CAT fans could scoop up bargains
Rick Albin, president and chief executive officer of CAT Auction Services, likes to say that somebody somewhere is working. And they need heavy machinery such as the Caterpillar earth movers that he will auction Tuesday at the Mesa County Fairgrounds.
But Albin also knows, given the economy, that people are looking for a steal.
“You come to an auction, you look for a bargain,” said Jim Anderson, owner of James A. Anderson Construction.
Like many looking for a bargain, Anderson and his wife drove down to the fairgrounds before the auction to check out the merchandise. They found a stunning array of large, earth-moving machines, dump trucks, lifts, construction lights and other equipment parked in the main rodeo ring, ready for the big day.
“That’s because there is no construction. No one is building anything,” Anderson said.
Ask anyone in the construction industry, and they’ll say the same.
Letha Claussen, receptionist for PCI Palisade Constructors, said business is so slow she goes outside the office these days to pull weeds just to stay busy. The company does not have any equipment for sale at the auction and does not intend to purchase any.
“We have had so many people in here looking for a job,” she said.
Rick Charlesworth, owner of Lower Valley Dirt, said he has some work, but not so much that he will be looking to buy at Tuesday’s auction.
“I think it will be a buyer’s market,” Charlesworth said. “The people who have the financing will be at that sale, and the people just hanging on will not be there.”
Not completely true. The auction is being broadcast live, via the Internet. Those attending the auction at the fairgrounds can sit and watch the live broadcast under a large tent. What they will see are video clips of every machine being put through its paces so they know it works before bidding.
Albin said much of the equipment will be leaving the country.
With merchandise valued at more than $10 million, there are more than 525 machines from the largest Caterpillar, a D9R, to small trailers on sale.
“Grand Junction hasn’t seen an auction of this magnitude since the ’80s (during the oil-shale bust),” said Cliff Henderson, owner of Henderson Equipment Sales & Rental.
His business is selling many of the machines available Tuesday, along with Wagner Equipment Co. The glut of yellow CATs in Grand Junction, said Henderson and others, has much to do with the slowdown in the gas patches.
“We were servicing the oil and gas industry,” Henderson said.
Last year he was making money. This year his monthly bills exceed his monthly income by $200,000.
“As bad as it shut down, you got to do something,” he said.
He anticipates taking a heavy loss, selling equipment for less than 50 cents on the dollar.
Last year, Henderson said he had an offer to sell his equipment for $12 million. He is speculating that the auction will fetch him only $4 million.
“I have never seen a business climate like we have now,” he said.
Energy companies such as EnCana and Williams have cut back their drilling operations significantly in the nearby Piceance Basin, reducing the need for subcontractors and their heavy machinery.
“Certainly, heavy machinery is used in building pads, building roads, building pipeline corridors,” said Doug Hock, spokesman for EnCana Energy. “It follows logically there are fewer pads being put in, fewer pipelines and roads.”
Last year, EnCana operated more than 300 wells. This year, the company is planning for 123, Hock said. It had an average of 13 rigs in the Piceance Basin. This year, the company is running four, he said.
The story is much the same for Williams.
“I would say our construction program is alive and well and ongoing, but it is not at the pace it was a year ago,” said Susan Alvillar, a spokeswoman for Williams.
Last year the company had 25 rigs operating in the area. It now has eight, she said.