BARRHEAD - The County of Barrhead is hoping to capitalize on what is still a hot heavy equipment used market.
At their May 21 meeting, councillors unanimously approved a public works recommendation to dispose of a 2018 John Deere motor grader (unit 220) through a public auction via Ritchie Brothers, with a guaranteed price of $145,000.
Council approved the purchase of its replacement in late June 2023 for $577,000 from Finning. The purchase price includes the optional 12-foot snow wing and a five-year warranty.
Due to a then "hot, heavy equipment" market, councillors opted not to accept a trade-in discount from Finning but rather hold off until the arrival of the new machine and sell the retiring grader.
The new unit is expected to arrive sometime next month. Councillors approved the purchase a year early (Unit 220 was slated for retirement before the 2024 road-building season started.)
Infrastructure director Ken Hove said the 2024 Capital Budget included $200,000 from the expected sale of the old unit. A county policy around the disposal of surplus items allows the municipality to dispose of surplus items through a competitive process, such as a public auction.
He added that as the replacement date neared, public works asked Ritchie Bros. Auctioneering, Mitchener Allen Auctioneering, Finning and Brant Tractor to provide pricing options on the unit.
Finning and Brandt Tractor did not submit pricing options, while Michener Allen guaranteed a minimum price of $112,500 and 88 per cent of any proceeds over $125,000.
Ritchie Bros. provided two options, the first with a guaranteed minimum price of $145,000 and an additional 80 per cent of proceeds over $164,000 or 9.5 per cent straight commission.
Coun. Bill Lane said it wasn't the first time the county sold heavy equipment at auction instead of the more conventional trade-in route, and they had come out ahead.
Hove agreed, saying in recent years, the municipality has gone the sale route for a scrapper and a crawler loader and came out ahead on both.
"Upon review of recent auction results, similar units have sold in the range of $140,000 to $190,000," he said. "An analysis was carried out on the proposals received to compare county profits versus the selling price, factoring in potential risk and reward."
He noted the option with the lowest risk was from Ritchie Bros, with a guaranteed minimum of $145,000.
Besides offering a higher guaranteed price, Hove said, Ritchie Bros. had a larger audience.
"Sales to Richie Bros. is worldwide while Michener Allen is just Western Canada," he said.
Hove also noted the amount of risk was equal to the potential profit, saying it was a matter of how much risk the county should take.
"So, how much risk are you prepared to take," deputy reeve Marvin Schatz asked jokingly.
Hove replied that it was council's decision, but he recommended taking the Ritchie Bros. option, which included a minimum of $145,000.
Coun. Walter Preugschas agreed, saying the potential windfall wasn't worth the risk, saying the estimated maximum was only a difference of about $10,000 between all three options.
Barry Kerton, TownandCountryToday.com
