an Inside Edge Live Construction Panel.
“We’re finding there’s an enormous problem presently in supply,” said Vazquez, referring to various brands of excavators and other equipment. “You would have to wait about three to four months to get it in. And again, that has to do with last year with COVID, lack of production, in the sense of shutdowns, but we’re seeing an enormous problem when it comes to the new side. And I think it’s only going to get worse.
“Everybody’s looking for late model equipment but it’s just very, very difficult to source right now.”
The auction sector experienced a significant trough last April as the pandemic hit, but there has been a rebound ever since, especially in demand for some types of equipment such as excavators, mechanical front-wheel drive tractors and telescopic forklifts, Ritchie reported in its Used Equipment Market Trends summary report, released recently.
Pricing for vocational trucks, lifting and material handling, and heavy equipment is up 10 per cent, nine per cent and five per cent respectively compared to same period last year.
Doug Olive, an senior vice-president for pricing for Ritchie Bros., noted there was a significant rise in residential real estate construction in the U.S. in 2020 as remote workers looked to move away from city centres or decided to focus on home improvements while in isolation.
“That resulted in solid to strong pricing for all different types of earthmoving equipment, including multi-terrain loaders, which saw more volume and better pricing than 2019, as well as excavators and dozers, both of which saw slightly fewer units year over year, but with much stronger pricing,” said Olive in a Ritchie Bros. statement.
Doug Rusch of Ritchie subsidiary Rouse Services, specializing in data analysis of the sector, noted the increased demand for material handling and aerial equipment during the pandemic dovetailed with a trend from the last half decade, with equipment rental companies looking to cycle over their fleets as the fleets grew and new equipment was needed.
A second area of growth in the past year was equipment for projects considered essential during the pandemic, Rusch said, including compact earthmoving equipment.
“These are compact track loaders, skid steer loaders, that really coincides with the kinds of projects that were deemed essential throughout the COVID time period, roadbuilding, excavation,” he said. “We actually saw an acceleration in the volume of equipment on that.”
Then in April, May and June, generator sales “exploded,” Rusch said, as did sales for lift trucks as use of warehouses expanded.
It all adds up to an “evolving marketplace,” he said.
Vazquez said Florida is a boom state right now with real estate projects doing well and the state government budgeting $5 billion for new roads over the next five years. He forecasted that the state would be taking in residents moving out of New York and Silicon Valley.
“Now, speaking for AED and all the other members, we’re seeing tremendous growth, especially on the smaller side,” said Vazquez. “A lot of utility equipment. A lot of people working in the home. A lot of people working in landscaping, a lot of mini excavators being sold, a lot of directional drills being sold.”
Vazquez was also asked his opinion on the current political landscape in Washington, with the Joe Biden administration now in place, the $1.9-trillion COVID relief bill finally passed but one long-time irritant remaining unresolved — the $2-trillion infrastructure plan.
Vazquez said he and the AED leadership believe 2021 is going to be the year it will happen.
“At the end of the year I believe it will happen because they got the COVID bill out of the way. Now infrastructure is going to be the primary concern,” he said.
Follow the author on Twitter @DonWall_DCN.