In the market: a tepid construction scene frees up heavy equipment inventories for other buyers

Recycling Today, Nov, 2003 by Curt Harler

The compact unit sales peaked in 2000 and followed the large equipment market down in 2001 and 2002. In fact, it was not recycling or construction that drove the small equipment market, but rather rental equipment buyers who had placed orders that were still being filled.

Caterpillar Inc., Peoria, Ill., stands as a leader in the larger wheel loader sector, with about one-third of the market. Cat has maintained that position for at least 15 years. Deere is jostling with Komatsu for second place, both with 18 percent to 20 percent of the market. Volvo maintains an 8 percent or 9 percent market share and Case is next at 8 percent. However, many lightweights are in the ring--there are 27 producers in this market, alone.

Imports and exports are about a wash. While the U.S. imports a lot of equipment--mainly from Japan and Europe--it also exports a couple thousand machines annually.

For most types of equipment, there is also a flourishing used equipment market with which to compete.

Manufacturers like Skodack see the used market as "a mixed bag." He says he sees strong demand for used machines. "We don't have any problem moving used," he says.

Yengst follows the auction market and is surprised at the number of fairly new machines that are coming on the block. "Machines one or two years old are coming to auction. Sometimes three or four buyers are interested. Other times, you can get a machine for a real bargain," Yengst says. He says it is not unusual for a four- or five-year-old machine to be sold at 60-70 percent below new equipment list. "If it's a two- to four-year-old machine, you still have multiple years of life left."

This puts pressure on dealers to move used equipment. "The market for new equipment would be much higher without that glut of good, used equipment," Yengst says.

Skodack says a substantial flow of used equipment out of Europe competes with the new market. "For us, it's good news and bad news--but it means there are more Fuchs machines in the field."

John Deere recently upgraded its used equipment Web site to provide access to every John Deere dealer's used equipment inventory, including attachments. (See sidebar.) In addition to equipment and model number, shoppers can search by age, hours and condition.

Not all recyclers are interested in used equipment. "We've bought used before," Glick says. "But we don't usually. We're in this for the long-haul." In addition to not buying someone else's problems, Glick says new equipment is quite affordable. "As cheap as interest rates are, it's worth putting the pencil to every deal."

Benacquisto of FPT would agree. "I've learned my lesson with used equipment," he says, although he will purchase loaders through Caterpillar Inc.'s certified rebuild program, because they provide a completely rebuilt machine with new numbers and warranty.

DOWN THE ROAD. While manufacturers like LBX Co. see a competitive market, Sutherland credits it more to the number of players in the field than to the economy. "There is never a deal we go into solo," he says. "You always have to be price-competitive and give more bang for the buck."