Iron man

O'Sullivan calls Iron Planet the eBay of construction.
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John O’Sullivan of Iron Planet outlines his online vision for auction houses.

Iron Planet may only be finding its virtual feet in the Middle East but John O’Sullivan is a returning to the market after a few years away as a veritable old boy back on the block. The managing director for the Middle East has been in and around the auction house scene for years and feels like he has a unique perspective on the impact online auctioneering will have on the industry here.

PMV: I was talking to Keith Lupton at WWA and he told me to seek you out.
John O’Sullivan: I’ve known Keith for 20 years and he really is one of the industry’s icons. I used to run WWA’s Australian business. We go way back.

PMV: John if you don’t mind, I’m going to sit back as you tell me about yourself.
JOS: I’m a New Zealander, I’ve been involved in the auction business for over 20 years, running traditional auction companies like the ‘Ritchies’ and ‘WWAs’ throughout Asia, Europe, Australia and New Zealand. I was running a consultancy business before I was recruited to Iron Planet.

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I would say I have a pretty in-depth knowledge of the industry from A to B.

I was attracted to Iron Planet because this how the new way is going to be. As we move forward to the future, this is the way that equipment is going to be sold.

PMV: How would you describe what Iron Planet does?
JOS: In simplistic terms we are the eBay of the construction world. The traditional auction houses are getting to a stage where their fixed-costs are extremely high.

I know you talked to Guylain Turgeon – who is a very good manager – and he puts a bright side on it, but the costs of running those auctions are phenomenal. Imagine the fixed costs of putting together an auction house.

The people, the buildings. Whereas we don’t have any of that. Our model is a simplistic model. You control the equipment, it doesn’t have to be moved, painted or put fuel into it.

At other auctions, when the machine comes in they fix it up, put fuel in it, paint it, and when you (seller) get your ‘end of account’ there’s a bunch of reductions.

PMV: You’re saying the cost is passed on…
JOS: Yes, so if your machine comes in and breaks down. They fix it and you have no control on it.

PMV: An auctioneer like Ritchie would argue that one of the virtues of going through them is that buyers are reassured they are getting a machine that will work after the auction is over.
JOS: Ok, they may get the machine going, but you don’t have inspection data to look at unless the client has given it. It’s not like it’s available online.

As you’re buying ‘as is, where is’, if that machine comes off the ramp and blows up it’s yours. There’s no guarantee. They may do a nice job of presenting it, but all that is cost to the owner.

And when a machine sells for $100,000, their commission comes off – which is quite high – so does the cost. It’s one of the revenue flows for them (traditional auction houses).