The official coming together of two of the world’s leading heavy equipment auction companies, that occurred on May 31 this year, is the culmination of a long process. It is one that was foreseen with the formal announcement of agreement for Ritchie Bros.’ proposed acquisition of Iron Planet in August 2016.
However, for Jeroen Rijk - managing director Europe at Ritchie Bros. – although there is an undoubted cause for satisfaction at this milestone for both companies; it is less about any sense of conclusion and more symbolic of a first step. The moment for congratulation has passed and it is now all about looking ahead. Despite the perspective of a long career, where he is probably entitled to claim to have witnessed most scenarios, he can’t disguise his excitement for the “enormous opportunities” this merger provides. Not least, for the customers of this newly created equipment superpower.
An expanding choice
However, all those in the previous rival’s respective customer databases who don’t share his insider knowledge on the specific points of synergy; will immediately see evidence that this new combination is delivering new choices for them in buying and selling equipment. That the market is improving is only part of the story. Customers’ needs are changing. There is an increasing complexity involved in the process of disposition. It is an auspicious time for Ritchie Bros. and IronPlanet to come together. Combining platforms enables their customers to take better advantage of the improving picture with the benefits of one powerhouse in the market that provides for all their needs.
Given the nature of other acquisitions in the industry, the tenure of each company outwardly can easily suggest a takeover of a presumptuous and competitive new kid on the block; a step taken in order to nullify a rival. However, in this case, this is far from the reality.
As the proposed benefits of the combined company are initially rolled out under the banner of - ‘Best Together’- customers, whatever their previous affiliation, can use one destination that incorporates their current favourite methods; with the promise of new routes to market as the processes are fully integrated.
It’s business as usual
Jeroen Rijk underlines that customers can expect business as usual in the short term: “It is a continuation of what each company is offering.” As it is still early days, the aim is to: “Keep it straightforward and easy for the customers - not to make things too complicated. We are committed to providing them with three main product lines. This begins with the existing live unreserved auctions held at our locations. Next is the IronPlanet product: the featured online auction - whether that be in the US (weekly) or Europe (monthly). The third product incorporates our EquipmentOne marketplace and the IronPlanet Daily Marketplace. These two will be combined later and will evolve into a platform called Marketplace e.”
As such, the emphasis is on: “These three main product lines which will run to one system. It also means we are now able to offer a complete portfolio of products to serve our customers. Our representatives have the ability to offer any of the products depending on what the customer needs; this could involve splitting items among auctions; with the option of then putting something a bit more unusual on Marketplace e. – whatever is considered apt for the transaction.”
Consequently, both the Ritchie Bros. and IronPlanet websites will look the same for the time being. Each one will retain its own identity and logo, yet, as Jeroen Rijk stresses -“at the same time they are truly connected. This goes from the moment you sign up: there is one combined contract, and you decide which platform you want to put the equipment on.” One of the first tasks after the acquisition was in combining databases, to ensure that anything that is offered on either site is being offered to the complete customer base.
Whatever the customer needs
Ultimately, it is about responding to customer needs, and the diversification of products is seen as being directly aligned with increasing customer demand for multiple selling and buying solutions. As Jeroen Rijk confirms: “From experience, our customers, all have different needs; regardless of their business size. The main solution we have been able to offer at Ritchie Bros. is the unreserved auction model. It is the thing that has brought us where we are today - and it’s still the majority of our day-to-day business; but from listening to our customers - it’s obvious they have multiple needs.”
Together with IronPlanet, Ritchie Bros. are now more able to tailor their products and response, giving customers a specific type of equipment at any given moment, and in any location. It is an expectation that Jeroen Rijk considers – “was more of a challenge once, not so long back…today, however, we now have that ability.” He pinpoints this, in particular, as: “A big change with a very positive impact for our company, but I think even more so for our customers – we can really serve them with whatever they might need.”
A smooth integration
Rationalisation typically involves cost cutting. Existing customers - often rightly - fear losing that special relationship or service that differentiates their chosen provider. Here, it is difficult to detect any of the negativity that often surrounds the coming together of the two companies. It is presented as a process of transformation: of going for growth and increasing customer share. There is a strong feeling of amplifying the best of each other and that the merger represents a key piece of a strategic jigsaw; as Jeroen Rijk explains: “Over the years the strategy of each business has involved developing some of the same regions - such as Europe - as well as also different regions around the world. IronPlanet has tremendous experience in the digital world, whereas Ritchie Bros. has a long record of building long-term relationships. Consequently, these two are a powerful match that complement each other well. This is especially so in Europe, because it’s a more complex market to operate in.”
The emphasis is upon enhancing customer experience and Jeroen Rijk considers that combining their local knowledge and strategic intelligence “is going to add a lot of value.” Words which echo those of Ritchie Bros. CEO, Ravi Saligram in reflecting upon the merger: “Together, we are combining decades of industry knowledge and trust.”
Jeroen Rijk reiterates that customers can be confident of achieving global market prices for their assets from multi-channel, multi-lingual selling campaigns. Buyers will benefit immediately from a bigger selection, from more locations - and with their confidence enhanced by being able to inspect at Ritchie Bros.’ auction sites; or from IronPlanet’s IronClad assurance inspection certification.
Stability… but will it last?
Is Jeroen Rijk’s confidence concerning the merger matched by global market conditions? What of Europe, the region he is responsible for? “I am quite optimistic at what we are seeing. Compared to last year and prior to that: in fact, since the end of last year… the market has been more stable than we have seen in a long time.”
The positive evidence, he views as being different from the recent past: “Before, the market would pick up and then something would happen. You might see particular areas where there was a small increase…Now, it is very stable for everyone – dealers, manufacturers; and that includes us as well.”
What does he consider is the main driver behind this? “Sales of new equipment have picked up considerably, so lead times have increased. When you buy your piece from the OEM or dealer, it’s not there immediately - depending on the model type and rank market. Many are looking at young, used items that they can put to work immediately, that is something we are seeing in our auctions.”
How are conditions in other regions? Has Jeroen Rijk seen an improvement globally? “It is more stable economically as the markets have picked up. We are seeing this upturn in Africa to some extent. We have also identified a positive outlook in the Middle East and Asia as well; although these are weaker in comparison. This overall improvement has been reflected at our auctions; prices have increased and the demand is there. However, it’s now more challenging to get hands on equipment.”
Identifying distinctive local and regional trends
Even in areas where recovery has been slow, Jeroen Rijk contends that balance is returning to the heavy equipment market. “Jobs and investment are back in Europe; maybe not in the big infrastructure projects, but there is a lot of residential. There’s often not enough equipment locally, so people go and buy outside of their region and end up at our auctions.”
Price stability is visible around Europe: from Scandinavia, to the Benelux countries and Germany. In southern Europe…Portugal Spain and Italy? “They’re back with good demand and activity. Even Greece, where so much equipment has been sold for export due to the crisis. There is also more activity in the mining sector in the African region, which has been really slow for years, for the big items – large hydraulic excavators and dump trucks. The Asian region as well for particular items; and the US for EPA certified items. Where Europe is so far developed; in Africa, a lot of infrastructure is still needed. We should be seeing more demand in the years to come.”
What of the approach to each region? Does he consider there are specific characteristics that are likely to affect the new company’s strategy? “There are regions that are very auction-savvy. Others not so much, and this is where IronPlanet products will be an excellent solution for people buying and selling equipment every day of the week. Our three-channel platform will be of particular interest in areas with more challenging logistics and areas where we don’t have auction facilities. We are aiming to provide a similar service in all regions and this optimisation is very much part of our new strategy.”
As for customers, who were not using the unreserved auction, Jeroen Rijk suggests that the new choice of products will be offered: “There is a difference in emphasis. Where before you might have moved your equipment; now you have the opportunity to sell it where it sits. Ritchie Bros. will put it on the marketplace for you and help you sell.”
Looking to a combined future
Jeroen Rijk is bullish about his expectations of the potential of the partnership. “The move from the traditional auction market to digital is more important every day. Both IronPlanet and Ritchie Bros. have been active in this area from the early days. There is still so much opportunity around in different sectors, such as; construction, agriculture, transport. We’ve really just started. The opportunities ahead are enormous. We will be able to open up a whole new range of services for customers who have become accustomed to using one single method of disposition.”
The combination of Ritchie Bros. and IronPlanet is a new step forward within the industry: “Remember, we’ve effectively only been together since May 31…Taking IronPlanet’s online marketplace and technology platform across a number of verticals, and our strength in live onsite auctions, we now have a suite of solutions that will make selling and buying easier, and more rewarding than ever for our customers."