February 27, 2009

Heavy-equipment market changes with the stormy economic weather

IAN HARVEY

correspondent

Heavy equipment may be parked because of a combination of weather and the economic storm, but that doesn’t mean there’s nothing going on.

“For a lot of our customers, this is the time they are getting to the maintenance and refits they didn’t have time for before,” says Tom Merinsky, vice president, investor relations and corporate affairs, at Finning International Inc., the world’s largest Caterpillar dealers.

Just before Christmas, however, Finnings was forced to lay off 500 employees as the recession started to grind into mining and construction.

Still, Merinsky says, those layoffs weren’t made at the shop floor in the service and parts departments for strategic reasons. “We’ve spent a lot of time and money hiring those skilled people and we can’t lose them. We want to keep them.”

As Peter Blake, CEO of Ritchie Brother’s Auctioneers points out, skilled heavy equipment mechanics have always been in short supply and most players in the heavy equipment industry will do anything possible to keep those skills at hand.

“If you lose them now, you won’t get them back when things pick up,” says Blake.

In tight times, says Blake, companies either sell off under-used equipment – providing revenue for auctioneers like Ritchie – or they get to work fixing the machines they have.

“Typically, companies have a brand preference, they may be all Deere for example, since its easier for them to tool up for it and they’ll look at parking one machine and using it for parts, or doing major undercarriage replacements on their other machines,” he says, even though it may seem like a bit of a make work project because in two or three years they’ll be scrambling to get mechanics on staff.

Merinsky says they’ve seen an uptick in service and parts, especially in areas where things are slow.

“Our shop in Edmonton is still going strong and Fort McMurray is still strong but there are areas, such as the mainland of B.C., where things are noticeably slower,” he notes.

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