For the past decade or so, Alberta has been Canada’s economic powerhouse, thanks mostly to the province’s robust energy sector. But that all changed last year with an oil price drop of 70 percent from mid-2014.
The fall-out is being felt throughout the province - unemployment has nearly doubled from a year ago, crime is on the rise and even one of Grande Prairie’s long-running country music festivals has been cancelled.
Amidst the turmoil, local Caterpillar dealer, Finning, and its customers have been weathering the storm and reorienting their businesses.
“Today, there’s not much happening in the oil and gas industry in the Grande Prairie region,” says Tyler Bowman, products and services sales manager with Finning’s Grande Prairie operation in northern Alberta. “Industry new equipment sales were down about 70 percent when you compare 2015 with 2014.” Bowman has seen the impact up close, with his customers. “Some of them have been able to deal with it by unloading equipment with debt attached, so they won’t have excess iron sitting idle.”
And that’s why father and son duo and long-time Finning Grande Prairie customers, Dennis and Deven Viken (pictured above and below) of Hi-Drive Contracting, were in Edmonton last week for the Cat Auction Services live auction at the Marriott River Cree. Hi-Drive, based in the small town of Hythe, about 45 minutes northwest of Grande Prairie, operates a fleet of 25 machines, primarily doing heavy construction work for Canadian Natural Resources Ltd. But reduced activity at Canada’s second largest oil and gas producer has resulted in Hi-Drive moving from steady work to more of a part-time role which meant fleet restructuring was a must.
We caught up with Dennis and Deven a few moments after they saw two of six machines they consigned to the Finning-hosted auction through their Finning rep Greg Robinson snapped up by bidders from Kentucky. “We just watched our two rock trucks sell,” said Deven. “They went for a little bit more than what we were expecting. So we’re happy so far. I guess it helps having the market in the States and the stronger economy down there.”
Added Dennis: “When you’re talking 25 to 30 percent difference (thanks to a weaker Canadian dollar), that’s huge. We sat down and talked about sending our equipment to auction and agreed that this is the way to go. We didn’t want to be sitting with a big debt load. This way everything’s going to be clear and we’re good to go. The economy should turn around in two years or so, that’s our feeling anyway, and we’ll definitely be back when things pick up and we’ll be getting more iron.”
Western Canada is a new territory for live auctions through Cat Auction Services. The March 30 event was just the second held on Canadian turf. Three more Edmonton auctions are planned for 2016 with the next scheduled for June 22.
Gary Agnew, vice president at Finning was on hand for the event. “We’re really thrilled about the momentum we’re starting to build here,” he said. “We’ve doubled the size of the sale from our first event last October. That speaks very highly to customer confidence in the Cat Auction Services platform.”
Cat Auction Services is an IronPlanet marketplace which, while a live auction format, benefits from IronPlanet’s 16 years in the online auction business and its global reach. The March sale saw bidders from 17 countries, 10 Canadian provinces and 34 U.S. states – these international bidders from stronger economies help drive equipment values. Agnew added that Finning sees the auction channel as a vital piece of customer service and its ongoing partnership with customers. “We want to be an integrated solution provider to our customers so it’s just natural to offer a premium auction option. In addition to the ability to buy and sell at auction, buyers and sellers can benefit from a suite of services covering transportation, finance and equipment technology. In dealing with your Finning representative, you get access to all that and the traditional range of Finning sales and service options with one contact. We think that’s pretty compelling.”
It appears as though business savvy equipment operators in Canada’s oil patch and beyond are beginning to agree.
