The wheeler dealers of Dubai go global

They come from all over the world to buy every type of plant you can imagine. Tim Wood charts the remarkable rise of Ritchie Bros. from local furniture merchant to global leader in the heavy machinery auction market.

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By  Tim Wood Published  April 8, 2006

|~|116prod200.gif|~|Plant equipment in line to be sold off at last month’s auction in Jebel Ali, Dubai. Nearly 1,800 lots were up for grabs during the two-day event, which attracted hire companies and dealers from across the world.|~|Alright gentlemen, here we go — it’s showtime! We’ve got lot number 555, triple nickel. It’s a loader, knee deep in rubber. Start me off. Who’ll give me one hundred thousand dollars. 1... 2... 3... 4... 5... Sold to buyer number 1314. A good eye and a good buy. Thank you, sir! Like a conductor directing the orchestra in front of him, this arm-waving auctioneer has just sold another lot for Ritchie Bros. Although there is a distinct absence of violins, cellos or harps at the Jebel Ali Free Zone in Dubai, confirmation of the sale is still sweet music to the ears of the man behind the company’s name, a certain Dave Ritchie, because it is another reminder of the success that the joint founder of the business now enjoys — and the fulfillment of a dream that first materialised when he was a young man living in British Colombia, north east of Vancouver, Canada in the late 1950s. So the story goes: The Royal Bank unexpectedly demanded a US $2,000 (AED7,300) payment on a $10,000 loan to the family — a payment that it just could not pay. On hearing of the family’s predicament, a friend suggested holding an auction of furniture scrambled together from the Red Barn furniture store, which the struggling Ritchie clan owned. A rented scout hall was the scene for the first ever Ritchie auction conducted by Dave and his older brother John, and it resulted in the money being found and the debt paid off. That was way back in 1958. More small auctions followed, but the team, which also included another brother Ken for a while, switched to heavy equipment after one auction grossed more than the furniture equivalent raised in a whole year. In 1963 Ritchie Bros Auctioneers was officially launched. Although John sold his 50% share in the company to Dave, converting his assets into gold and moving his family to South Africa in 1974, the split only seemed to galvanise the ambitious younger sibling. His equally focused team helped organise sales across the globe with auctions becoming regular occurrences in Canada, the US, Mexico, Singapore and Australia. Ritchie Bros. started up in Dubai in 1997, and that’s where we are today, with business booming and things looking rosier than ever. Some 1,725 lots of industrial equipment utilised in the construction, transportation, material handling, mining, forestry, petroleum, marine, real estate, and agricultural industries, were on offer at the end of March — and most will be snapped up in two days. And Dubai was an obvious choice for the next stage of the growing Ritchie Bros. empire. Stephen Branch, Ritchie Bros. general manager, Middle East, takes up the story. “While the world market has been up and down over the past decade, the growth pattern in Dubai has been steadily going upwards,” he explains. “A lot of equipment was funnelled through here to Europe, and it was just a natural place to sell after the Asian crisis meant that no-one was buying in Asia. “In Jebel Ali, we now have 40 different countries from every continent represented at every auction, and more than half of all the items sold leave the UAE.” Although Ritchie Bros. did not become the world’s leading auctioneer over night, its rapid growth is due to its reputation as a trustworthy source of equipment. Its ramp method, where customers are able to sit down while the mobile equipment is sold as it is driven over the ramp, was an inspired invention. And buyers are also drawn to the speed of the sales. On average it takes just 40 seconds for an item to be sold before the next one is lined up and the auctioneer can take centre stage all over again. “Buyers are not coming to play a game, they want to buy fast, then get out of town and get back to the job site,” explains Branch. “After care service is also one of the most important things and companies now recognise that. Down time for a machine is the worst thing that can happen to a company. But nowadays buyers are more choosy in picking pieces of equipment; they want to know its history, where it comes from, and who has owned it before. They realise that if the machine works, they make money; if it doesn’t, they don’t.” Branch, who moved to Dubai from Canada to allow his family to “broaden their minds to many different cultures”, says that he has noticed a significant change in the Middle East in the six years since he arrived. “The market used to be dominated by the likes of Caterpillar, Komatsu, Toyota, Mercedes and some German brands such as Liebherr. But you drive around today and you see Volvo, Renault, Hyundai and Hitachi equipment too. There has been a major influx of brands into the market place, and the industry is thriving as a result.” With the turnover of used equipment worldwide per year worth in excess of $100 billion, the industry is clearly big business. But a global shortage of kit threatens that figure and has forced many plant hirers and hire companies to descend on Dubai to source machinery. “Manufacturers as a whole were producing less and less equipment a few years ago, because in previous years they had over produced,” he recalls. “Now they have a better handle on their own companies and what they are trying to produce, which creates a shortage in the market. “Margins are especially tight in Dubai. Lots of contractors are vying for every job, which makes everyone more efficient, and gives them reason to be more efficient. This leads to a change in their own business habits to make sure they are up to the high standard. This competition is very good for Dubai in the whole field of construction and equipment. And any competition is always healthy.” There also appears to be a healthy competition as far as who can remain the longest at Ritchie Bros. is concerned. Branch admits that he can’t see himself moving on, and feels that the majority of employees are the same. “You certainly need a lot of energy; you work very hard. You breathe, eat and sleep equipment, and you either love it or you hate it,” he says. “Anyone in this industry will tell you that if you have the equipment bug, you are gone for life. It’s like an addiction, you can’t live without being around equipment. People seem to gravitate to this company and become lifers.” None more so than the man who started it all. Dave Ritchie turned 70 this year. And although he has reigned back on his role as CEO, he is still chairman of the board and still attends as many auctions as he can. “He still gets out there, still meets the customers,” says Branch. “He is one of those guys who had a vision, and knew that by himself he would not be able to accomplish that vision, so he surrounded himself with good people. “Dave’s philosophy comes right down to one sentence: Treat your customers as your friends and your friends as your customers; the whole foundation of this company is based on that one statement. He can’t leave it alone; it’s his life.” And what a life. If ever there was a rags to Ritchie’s tale, this was it. But this is one never-ending story that is set to run and run.||**||

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