YOKOHAMA — On a scorching mid-July day, hundreds of huge hulks were slowly paraded along a 30-meter tarmac in front of a circus tent packed with sweaty buyers.
Instead of cattle, it was an auction of construction equipment, including road-graders, backhoes and dump trucks. The items were selling like hotcakes, but how long the fever will last is anyone’s guess.
The bid prices for certain items shot up like the mercury for the day. The highest price fetched was 14.3 million yen.
While not as popular as used cars, secondhand construction equipment, including bulldozers and excavators, are in hot demand overseas. Buyers flock to auctions like this Yokohama site for their clients in the Middle East and China.
Japan’s exports of used heavy machinery jumped to 78,000 units in 2003 from 27,000 a decade ago, according to industry officials.
It is ironic that Japan’s prolonged construction slump has spawned a steady supply of only slightly used equipment put up for auction.
At the Yokohama site — a huge filled-in lot across the street from the waterfront — hundreds of earth-movers were sold just about a minute apart.
The sound was ear-piercing as caterpillars, excavators and other heavy machinery were put through their paces in front of buyers from around the world.
“A lot of overseas buyers come to Japan around this time of year and stay here for two weeks to attend used-equipment auctions,” said Yoshito Maeyama, president of Komatsu Used Equipment Corp., a subsidiary of the major construction machine maker.
Since 1994, the firm has held three weeklong auction tours a year, traveling from Yokohama to Kobe to Fukuoka.
Some 250 to 270 buyers attend each auction. Overseas participants account for nearly half, and most Japanese bidders are agents for foreign clients. In all, some 90 percent of auctioned machines are shipped abroad, according to company officials.
Maeyama said the auction business has been growing steadily. At a two-day March auction in Yokohama, a record 1,097 used heavy machines, amounting to 2.8 billion yen, were sold.
Recently, more and more buyers have come from the Middle East and from Hong Kong, where they represent clients in mainland China.
“There is a strong need for Japanese equipment,” said a buyer from Hong Kong who identified himself as M. Muzammil, referring to his clients in China.
“They are also making their own machines, but people like Japanese ones,” he said at the recent Yokohama auction. “It’s quality. They can be used many years.”
He came to the auction with a budget of $1 million. He planned to buy road-graders that will probably be used in war-ravaged Afghanistan and Iraq.
Just exactly where the earth-movers are destined for is hard to tell. The auction organizer said buyers come from some 30 countries, but like Muzammil they have clients elsewhere.
A former owner in Japan may find it strange to learn its auctioned-off equipment was leading a new life — with the same company logo — in Uganda.
Maeyama of Komatsu Used Equipment said auctioned heavy equipment usually doesn’t need repainting, noting some buyers even want the original paint job as proof the equipment was made in Japan.
“They would suspect we were trying to hide something if we slapped on new paint,” he said.
Fierce competition in the domestic heavy machinery market has driven down prices compared with overseas, and used equipment here is often in surprisingly good condition.
“Japanese culture takes very good care of machines,” said Gary Beal, a buyer from Arizona who has participated in nearly 10 auctions.
Japan’s weak construction market has also helped shorten the operating hours of heavy equipment.
Construction equipment in Japan average about 1,000 annual hours of operation, compared with 2,000 to 3,000 in China, according to industry officials.
During the heady asset-inflated bubble economy of the late 1980s, Japanese construction companies went on shopping sprees and owned two out of every five pieces of heavy machinery in the world, according to Komatsu.
But the bubble’s burst and the cutback in public works spending in recent years have idled the bulk of the equipment, relegating them to the auction block.
Whether the auctions remain brisk, however, is in question, now that Chinese authorities are looking to cool their overheating economy, including the construction sector.
According to Komatsu, mainland China and Hong Kong buyers, who accounted for 30 percent of sales in the March auction, dropped to below 10 percent in the July one.
There is also a supply-side worry. Maeyama said “stock adjustments” have almost run their course, meaning overcapacity at construction firms has been slashed to a great degree.
“Eventually, exports of used machines will decline,” he said.
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