Ritchie Bros: A three-way split
Ritchie Bros is preparing to hold a three-way auction between Dubai, Japan and Singapore. Regional SVP Guylain Turgeon explains its new three-in-one strategy.
Relocating to Dubai has given Turgeon a greater understanding of the region
Ritchie Bros is preparing to hold a three-way auction between Dubai, Japan and Singapore. Regional SVP Guylain Turgeon explains its new three-in-one strategy.
As any Craps player will tell you, three is the hard way to play with two dice. However Ritchie Bros is sure its three centre auction in July is a sure bet for buyers based in the Middle East and Africa, Japan and Singapore to secure equipment listed at its Dubai auction house.
Effectively this will open all three markets to buyers via simultaneous broadcast.
CMME met with Ritchie’s affable managing director for Europe, Middle East and Asia, Guylain Turgeon during the run up to the event to understand why now is a good time to bring the territories together as one auction.
“Dubai is definitely a hub, is well established for us and has a good customer base, so we are trying to leverage from that,” he comments. “As far as Singapore and Japan is concerned, it’s more about trying help to promote these sites across the region and help with them with customer base we have established here. You’ll find bidders from the Dubai site bidding than Japanese and Singaporeans.
He continues: “Ulitmately our strategy in the region is not linked to Singapore and Japan but focusing on Turkey and Saudi Arabia.”
He views expanding its reach into those two markets is a process of moving towards both buyers and suppliers of used equipment. “We have to start with the principle that there are a lot of machines everywhere.”
As well as Saudi Arabia and Turkey, he cites Iraq and Russia as other potential hot spots. Although he laments that the Russian market has the most opportunities but is also the most complicated to tackle from Ritchie’s perspective.
“It has the biggest potential of all the region,” he explains. “But unfortunately it is so difficult and challenging to do business there that we’re putting it aside. We’re focusing on areas that are achievable.
“Second comes Turkey and then Saudi Arabia,” he says. “So that is what we’re concentrating. We’re not talking about machinery, we’re talking about the potential of the construction market.”
He then jokes: “Stats on machines are very difficult.”
Ritchie Bros’ auction house close to Jebel Ali has served it well over the years with the port being a funnel for equipment coming in and then out to the rest of the region. He considers the dynamic nature of the flow of machinery in the port for a moment.
“I drive (through) there every morning and there’s lots of machines coming into the port. Whether they stay in the UAE (is a another matter).
“And then you go to Sharjah and there’s yards full of machines there and there get sold everywhere. It’s challenging to get the size of the market.”
To understand how important Dubai has become as a trading centre for Ritchie it is worth noting that he moved last year from its European office to the UAE. The change makes him one of the few major industry executives – Turgeon has his own listing with Forbes magazine – to be based in the region.
Turgeon is also no desk jockey. You get the sense that re-locating to the Middle East has given him an even greater understanding of the region. What has he learned so far? He returns to his earlier comments about Saudi Arabia and Turkey.
“The common thing I hear is that Saudi Arabia is three times the size of the UAE – at least. In terms of the number of construction sites we hear Turkey is the largest, although that could be misleading when you think that out of the 225 largest construction companies in the world, 32 are Turkish and they work everywhere in the world. They are very active and very business-minded.
“The interesting part for me is to get into the field and meet the people using the machines and then you get a good sense of how big a market is, who the major players are, and so on.
“There’s an interesting dynamic in the whole region, not just the Middle East but also in Africa. There are some areas that are buzzing and some where things are flat, but overall there are a lot of opportunities for us. Whether it’s in India, Africa or the Middle East. So we’re quite excited to be here.”
When the Quebec native took over in Europe, Ritchie Bros only had one auction site on the continent. By the time he left last year it was operating 11 sites and his initial team of ten had swollen to 250 people. It is reasonable to assume a similar multi-centre expansion could be on the cards with Dubai as the hub.
“There is experience there of how to develop a market and we’re trying to bring that to the area with the idea of having more auction sites and trying to develop our auction network around the region.”
Ritchie in South Africa
Ritchie Bros. sold more than 690 mining and other heavy equipment items, trucks, attachments and parts at an unreserved public auction in Witbank (near Johannesburg), South Africa on March 27, 2013. The auction, held on behalf of Sentula Mining Limited, a leading mining service provider and coal miner based in South Africa, attracted more than 270 registered bidders from over 45 countries to bid in person at the auction site or online in real time.
“The unreserved auction in Witbank attracted a truly global audience of on-site and online bidders from a range of countries including Congo, Mozambique, Egypt, Russia, Australia, Portugal, the United Kingdom and many more,” says Turgeon,
“More than sixty percent was sold to buyers from outside of South Africa. Equipment prices were particularly strong in the auction for heavy construction items and trucks. We also witnessed strong competition from live online bidders, which resulted in more than half of the gross auction proceeds being generated over the internet.“
