Closeup/Business

Open for bids

How ‘Ritchie’ became a Canadian bestseller

Suzanne Zwarun May 29 1978
Closeup/Business

Open for bids

How ‘Ritchie’ became a Canadian bestseller

Suzanne Zwarun May 29 1978

Open for bids

Closeup/Business

How ‘Ritchie’ became a Canadian bestseller

Suzanne Zwarun

The Saskatchewan contractor was also a lay preacher and that seemed, to Ritchie Brothers Auctioneers, the only remarkable thing about the proposal. The Ritchie brothers struck a deal with the preacher and auctioned off his machinery for a respectable $185,000. The new owners— clear title guaranteed by the Ritchies—departed with their buys and the preacher vanished with his money. A week later, recalls Dave Ritchie, an Outlook, Saskatchewan, credit union man arrived at Ritchie Brothers with a $25,000 lien against the preacher’s equipment. “Perfectly legal and ours.” But the preacher didn’t bank on the tenacity and originality of the colorful £ Ritchie Brothers. They bird-dogged him □ down, demanded their money and discovered he hadn’t a cent. “But my haywire & brother John fixed him,” says Dave with I satisfaction. “It turned out the preacher’s g one asset was his life insurance policy and P he signed it over to us. One of these days, ï we’ll get our money, plus a dozen years of

premium payments. He can’t live forever.”

You have to know where to look for the Ritchie Brothers auction yard to spot their neat little yellow and orange checkerboard world tucked under the Surrey end of the Pattullo Bridge to Vancouver. The precise rows of machinery, looking tiny as toys from the bridge above, are laid out in DayGlo bright lines along the banks of the muddy Fraser, like an industrial-age Chariots of the Gods configuration. But the motorists streak back and forth without a glance for what’s below. Most of them

wouldn’t know a dozer boat from a flatbed, anyway. The people who do know their “iron,” as the construction industry calls all the heavy equipment that moves mountains and sculpts highways, are already gathered in the yard on this spring Thursday, casting experienced eyes over crawler tractors, wheel loaders, backhoes, excavators, fork lifts, cranes. A couple of thousand have turned out to bid on bargains, to feel out prices, to see what’s going by this season. By the end of the day, they’ll have laid out $1.5 million for the secondhand iron, almost $250,000 more than the

auctioneers had expected the sale to bring.

Million-dollar sales are nothing special now for David E. Ritchie, chairman of the board, but he’s left leaner days not far behind. Only 15 years ago, the auctioneering brothers guaranteed an owner $ 115,000 for his iron, then had panicked second thoughts that the equipment would never sell for that. Ritchie drove his pickup truck from Vancouver to the sale site in Lloydminster, Saskatchewan, scouted the town for a $6-a-night hotel room, ate all his meals at a hamburg stand across the street. The budgeting wasn’t necessary; the sale grossed $185,000.

Relaxing in his Crescent Beach mansion after Thursday’s take has been totalled up and taken to the bank, 42-year-old Dave, youngest of the brothers, tells the Lloydminster story with huge enjoyment. His 4,000-square-foot cedar and glass house, nestled on 10 wooded acres about 30 miles south of Vancouver, boasts all the Good Life goodies: a swimming pool, tennis courts, two greenhouses, horse barns, a 53foot-long cruiser moored at the marina a few blocks away.

It’s been a profitable quarter of a century for the trio of brothers who started out with a secondhand store in Kelowna, B.C. Back then, they peddled pots and pans, chesterfields and chairs. Last year, they pushed $4 million worth of heavy equipment through a single day’s sale in Edmonton, giving them a gross of $53 million for the year. They’ve become Canada’s largest auctioneers, perhaps the fourth or fifth biggest business of its kind in North America. “Our business is good when business is good,” says Dave Ritchie. “And our business is better when business is tough.”

The beauty of auctioneering from the Ritchies’ point of view is that it gets businesses coming and going. The downturn in the Canadian economy, particularly in the resources industry, has made mining equipment a drug on the market. But there are still plenty of buyers to be found outside the country, mainly in the Third World. At the same time, construction equipment is enjoying a boom, thanks to a spate of pipeline building in northern B.C., to roadand bridge-conscious Western governments and to plans for the Alaska Highway pipeline. One major supply, just coming on the auction market in Washington state, is the equipment that built the Alaska pipeline. The end of a major project like that can suddenly make thousands of pieces of top-notch machinery available because while farmers, for instance, might tend to run their heavy equipment until it’s dead, one construction job makes a small dent in the long life of the big earth-moving machines.

The clan’s father, the late R. G. Ritchie, fondly remembered by his sons as the world’s first hippie, was “rich and poor three times in his life.” A lawyer who’d won the Governor-General’s award for excellence at McGill, R. G. fought in both

World Wars, lost his oldest son in the Second, and came out of it with the firm intention of opting out of the world. He settled in Kelowna to collect stamps and coins, a hobby that evolved into a secondhand store. In Kelowna, they called him a junk dealer but as his sons—Ken, now 50, John, now 46, and Dave—grew into the business, the store expanded into sporting goods and luggage. By the early 1950s, the cramped quarters were unmanageably overstocked with merchandise, new and used.

Enter J. B.(“Mac”) MacFarlane, a cattle auctioneer from Dawson Creek, wintering in the Okanagan. He was one of the good ol’ boys who gathered daily around the

potbelly stove in the Ritchies’ store to swap tall tales and terrible jokes. MacFarlane convinced the Ritchies an auction—Mac would do the actual auctioneering—could move some of the surplus merchandise. “The first item he sold,” Dave remembers, “was a pulley block for which we’d paid $60. He let it go for $5. 1 thought, ‘To hell with auctions, if that’s how they go.’ But by the end of the day we’d moved $2,000 worth of merchandise and got $2,000 for it.”

A couple more sales followed, then MacFarlane dropped a bombshell an hour before an auction was to start; he had to leave immediately for Dawson Creek.

Ken, drafted as auctioneer because he was the oldest, didn’t have MacFarlane’s honey-smooth patter, but he managed to move the usual amount of goods. And MacFarlane, who hadn’t gone anywhere, wandered in as they were shutting up. “Heard you had a pretty good sale, boys,” he said with a grin. “Guess you won’t be needing me anymore.”

The Ritchies didn’t, although the brothers barely scraped through high school and none has even taken an auctioneering course. The auctions at the local Scout Hall became a weekly Kelowna event, as much a social occasion as a bargain hunt. Ken Ritchie, who now manages the Interior B.C. Division of Ritchie Brothers, had a notion from the beginning that auctioneering could become a big business. When used furniture seemed unlikely to lift the Ritchies into that league, they turned to machinery. With a borrowed $ 11,000, they bought a Summerland, B.C., sawmill and auctioned it for $24,000.

The Ritchies consider 1963 their watershed. That year, an auction in Radium Hot Springs grossed almost a million dollars and there seemed to be no going back. In 1975, with John retired to the Okanagan, David and Ken formed a new partnership with a school buddy, Dick Bartel, 43; Russ Cmolik, 32, a Kelowna accountant; and Bill Gronberg, 47, an Alberta contractor. But one poor sale in the first year cost Ritchie Brothers $500,000, the company’s entire reserves and the partners considered quitting.

Then Ritchie Brothers Auctioneers hit its stride, thanks in large part to the inflation-dogged 1970s. Major mining and construction companies that once ordered only new equipment are now prowling the used equipment lots and sales, paying more for good, used machinery than it sold for originally. Even at that, they’re getting a bargain over current new equipment prices.

Successful auctioneering is a stew of psychology, organization and showbiz and

the Ritchies have learned to cook up a slick sale. The equipment is usually sandblasted, painted and put in running order so it will look its showroom best. Sales start small to get the crowd warmed up and build to a $100,000-an-item fever pitch. If there aren’t any pipe wrenches and tire carriers to start the bidding, the Ritchies buy a bunch from a handy hardware; they’ve bought $5,000 worth and sold the order for $6,000. Ritchie Brothers accountant Beth Farrell, who once starred on the vaudeville circuit as a contortionist, says setting up an auction is like putting on a stage production: “You have your opening act, your feature and your closing. I know whether we’ve done a good show or not.”

Under the costuming, however, is solid organization. The company is small, 15 people in Richmond head office, another 15 scattered in branch offices in Kelowna, Kamloops, Prince George, Edmonton, Winnipeg, Toronto, Montreal and Portland, Oregon. And with auctions happening almost weekly across the country, employees are always wending their way

through a mind-boggling tangle of paperwork. Potential buyers are alerted to the action with 40,000 color brochures mailed around the world. And if the theory of auctioneering is simple—buy equipment that can be resold at a profit—the accuracy of the initial appraisal has to be uncannily precise since two of the three deals the Ritchies offer leave them the losers if they’re wrong. (The Ritchies buy the equipment outright and resell it; guarantee the owner a gross and split anything over that; or auction the owner’s equipment for a fee.) To keep their guesstimates good, the Ritchies attend virtually every auction. Showbiz is the Ritchies’ first love. They hand out hats, jackets, umbrellas and beef on a bun, bed down customers in remote bunkhouses and give them their blankets and pillows as sale souvenirs, charter planes to get customers to a site. The Ritchies even photograph the departing iron and make up scrapbooks for sentimental owners. “Guys fall in love with their iron,” says partner Russ Cmolik. “They’ve fought with it, cursed it every day for 10 years, so it’s not just a business decision to sell it. It’s like parting with a wife.” Some customers have a flair of their own: they’ll jet hundreds of miles, spend $200,000 in five minutes at the auction, and be back in their own office before closing time.

Then, after the sale, staff, customers and hangers-on normally head for a restaurant

to eat and drink all night at Ritchie Brothers’ expense. Staffers not directly involved in a sale still make the trip out to the Surrey yard to be in on the party afterward. “I couldn’t believe the whole evening,” says Heather Brown, 20. after her first chateaubriand and champagne dinner. Restaurant owners are similarly bemused; somebody, at one recent dinner, started auctioning off the restaurant’s tables and chairs. Auctioneering people can't resist the urge to sell. John Ritchie climbed on

the ticket counter at the Fort St. John airport and sold, for $15 a piece, an armload of pies he’d bought in the airport coffee shop.

Parties are thrown to mark everything from birthdays to dog days; they range from charter cruises to late afternoon drinks in the kitchen of the converted Richmond house that is head office. (They fought a tough zoning battle to make the house their base because they like the homey atmosphere of working around two wood-burning fireplaces and stashing advertising material in the shower stall.) The bar there is always open, never abused, and the Ritchies’ explanation for the expense is simple; “We love parties.”

Ironically, the Ritchies last February were responsible for the worst party disaster in the history of the Western Canadian Roadbuilders Association. With their own staff parties already a legend in the industry, they offered to foot the bills for a cocktail party and buffet for 600 at the opening of the group’s convention in Arizona. The party went swimmingly for the first four hours, then Dave Ritchie noticed the hors d’oeuvres had run out and the buffet hadn’t arrived. The caterers had misunderstood the order for the buffet. They had no food to offer and at 10 p.m. in Scottsdale, Arizona, there was no one else prepared to feed 600 people. There was nothing the Ritchies could do but buy everyone another drink, pay the bills and flee.^