Ritchie Bros. bids on auction theater in Las Vegas

After years of running heavy equipment auctions out of trailers, Ritchie Bros. Auctioneers has decided to put down permanent roots.

Vancouver-based Ritchie Bros. expects to bid later this week on a 33,000-square foot auction theater. In August, it completed a shop to refurbish used equipment.

The auction theater, though, means that for the first time buyers will be able to sit indoors instead of under a canopy or having to trek around the storage lot.

However, said Ritchie Bros. regional manager Jim Rotlisberger, this does not reflect an outlook that the slumping local construction companies have a long-term pipeline filled with surplus mixers, backhoes, rock trucks and other "yellow equipment" that they need to unload. "We have built up enough of a presence in the market to be able to justify something long term," he explained.

Many of the business' sellers are repeat customers who raise cash from older pieces to help pay for new ones, he said.

However, many are also in the position of Cindy Taylor Trucking and Construction in St. George, Utah, which has put numerous pieces into the catalogue for Ritchie Bros.'s Nov. 5 auction. "Work has fallen off and we don't need the equipment right now," said Cindy Taylor Vice President Ford Stewart.

As construction work started to fall nationwide in 2008, used construction equipment began to flood the market and drive down prices.

That trend scared off some companies, such as Las Vegas-based Ahern Rentals, that did not want to sell in a distressed market. Sales from Ahern's fleet dropped by half in the two years through 2009, according to company financial statements, even though its storage lots started to fill up. Company executives explained in the past that they held back rather than settle for bottom-of-the-market prices.

Ritchie Bros., a public company with 110 locations worldwide, reported a decline in revenues last year as average sales prices slumped. "A state of paralysis among equipment owners in the United States affected our ability to grow our gross auction proceeds in 2009," the annual report said.

This year, however, Ahern has stepped up used equipment sales as it detected a stronger market. Likewise, Stewart said he has seen prices rise from the floor in the past six months.

Ritchie Bros. is the only yellow equipment auctioneer with a permanent bricks-and-mortar presence in Las Vegas, although others will stage sales periodically. Internet bidding has become an increasing force.

"It's a very specialized field," said Allen Schaengold of Munari Auctions. "Sellers want you to tell them how much they can get for an item, but I could not do that for construction equipment."

Although Ritchie Bros. has been in Las Vegas for about two decades, it was only in February 2008 that it signed a long-term lease for what is now a 76-acre parcel where it will build the auction theater. Before that, said Rotlisberger, local land prices were too high to justify the long-term investment since the company only holds only quarterly auctions.

Yellow equipment brings in about two-thirds of the revenues, he said, but what he termed "toys" -- boats, pickup trucks, RVs and cars -- account for about half the items at the local lot. Ritchie built up its sales of personal vehicles to avoid becoming too dependent on a single sector.

However, Schaengold noted, most people who buy auction cars go to lots that sell en masse at least once a week.

Contact reporter Tim O'Reiley at toreiley@reviewjournal.com or 702-387-5290.