As supply chain issues wreak havoc on lead times and pricing for new equipment and parts, construction material producers and contractors are turning to an alternative solution to ensure work continues and jobs are completed.
That alternative is used equipment.
Greg Donecker, owner and president of Kemper Equipment, a Pennsylvania-based supplier of crushing and screening processing equipment and material handling systems, says used equipment is becoming a viable alternative in today’s pricing environment.
“There seems to be an increase in demand for used crushing and screening equipment,” Donecker says. “[Customers] are looking for reliable used equipment. [But] because of labor shortages, customers don’t have a workforce to repair a very high-hour machine. Yes, there is demand for used, but customers are being selective, and they want good used equipment.”
Donecker noticed demand shifting from new to used equipment sometime in the second quarter of 2021.
“[There has been demand] for good washing equipment, good re-crush systems and portable jaws,” Donecker says.
Some equipment dealers have seen a steady uptick in demand for used equipment as new equipment is harder to come by in a timely fashion. In some cases, dealers are concerned about keeping good used equipment in stock as they await new equipment to arrive from their vendors.
“There is a shortage of good, available used equipment out there,” Donecker says. “Partially because the supply chain has been disrupted for the new [equipment] and, at the same time, demand overall for all machinery is increased.”
Other observations
Brian Glenn, senior vice president of sales and dealer management for Ritchie Bros, a Canadian-based used equipment auction company, has seen new impacts on the equipment market, as well.
According to Glenn, some customers are keeping equipment in use longer than they otherwise would because of current business environment.
“Owners of ‘said’ equipment are keeping it longer because they have to,” Glenn says. “They’re extending that life cycle. Whether it would be a 6,000-, 8,000- or 10,000-hour threshold where they would typically replace that asset and we would benefit from that sale, they’re having to hang onto it for a little longer, based on the simple fact that they can’t get a new one.”
Ben Schmidtlein, aggregate division manager at Road Machinery & Supplies Co. (RMS), says demand for construction materials is having an effect on equipment demand, as well.
“The market has been very strong even through the pandemic,” says Schmidtlein, whose company is based in Minnesota yet also serves Iowa, Nebraska, South Dakota, North Dakota and the Upper Peninsula of Michigan. “If you’ve paid attention to some of the publicly traded companies, you’ve seen some really nice margins in that. That’s been very promising for us.
“But it absolutely creates issues when you’re trying to locate a good amount of used equipment,” he adds. “When people are trading in, we just don’t have it in the yard for long. Sometimes it’s already pre-sold. We have somebody in mind who’s already been looking. A lot of times, when we’re evaluating a piece of equipment to bring in on trade, we’ve already got a place in mind where it might fit.”
As increased demand and dwindling supply drives up the price to purchase used and new equipment, Andy Schwandt, RMS’s vice president of sales and marketing, says there is another option for customers to get equipment for jobs while not breaking the bank.
“We have a large rental suite, so we generate a lot of our own used equipment through our rental suite,” Schwandt says. “Rentals continue to trend upward, especially as people get more used to usership instead of ownership. Use whatever you need for the time you need it, and you turn it back in.”
In some cases, Schmidtlein says transactions that begin as three- or four-month rentals can end up staying out all season. These can eventually be converted into purchases.
“It seems like a lot of them that have left the yard have found more work,” Schmidtlein says. “It’s a pretty good market right now for a lot of customers in our region.”
Final thoughts
According to Glenn, mobile jaws and screeners have been the most sought-after pieces of equipment over the last eight to 10 months.
“We benefit from the fact that our customers are fluid,” Glenn says. “In certain situations, a customer geared up for a big project, which is now completed, and he doesn’t have another job to go to. We’re fortunate enough to be the channel that he chooses by which to remarket it.”
According to Schwandt, one market that should fuel further equipment demand is residential construction.
“I think supply chain issues are going to carry with through next year,” he says. “I think demand is going to be strong for the next several years, primarily driven by a shortage of housing. Aggregate is used in everything from roads to foundations, so I think aggregate demand is going to continue to be strong.”