Emissions Regulations Squeeze Construction Equipment Owners

Sept. 28, 2010
When it comes to moving equipment for which a local market may have been eradicated, Ritchie Bros. Auctioneers offers a global market. "You're trying to get the best return you can get on the asset," says Nick Nicholson, "and with the international demand as it is now, you're going to turn to whoever can bring you the most international attention."

A man of faith, outgoing equipment owner Arnie Richter smiles, extends his hand, and immediately offers a comfortable seat to a visitor. As he deliberately discusses what has brought him to a heart-wrenching crossroads in his life's work, his face remains pleasant and he speaks with grace and humility.

He hails from a family of contractors, for whom the blue skies on this morning represent the optimism of a day's work that most every single morning prior has brought. Hey, it's California after all.

But as the big iron continues to rumble across the auction ramp below, surrounded by the fast-paced pitches that envelope every Ritchie Bros. sale anywhere in the world, Richter's eyes briefly shift downward and his voice momentarily tails off.

"I am," he manages, "just disappointed."

Others around him would be and are angry; still others disillusioned, frustrated, panicked or even distraught. But, in this case, "just disappointed" seems entirely appropriate.

It's California, indeed.

Long at the fore of environmental concerns, the state for which warmth and sunshine are synonymous has sent a chill through the construction-equipment industry — and nowhere is that more sobering than with the contractors, at least many themselves believe.

As California Air Resources Board (CARB) regulations drive off-highway equipment ultimately to Tier-4 compliance — and agencies in other jurisdictions watch on with varying degrees of interest — equipment owners are often faced with the dilemma of divesting themselves of or repowering equipment they own and operate.

For Richter, a contractor for 27 years including 20 as a partner with his father, his own Ontario, Calif.-based Richter Engineering was admittedly a small player with less than 20 total pieces of assorted earthmoving and transportation equipment, and annual business of $2 million or less. "Just enough to poke along," he says.

With the current economic slowdown coupling the increasing costs of just doing business, most notably for insurance, the equipment-compliance issues ultimately just wore him down.

"I tried to sell my fleet, because I had a nice fleet, to several larger contractors," he says. "Nobody would buy it, even though it was late-model equipment — in fact, I was still paying on it. It was going to throw them over on their counts on the emissions, so I was forced to selling here to get rid of it."

"Here" is the Ritchie Bros. Auctioneers permanent auction facility in Perris, Calif.

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These Caterpillar wheel loaders about to cross the Ritchie Bros. auction ramp in Perris, Calif., may not look all that different than those elsewhere in the United States, but a Tier-0 description (inset) leaves them at a decided disadvantage for their soon-to-be-ex owners.

Thanks to the Internet, Iron-Planet customers like Mark Domeier can easily access equipment up for bids from California from the convenience of his office at Caterpillar dealership Patten Industriesin Elmhurst, Ill.