Construction Business Owners Auction Equipment

Riverside, CA (AHN) - With new-home starts down to its lowest level in almost 50 years, construction business owners want to rid themselves of idle assets, leading to the auction of their equipment.

At least 2,000 equipment was sold to the highest bidders at a two-day auction which ended Wednesday, held in the town of Perris in Riverside County, California. The construction equipment auction, which sold a total of at least $20 million payloaders, cranes and other house- and building-making equipment, was organized by Ritchie Brothers.

Those who sold their equipment recounted the drop in job orders until they decided to dispose the items to add to their working capital instead of lying around useless. The buyers were attracted by the cheap prices, but some were wary in purchasing so many items which may not be fully utilized because of the continued decline of the housing market and the construction industry.

A hydraulic dirt excavator which cost $309,000 in 2005 was auctioned Tuesday for only $50,000. Another excavator which cost the original owner $1.4 million agreed to sell it for $150,000. A $112,000 Volvo wheel loader was sold for $60,000.

Some of the buyers were not really into the construction business, but entrepreneurs who plan to sell the cheap equipment at a higher cost on a later date. Los Angeles resident Tim Isiguzo purchased a Caterpillar wheel loader for $24,000 which he plans to fix and repaint, and eventually sell it to Nigeria for $60,000.

If equipment owners are selling their idle assets, construction equipment makers are neither making sales causing Caterpillar's thirds quarter net income to dip by 6.4 percent to $868 million. JP Morgan analyst Ann Duigan said the downturn in the construction industry may lead to the sale of weaker construction equipment manufacturers which will falter financially due to the economic downturn.

According to the Commerce Department, housing starts went down by 4.5 percent while there was a 12 percent dip in new building permits issued in October.