The second quarter of 2024 has been particularly challenging for the sawmill and forestry equipment market. Despite these difficulties, there were some standout items and types of equipment that performed well. In this report, we will explore these highlights, the market outlook for Q3 and the rest of the year and provide insights from Eugene Hochstetler of Bright Star Auctions.
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Q2 Market Highlights
Certain types of equipment managed to hold their value and demand and are not that much different in auction value than they were in 2022 when the market was strong. Eugene Hochstetler noted that common pieces of equipment that majority of our clients can use in various operations (chip packs, debarkers, carriages, edgers) remain in high demand if they are name brand, late model, have low hours, and are well-maintained. (The regular service costs are always worth it and pay off when you go to market your equipment!) One might note that supply has still not met demand for a lot of name brand equipment.
In contrast, older, high-hour, off-brand, and close to worn-out equipment has seen a significant drop in auction values. Gone are the days when you could sell this type of equipment for good prices as demand has gone down significantly due to lumber market conditions.
Most transfer equipment (Conveyors, roll cases, transfer decks, belts, barn sweeps, etc.) is taking a beating in the current market. Not sure why this sector has taken such a hit, but it could appear that there is simply not as much retooling going on currently. It is certainly a buyers’ market in this field, so if you are thinking of retooling in the near future, now would be good time to buy this type of equipment.
Vibrating conveyors from reputable brands (Mellott, Webster) remain an exception though, maintaining their value and demand even in these tough market conditions.
Rolling Stock
Certain types of rolling stock are consistently in high demand in the current market as well. Hochstetler noted that (again, late model, low hour, name brand and well maintained – in this case “dealer maintained” with records means a lot) self-propelled knucklebooms, wheel loaders, and trucks continue to perform well.
Interestingly, off-brand equipment, even if new, does not perform as well as recognized brands. This highlights the importance of brand reputation and reliability in the market.
Q2 Highest Selling Items
Outlook for Q3 and Beyond
Looking ahead to Q3 and the remainder of 2024, there is cautious optimism in the market. According to Hochstetler, high-quality equipment is expected to continue performing well. Key points include:
- Stable Demand: The demand for well-maintained, late model, and name brand equipment is expected to remain steady.
- Potential Market Uptick: The amount of equipment entering the market in late summer and early fall could influence auction prices positively.
- Lumber Market Influence: Positive feedback from operators in the industry suggests that the lumber market might see an uptick this fall, which could further stabilize equipment prices.
Investment Advice
For those looking to invest in sawmill and forestry equipment, Hochstetler offers sage advice:
“A wise man once said – When everybody walks you run, and when everybody runs you walk. Invest in name brand quality sawmill equipment while the market is down. When the market comes roaring back, you will be able to capitalize on that.”
The current market presents opportunities that are often overlooked. Dealers are cautious, only purchasing what they can sell immediately due to cash flow constraints from existing inventory. This situation allows for strategic investments in high-quality equipment at potentially lower prices.
Conclusion
The outlook for Q3 and beyond remains cautiously optimistic, with potential for market stabilization and growth influenced by the lumber industry.
As we weather this storm of the current downturn in auction values, we also recognize that in all aspects of life, personal and business, we need to take the good with the bad. There have certainly been good times in the sawmill industry (making hay while the sun shines), and we expect it will be that way again. We just need to trust in the Lord and weather the current storm!
ONWARD UPWARD!
