The Journal of the International Machinery & Technical Specialties Committee of the American Society of Appraisers - Volume 37, Issue 1, Summer ...
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The Journal of the International Machinery Volume 37, Issue 1, Summer 2021 & Technical Specialties Committee of the American Society of Appraisers
THE MTS JOURNAL
Contents
MTS Journal Editorial 4
Zachary Rimler, ASA and Tim Roy, ASA
CEO Update – New Year – New Possibilities 5
Johnnie White, ASA CEO
Chairman's Corner 7
Bill Engel, ASA and MTS Committee Chair
Governor's Bulletin 8
John Mathe, ASA and Sam Shapiro, ASA, MTS Governors
M&E Marketplace Insights: Row Crop Machinery Technology 10
Todd Janzen, President, Janzen Schroeder Agricultural Law – As Interviewed by Tim Roy, ASA Capitale Analytics.
M&E Marketplace Insights: Industrial Processing and Plant Auctions 13
Joel Bersh, Co-CEO, Aaron Industrial Solutions – As Interviewed by Tim Roy, ASA Capitale Analytics.
Heavy Equipment Technology Products 17
Brad Hartsburg, ASA, CPPA, CSA – and information gathered from Caterpillar Performance Handbook 49
Aircraft Maintenance Condition and Asset Value 22
Barbara A. Spoor
Do the Marine Asset Appraisal Methods Used Internationally Meet Acceptable Standards? 25
Norman F. Laskay, NAMS-CMS; ASA
Iowa-Type Survivor Curves and Equipment Life Expectancy 28
Richard K. Ellsworth, PE, ASA, CFA, CCP
Archived Articles Available for Your Library 35
The MTS Journal Subscription Form 62
American Society of Appraisers
Volume 37, Issue 1, Summer 2021 2
THE MTS JOURNAL
The International Machinery & Technical Specialities Committee
MTS Board of Governors
John Mathe, ASA – Australia
Samuel Shapiro, ASA – Massachusetts
MTS Committee Officers
William M. Engel, ASA – New York – Chair Tim Roy, ASA – Indiana – Secretary
Jamie Allen, ASA – Chicago – Vice Chair Karen M. Milan, ASA – Texas – Past Chair
Ryan Kinahan, ASA – Virginia – Treasurer Todd J. Paradis – Virginia – HQ Liaison
MTS Committee Members At-Large
Dennis Bolton, ASA – Charlotte Nollaig Daly, ASA – Australia Brad Hartsburg, ASA – Calgary
Achin K. Chugh, ASA – Toronto Richard Ellsworth, ASA – New Jersey Shane Miller, ASA – Australia
Suzette Clingerman, ASA – London Joshua J. George, ASA – Pennsylvania Greg Skelton, ASA – Alabama
Jeanne L. Crepeau, ASA – Wisconsin Ran Greenberg, ASA – Israel Fernando Sosa, ASA – Chicago
MTS Committee Emeritus Members
Merritt Agabian, FASA – Massachusetts Alan C. Iannacito, FASA – Colorado Victor N. Thompson, FASA – Kentucky
Kal Barrow, ASA – New Jersey Norman F. Laskay, ASA – Louisiana
Michael Clarkson, ASA – Texas Leslie H. Miles Jr., FASA, ARM – Texas
Melvin I. Fineberg, AM – Nevada Robert S. Svoboda, ASA – Texas
American Society of Appraisers
11107 Sunset Hills Rd, Suite 310, Reston, VA 20190
800-272-8258 ext 125
Editorial Office:
Duff & Phelps, 2000 Market Street, Suite 2700, Philadelphia, PA 19103
Capitale Analytics, 8425 Woodfield Crossing Blvd., #520 West, Indianapolis, IN 46240
Business Office:
American Society of Appraisers, 11107 Sunset Hills Rd, Suite 310, Reston, VA 20190
© 2021 American Society of Appraisers. All rights reserved. For permission to reproduce in whole or in part, and for quotation privilege, contact ASA’s International
Headquarters. Neither the Society nor its editors accepts responsibility for statements or opinions advanced in articles appearing herein, and their appearance does not
necessarily constitute an endorsement.
Volume 37, Issue 1, Summer 2021 3
THE MTS JOURNAL
MTS Journal Editorial
Z a c h a r y R i m l e r, A S A a n d T i m R o y, A S A
Thank you for reading the Summer 2021 edition of the MTS Journal! We
hope you enjoy and learn from the content which has been contributed by
your peers, ASA leaders, and other industry professionals.
Over the past year, many of us have faced unprecedented uncertainty as
we continue to navigate the COVID-19 pandemic. Work-from-home orders
and restrictions on travel have forced us to reimagine and adapt to our
workplaces and even our roles as MTS appraisers.
Many of us have found ourselves working from home. With limitations
to perform physical site inspections due to travel restrictions, we have
leveraged technology, including video conference calls, to conduct virtual
site inspections and to interact with our clients, colleagues, and peers.
As we head into the second half of 2021, we are starting to see a return to
‘normalcy.” However, with many unanswered economic questions remaining, the need for reputable valuators is as strong as
ever. The $1.2 trillion Bipartisan Infrastructure Framework will bolster activity in MTS-relevant industries, such as construction,
transportation, and energy. Industrial technology and automation investments are also due to accelerate in response to post-
COVID labor shifts. These are just a few areas of ongoing opportunities for ASA MTS appraisers to help bring clarity to the
marketplace amid ever-changing economic outlooks.
As these industries and businesses recalibrate for the future, the demand for the MTS appraiser will likely be reinforced to
address critical valuation questions for a variety of financial, accounting, tax, insurance, and other considerations.
As we, MTS appraisers, also recalibrate for the future, we encourage you all to connect and share experiences, information,
and best practices through the Journal’s platform. We have a number of developments under way to further the success of the
MTS Journal and look forward to sharing with you in the near future.
We have some fantastic articles on a variety of MTS topics in this issue. We continue to encourage our readers and members
to provide interesting articles for inclusion in the Journal and to suggest topics of particular interest for future article
consideration.
Thank you again for reading the MTS Journal, and we welcome your feedback.
Sincerely,
Zachary Rimler, ASA Tim Roy, ASA
MTS Journal Editor Capitale Analytics
Duff & Phelps Email – tmroy@capitaleanalytics.com
Email – zachary.rimler@duffandphelps.com
Volume 37, Issue 1, Summer 2021 4
THE MTS JOURNAL
CEO Update – New Year – New Possibilities
Johnnie White, ASA CEO
July marks the start of ASA's new fiscal year. It’s a time filled with anticipation, excitement and energy,
as new elected leaders take office, volunteers begin their appointments and staff get to work with
numbers of new faces. This change brings many new ideas and opportunities, and continues to help
move our Society forward. I would like to thank in advance all of our MTS leaders and volunteers for
your time and efforts to be made this next year. Myself and staff are eager to see what great things
we will accomplish together. I would also like to thank all of the members that are at the end of their
terms. Thank you very much for your services.
Here’s some exciting ASA MTS news to report:
MTS Successfully Hosts 10th Annual Equipment Valuation Conference
ASA's MTS discipline successfully hosted their 10th Annual Equipment Valuation Conference this past
month. The virtual event brought together leaders in the valuation, equipment and finance professions
and offered a complete line up of breakthrough and innovative sessions. A diverse group of professionals attended the event,
including international registrants from Australia, Canada, Hungry, Indonesia, Israel, Mexico and Singapore. Missed the event?
View event images here, and stay tuned for the sale of sessions recordings.
MTS Session Schedule Released
The 2021 ASA International Conference MTS session schedule has been released. Includes complete listing of session
descriptions, presenter names and links. Make your plans to attend today. Here's a sneak peek:
• What's Hot/ What's Not in Equipment Leasing and Finance for 2021 featuring Carl Chrappa, ASA.
• Extrusion Industry Equipment featuring Kenneth Heyse, ASA and Gary Anderson.
• What to Look for When Appraising Printing Assets featuring Joseph Koravos.
• Growing Your Appraisal Business featuring Joseph Santora, ASA.
• What's Behind Your Curtain #3? - A Conversation About Compliance with The USPAP Scope of Work Rule and
Standards 7&8 featuring Paul R. Cogley, Jr., ASA.
• Pulp & Paper - A Case Study on ACV featuring Asher Cohen, ASA.
• The Pandemic and Its Valuation Impacts on Food Processing and Service Equipment featuring Joseph Joyce, ASA.
• Demystifying Insurance Appraisals featuring Austin Engelhardt, ASA.
• USPAP Analysis Requirements for Desktop appraisals, Oral Reports, and Restricted Appraisal Reports featuring R. Lee
Robinette, ASA.
• The Growing Market for Used Cannabis Equipment featuring Andrew Cohen.
• Appraisal of High Tech Assets featuring Alex Steele, ASA.
• Emerging Technology Trends in Agricultural Equipment featuring Anthony Gordon, ASA.
• Drone and Digital Surveys for Equipment Appraisals featuring Harry Ward.
Volume 37, Issue 1, Summer 2021 5
THE MTS JOURNAL
MTS' Popular Mining Course to be Offered Virtually
MTS' ME217 Advanced Mining course will be held for the first time in virtual format September 10-12, 2021. Complete details
about the course are available online, including a special spotlight interview with veteran instructor, Charles W. "Bill" Ruth.
MTS Valuer E-Newsletter Archive
Missed an issue of the monthly MTS Valuer E-Newsletter? Visit the publication's archives for back issues filled with important
and insightful content.
Call for Articles
Interested in publishing an article in the MTS Journal? For more information contact Zachary Rimler, ASA, editor at
zachary.rimler@duffandphelps.com or (215) 430-6019 and Tim Roy, ASA, editor at tmroy@capitaleanalytics.com or
(317) 559-6367.
As you can see there are a lot of exciting ASA MTS initiatives underway. To help stay on top of the latest developments be sure
to view our monthly MTS Valuer e-newsletter or participate in forum conversations at mts-discussion@list.appraisers.org.
Volume 37, Issue 1, Summer 2021 6
THE MTS JOURNAL
Chairman’s Corner
Bill Engel, ASA and ASA MTS Committee Chair
Dear MTS members,
I am honored to be assuming the role of MTS Discipline Chair and I would like to thank those who have
supported our discipline and greatly contributed to what it has become.
Karen Milan, ASA, provided two years of solid leadership, in particular, guiding the discipline through
the Covid-19 storm. Her calm and openness to new ideas provided avenues to “get things done”
despite the pandemic and I am grateful to her.
I would also like thank Rick Berkemeier, ASA. His tenure as MTS Education Chair came to a close on
July 1st as he assumed the International Vice Presidency of ASA. Rick accomplished a great deal in
his education role and I wish him the best as I do our new Education Chair, Rick Ellsworth, ASA.
I am looking forward to working closely with the rest of your MTS leadership team: Jamie Allen, ASA
(Vice Chair), Ryan Kinahan, ASA (Treasurer) and Tim Roy, ASA (Secretary) whose dedication will mean
great success for our discipline for years to come.
We are looking to grow and it all begins with you. How can the ASA and the MTS Discipline better serve you? What educational
opportunities would you like to see? How can we strengthen our profession even more? In the coming months, we will be
reaching out to you for your ideas, however, feel free to reach out to any of us as well – your MTS Discipline Committee.
As this issue goes to print, there are only a few short months before the 2021 ASA International Conference will be here,
October 24- 26 in Las Vegas. This year, for the first time, you can attend either in-person or virtually. The committee has worked
hard to provide you with a slate of superior content and speakers. Just take a look at the session schedule and make your plans
to attend!
I hope to meet many of you at the conference. In the meantime, if you have any questions, ideas or concerns, feel free to contact
anyone serving on the Discipline Committee directly (find out who we are here).
Bill Engel, ASA, MTS Committee Chair
Volume 37, Issue 1, Summer 2021 7
THE MTS JOURNAL
Governor’s Bulletin
John Mathe, ASA and Sam Shapiro, ASA, MTS Governors
Dear MTS Members,
As MTS Governors, we want to offer our sincerest condolences to all
those that have lost loved ones over this past year and to all those that
have been affected by this horrible pandemic.
The last year and a half have brought incredible challenges to the
profession and to appraisers across the globe. It has however, also
brought out the best in our people with many firms and individuals
adapting and creating innovative ways to service their clients’ needs.
Innovation and change have also taken place internally within the ASA
from the Board, from Committees, from our Members and from HQ
staff. Much of this change has been driven by our dynamic CEO and the
wonderful team of committed professionals within the ASA. Our personal thanks and appreciation go out to all whom have
contributed to getting us through what has been a tough 18 months.
Governance: The changes to how we govern the society are now well and truly integrated in our governing processes and
proving to be very effective. These changes have freed up time for the Board to focus upon the key stakeholders (you the
member) and strategic planning for the ASA’s future.
Diversity & Inclusion: A number of D&I activities have been implemented over the last year to ensure that we become a
more Diverse and Inclusive association. Although cultural change takes time, the ASA is committed to creating a progressive
and socially responsible association for our members, future members and users of appraisal services. The D&I Task Force
welcomes any suggestions and feedback from the membership that will help us reach our D&I goals.
Conferences: Our next conference for the Discipline will be the ASA International Conference to be held on the 24th – 26th
October 2021 in Las Vegas NV United States. Now that the world is opening up and getting back to a kind of normal, we expect
a good attendance of both in-person and virtual attendees. The line-up of speakers and topics is world-class and we encourage
anyone considering attending to book early. For those golfing enthusiasts, there is a golf outing on the Saturday morning –
hope to see you all there. ASA International Conference Las Vegas.
Market Commentary: As we are nearing what we all hope is the halfway mark in the current pandemic and yet we find that
the world is still more than 50% closed to travel and business as usual. It appears it will be a long time, if ever, that we will see
the world as it was pre pandemic. The effects on our manufacturing industry seem to be that.
Manufacturing
A great deal of interest has turned to the medical supply industry for face masks, surgical supplies in general, and cleaning
products. The need for these items spiked during the pandemic worldwide and continues to be in high demand. As such, many
manufacturing companies continue to shift to high demand products and we are seeing the need for manufacturing companies
to invest in new and modern equipment.
This brings us to the point of appraisals. These services are sought after by most all investor banks and other financial
companies to evaluate both the new items for purchase and lease as well as the older items still in use. This need should
continue to rise if the investments continue. However, there is a growing concern of foreclosures and bankruptcy soon due to
the lack of manpower, finance and of course the import from China and the world arriving daily to the USA. The USA sent most
of our manufacturing overseas in the years before due to cheap labor and this does and will continue to haunt us.
Volume 37, Issue 1, Summer 2021 8
THE MTS JOURNAL
Mining
The mining industry is coming back strong, while some supplies and repair parts, as well as new equipment shortages remain
at issue, mining is alive and well. Stock price for Caterpillar is up 58% when compared to the same time last year, as is BHP,
which is up 48% and Rio Tinto which is up 59%. With the global economy growing and the demand for metals high, continued
growth in the mining sector is most positive. Some of the marginal operations are starting back up and increased capacities for
the current operations are growing. As the global infrastructure continues to grow and work forces get back on track, 2021 –
2024 should show growth in the mining sector.
Education:
Be on the lookout for live webinars that may be helpful for members to navigate through this environment. Please check online
for the latest updates to ASA National Classes, Local Chapter Classes and Events. ASA also offers a full library of eLearning
classes, including: On demand classes; webinars and webinar series; webinar recordings and audio recordings.
Interest remains strong for the MTS Aircraft Education Program. The Program consists of four course offerings leading to the
Aircraft Specialty Designation. These courses bring together the best and brightest in the industry and allows them through an
accelerated program covering all aspects of items related to aircraft including but not limited to:
• Corporate Aircraft • Simulators
• Commercial Aircraft • Helicopters
• Engines • Drones
• Parts • Autonomous Flying Vehicles
The Course format consists of speakers from leading Industry specialists such as Airbus, Boeing, GE, Pratt & Whitney, Netjet,
JSS, Ascend by Cirium, MBA and several others delivering on state of the industry topics.
The last four sets of classes have been sold out and we will begin the program once again in October of 2021.
International: Our international chapters have also had to adapt with education offerings, member engagement and
member growth. Despite the pandemic, Japanese, Australian, European and Virtual chapters have all continued to attract new
candidates to the ASA. As economies around the world are recovering and returning to a sort of normal, we encourage all
members to keep promoting the ASA and the MTS Discipline throughout their respective networks.
M&TS Book: The 4th edition of the M&TS textbook Valuing Machinery and Equipment, has been completed and has been
selling extremely well. We highly recommend all MTS members take advantage of this authoritative source on the theory and
methodology of appraising machinery, equipment, and technical assets. The book can be purchased in combination hardbound
printed edition and digital PDF form or in standalone PDF form.
John Mathe, ASA Sam Shapiro, ASA
MTS Governor MTS Governor
Volume 37, Issue 1, Summer 2021 9
THE MTS JOURNAL
M&E Marketplace Insights: Row Crop Machinery Technology
To d d J a n z e n , P r e s i d e n t , J a n z e n S c h r o e d e r A g r i c u l t u r a l L a w – A s I n t e r v i e w e d b y T i m R o y, A S A C a p i t a l e A n a l y t i c s
TIM: “Ag tech” is a broad field. Our focus here will be technology
commonly found in row crop machinery, such as combines, tractors,
and planters. It seems like some type of guidance or auto operation
system is now present on every major piece of machinery. Do you
have a sense for whether this trend has been driven more top-down
by OEMs introducing new technology, or bottom-up by user demand?
Todd: The advancement has come from both directions. Farmers are often
viewed as having a conservative mindset, but in reality, they aren’t scared to
try something new. When GPS guidance systems became affordable, they
had an immediate positive impact for farmers in saving time, fuel, and other
inputs. That has helped encourage the market to ask for and accept other
kinds of new technology, which has in turn encouraged OEMs to continue
developing new technologies.
Have you seen more advancements from large OEMs or small tech companies?
Agricultural machinery has experienced a recent history similar to other heavy industries. Dozens of regional OEMs have steadily
consolidated for the last century, leaving only a few major players.* This contributed to somewhat of a slow evolution in technology,
as large corporations offered incremental advancements and focused on protecting their market share as opposed to investing in
risky – but potentially revolutionary – technology.
Tech startups backed by venture capital started really shaking up the marketplace in the past 10-20 years. Early guidance systems
and automation technology were aftermarket accessories. Major OEMs have responded to user demand by buying the tech or
developing their own versions of it, and integrating the systems directly into their new models. The OEMs have also created venture
capital groups to fund new tech startups under their own umbrellas.
As of yet, there is no “Tesla” of tractors which presents a real potential threat to the major row crop machinery OEMs. But
otherwise, the pattern of outside innovation and OEM response has been similar to auto manufacturing.
*John Deere leads the North American row crop machinery marketplace, followed by CHNI (New Holland and Case IH, among other
brands) and AGCO (Challenger, Massey Ferguson, et al). (Sources: Market Research Reports; Statista; Markets Insider)
It is easy for us as appraisers to spot the interfaces and control boxes on the machinery itself. What other kinds of
investments are required that we may not see when inspecting machinery?
The modern systems are mostly software and cloud-based. There may be servers and other hardware in the office that sync to
the hardware on the machinery, but the major investment will often be in the software and system upgrades. Perhaps the more
significant support investment is being required of machinery dealerships, which now need to support the technological as well as
the mechanical side of the machinery. This requires a different set of tools, employees, and training programs than they traditionally
employed.
There was a popular news story out of Minnesota last year about rising auction prices for 40-year-old “pre-tech”
John Deere tractors.* You blogged about the story and expressed your opinion that farmers were not necessarily
rejecting new technology, but rather did not feel that the incremental advancements offered by OEMs in the past
few decades justified the high price tags on new machinery. Do you still hold that opinion?
Volume 37, Issue 1, Summer 2021 10THE MTS JOURNAL
Yes I do. Farmers all want higher yields and more efficiency. But in some circumstances – particularly for smaller operations – the
skyrocketing price of new machinery has not been justified. A pre-tech tractor is easier and cheaper for the farmer to maintain
in-house, and aftermarket guidance systems can provide modern efficiencies without a full OEM integration. Like most tech, these
kinds of systems have become very affordable.
However, I do believe that the trend will run its course eventually. It will get harder to find parts for the old machines over time, and
things like electrical hookups for new attachments and implements will become ever harder to retrofit to old machinery. At some
point the costs of new machines will be justified by their efficiencies and ease of use, even for small operators.
*Belz, Adam. "For tech-weary Midwest farmers, 40-year-old tractors now a hot commodity: Tractors built in 1980 or earlier cause
bidding wars at auctions." StarTribune [Minneapolis], January 5, 2020.
The “Right to Repair” movement has been a part of this conversation as well. John Deere in particular has been
criticized for not allowing farmers to modify or maintain newer machinery without dealer involvement. Do you have
a sense of where this conflict is headed?
John Deere has caught a lot of flak, but in reality this is a society-wide issue. Elon Musk said that a Tesla is not really a car but
rather “a sophisticated computer on wheels.” We could say this about many of the items we use every day – cars, phones,
appliances, and so on.
I sense that eventually it will become a moot issue. Do you really want to hack into your iPhone and risk ruining it? How many
people want to repair their own car anymore? Farmers who make major investments in high-tech machinery will probably come to
feel the same way.
Do large consolidated farms care about the “Right to Repair” movement? Or is this an issue only among smaller
independent operators?
Of course I can’t speak to every situation, but my sense is that in general, larger operations are going to view machinery as a
regular input cost as opposed to an owned asset. They will be more likely to lease machines or cycle through them quickly in order
to get the latest efficiency upgrades with new machinery, as well as to reduce downtime. The largest operators will keep system
techs on staff just like they keep mechanics on staff. They will have close relationships with dealers who will help resolve any
issues their machinery.
Smaller operators may be more likely to look at machinery in the traditional sense: as an owned asset to be purchased, paid off,
and maintained over a long duration. It seems logical that these operators are more likely to want to have the right to maintain and
modify their own machinery.
Instead of continuing to pay top dollar for 40-year-old tractors, I would not be surprised to see farmers turn to “open source”
control systems, small electric tractors, and other affordable new tech machinery built specifically for the next generation of tech-
savvy independent operators.
As we’ve already touched on, farming is transitioning (like most industries) into a marketplace of very large and
very small operators. Where does tech fit into this transition?
This transition is being caused by many factors, including government policy, global trade economics, land value trends, and
shifting generational perspectives about farming. Tech is integrated into every one of these factors, and into every aspect of
farming and farm ownership, just like it is integrated into everything else in modern society. Farms of any size can operate more
efficiently with less labor and higher yields than ever before. In some instances, new technology helps smaller operations become
competitive with larger ones, such as robotic milking machines that keep small dairies in business. In other areas, new technology
benefits larger operations that can afford the initial investment. Tech in and of itself is not really causing this divide.
Volume 37, Issue 1, Summer 2021 11THE MTS JOURNAL
You recently wrote about “swarm farming” – fleets of small field robots replacing traditional large machinery. Is this
something that you expect to see in practice in the near future?
Farmers are usually willing to give new ideas a try. Swarm farming has potential for many reasons. It is easy to scale up and down
for different operation sizes. It reduces man-hours in the field. It can be extremely precise – one robot can head out to apply
inputs to a small area without disturbing the rest of the crop. A broken down unit does not stop the entire activity since other units
continue to operate. Compared with big and heavy machinery, small and lightweight robots don’t compact the soil or sink into the
mud as much. There are many potential advantages.
However, my point was not so much that any one technology is going to become widespread. My point instead was that the next
generation of farm machinery might not look anything like what we’re used to. Many of the current visions for autonomous tractors
coming from major OEMs look pretty much like a regular tractor without a cab. Is this practically necessary, or is this just meant to
ease the transition for operators from a psychological standpoint? Perhaps the next generation of farm machinery will represent a
completely fresh operational philosophy.
About the Authors
Todd Janzen is the president of Janzen Schroeder Agricultural Law LLC in Indianapolis. He provides legal services to farmers and
ag tech companies. Todd regularly authors the Janzen Ag Tech Blog, featured on his website: www.aglaw.us. Contact Todd at:
janzen@aglaw.us
Tim Roy, ASA is an M&E appraiser with Capitale Analytics in Indianapolis. He is an officer of the MTS Committee and the ASA
Indiana Chapter. Contact Tim at: tmroy@capitaleanalytics.com
Volume 37, Issue 1, Summer 2021 12THE MTS JOURNAL
M&E Marketplace Insights: Industrial Processing and Plant Auctions
J o e l B e r s h , C o - C E O , A a r o n I n d u s t r i a l S o l u t i o n s – A s I n t e r v i e w e d b y Ti m R o y, A S A C a p i t a l e A n a l y t i c s
TIM: Aaron Equipment is known for processing and packaging
equipment, and you have brought to Aaron Industrial Solutions
your experience in metal, recycling, plastics, and printing, among
other industries. In these markets, prior to COVID, how did you
determine when to conduct your auctions in-person or online?
Joel: By the time COVID hit, the market was already comfortable with online
auctions, but we still did some in-person auctions. The decisions were usually
driven by the economics of each situation. In the early days of online auctions,
we still wanted to “look them in the eyes” if we could, so we would simulcast a
portion of the auction and run the rest in-person only. (Simulcasting holding an
in-person auction with live online bidding as well.)
But simulcasting is very expensive because you have to incur the crew expenses of an in-person auction, as well as the
expenses of arranging an online auction. Eventually many buyers quit coming to the in-person auctions. I remember a specific
in-person auction where we were selling the equipment stadium-style, and I looked out at the seating and realized there were
no buyers under the age of 45 in the crowd. Any lots which we sold in-person only were being totally missed by the younger
generation of buyers. This wasn’t good for the buyers, the sellers, or us as the liquidators.
As time went on and the market became more used to online auctions, that became our default. Even a small in-person
industrial auction can incur $25,000 or more in crew expenses, such as airfare, hotels, meals and so on. A larger auction can
incur a very high bill. As the online bidding technology matured and buyers and sellers became more comfortable with online
auctions, it became the more efficient option in the majority of situations.
Did “online only” limit your flexibility in handling seller reserves, pacing the auction, and so on?
We webcast our auctions in a live format. Online bidders can place pre-bids, but they can also follow the auction live and bid
along in real time. It is like going to an in-person auction, but instead of seeing the auctioneer and the auction crew, you see
the bids and asking amounts increase on your screen, and you can click to increase the bid when it’s your turn.
Our auction team meets live on a group Zoom call as the webcast auction is being conducted. The auctioneer is still
responsible for directing the opening and closing lots, combining lots, and pacing the auction – just like in an in-person auction.
On the Zoom call we also have the bidding app operator, other crew members, and sometimes the seller. This allows us to do
things like combine lots and handle seller reserves in real time as the auction progresses.
How did you respond when COVID hit?
Honestly, it did not affect our process as much as we feared. Our team was already experienced with online-only auctions, so
we were prepared. We had an auction in South Dakota shortly after COVID hit which could not be postponed. So we just went
for it and had a webcast auction. Our team was spread out between Chicago, Florida, and many other places. The auction was
a success; everything sold at or above our pre-COVID expectations.
After that, we never looked back. We adopted protocols for buyer inspections and removal which were in line with each state’s
COVID mandates. We did attempt one simulcast with strict social-distancing, but the results from the live audience were
mediocre. All of the major items sold to online buyers. The expense of simulcasting and the hassle of social distancing was not
paying off in extra revenue for the seller or commissions for ourselves. So we have not actively pursued simulcasting since that
time. If a seller wants it, we will still do it – but there will probably be extra costs involved.
Volume 37, Issue 1, Summer 2021 13THE MTS JOURNAL
Before COVID, in-person auctions were enduring out of tradition and as social events. I made a lot of great friends over the
years at our auctions, and I enjoyed seeing them and doing business with them. In-person auctions are a great way to network
with people in the industry. It is much easier to build trusted partnerships when you meet people in person – I miss that part of
the business. And, especially in family-owned businesses, the family likes to have the auction and preview days as an event for
employees and other people to come back and say goodbye to the business.
But the industrial auction industry was already accepting that business was being done online, and that online auctions were
usually the most efficient solution. COVID pushed the last holdouts over the hump. Like many other professionals, we are
enjoying seeing more of our homes and families. The industry is not going back to in-person walkaround auctions as the
common way of doing business.
Do online auctions result in different value outcomes than in-person auctions?
On the total package of a plant, the outcomes will usually be the same or better, especially on the good items. The auctioneer
is still marketing the assets to the same buyers, and buyers will still send their technicians to inspect the assets. If they buy
something, they still have the same expenses of rigging and freight. It’s really just the method of placing and accepting bids
which has changed. And buyers don’t have to travel to bid, so that saves them a lot of time investment.
But the structure of a sale can be different, and on the lower end, items can be more difficult to sell online. At an in-person
auction, the buyers have invested their time to travel to the site and may stick around for the end of the sale to pick up some
bargains. At an online auction, buyers will log off if they don’t win the item they came for.
At an in-person auction, you can almost always “clean up” the shop. We can usually bargain with scrappers or bargain-hunters
to get rid of everything. The buyers are standing there looking at it, and they can’t pass up a deal! The auctioneer creates a bit
of a carnival atmosphere and gets the buyers to help out a little.
But with an online auction, you can’t convince somebody to drive across town to clean up your junk. You don’t have that
personal relationship, and they haven’t invested any time or effort to be there already. The auctioneer can’t convince a scrapper
to clean out a storage room in exchange for keeping anything they find and buying them a hot dog!
Because of this, an online auction of a plant with a lot of undesirable items is more likely to incur cleanup and removal
expenses than an in-person auction of the same facility. If you’re appraising a plant for net liquidation value, you have to think
about those costs coming off of the net proceeds of the sale.
Is there anything else you’d like to say about the way COVID has affected the marketplace for processing
equipment and other industrial assets?
The value factors for any auction are the same as they always were. Does the plant have a good reputation for taking care of
its equipment? Are the assets clean and modern? Are the logistics favorable for taking the assets out of the plant and getting
them on the road?
And don’t underestimate the importance of location! When you’re appraising for liquidation value, don’t disregard the local
manufacturing economy. If a big manufacturer in town is ramping up and handing out contracts to all of the local shops, those
shops will pay top dollar for a working machine they can put in their shop tomorrow. Buying a machine from a competitor you
know is less risky than buying from a shop across the country. And they don’t have to wait several months to get a replacement
from the manufacturer – they can start making money tomorrow. Location is very important to liquidation results.
If COVID has had any effect, it has really drawn a line between desirable items in a plant and “everything else.” Markets are
changing very quickly. End-users are buying what they need right now, and dealers are buying what they can resell right now. If
it’s not an in-demand item, it might be scrap.
Volume 37, Issue 1, Summer 2021 14THE MTS JOURNAL
About the Authors
Joel Bersh is the co-CEO of Aaron Industrial Solutions, a subsidiary of Aaron Equipment Company. Mr. Bersh has been involved
in the distressed asset industry for over 34 years. He has a deep and comprehensive expertise in metal working, plastics,
woodworking, construction, printing, bindery, processing equipment and other industrial assets. Mr. Bersh is a certified AMEA
appraiser, a member of the Machinery Dealers National Association, and holds auctioneer licenses in several states. Contact
Joel at: Jbersh@aaronauctions.com
Tim Roy, ASA is an M&E appraiser with Capitale Analytics in Indianapolis. He is an officer of the MTS Committee and the ASA
Indiana Chapter. Contact Tim at: tmroy@capitaleanalytics.com
Concrete Equipment Group
A Division of iwi group LLC
Larry Z. Isaacson, ASA,
lisaacson@iwigroup.com
Offering machinery and
equipment appraisal Leland E. Martin, ASA,
lmartin@iwigroup.com
services, specializing in
concrete products and 6069 Oakbrook Parkway
related industries Norcross, GA 30093
800-247-2819
Volume 37, Issue 1, Summer 2021 15THE MTS JOURNAL Volume 37, Issue 1, Summer 2021 16
THE MTS JOURNAL
Heavy Equipment Technology Products
Brad Hartsburg, ASA, CPPA, CSA – and information gathered from Caterpillar Performance Handbook 49
With our changing times, the equipment world has kept stride with technology, innovation and
design. Each of the major equipment manufacturers in the heavy equipment industry have their
own technology products, however this article is focused on Caterpillar technology products as the
information is readily available and it is common and popular around the globe. Caterpillar has long
been a leader in bringing innovation to Cat products.
Today, one of the biggest differentiators isn’t just in equipment — it’s in the technologies that are
integrated into products that are improving machine performance and productivity, and transforming
the way customers work to manage their operations and business more efficiently and cost effectively.
Caterpillar offers a range of technologies available on Cat equipment that can be customized to meet
the needs of work sites in three primary industries:
- Construction
- Energy & Transportation
- Mining
Construction Technology products deliver dramatic
improvements on the job site to help customers manage their
business more efficiently and cost effectively. Fully integrated
into Cat machines and core systems, these technologies
use advanced electronics to accurately measure and control
productivity, monitor and manage machine health and
maintenance, and provide more insight into equipment fleet
and operation.
Energy & Transportation Technology products simplify equipment management to help customers monitor and manage assets,
operate at peak performance, and lower operating costs. Cat Connect combines the latest in technologies and dealer services
to help customers improve in four key areas: Equipment Management, Productivity, Safety, and Sustainability to take optimum
control of the job site. Whether running one machine, managing a fleet, or overseeing several job sites, Cat dealers can help
customers with the right combination of technologies and services to meet the specific needs of their business and realize
significant gains in productivity, efficiency and profitability.
Cat Vision Link – is a telematics software application that enables you to remotely monitor your equipment so that you can
make timely, fact based decisions to maximize efficiency, improve productivity, and lower the cost of owning and operating your
fleet.
Cat GRADE – combines digital design data, in-cab guidance, and on some machines — automatic control — to help
operators work more productively and accurately with less rework. Available on select models of earthmoving, excavation, and
paving equipment.
Cat PAYLOAD with Truck Production Management System (TPMS) – enhances truck and loader effectiveness for
improved fleet productivity and reduced operating cost. TPMS offers external lights or an optional digital display to signal the
loading tool operator when the proper load is reached.
Volume 37, Issue 1, Summer 2021 17THE MTS JOURNAL
The on-board system provides a payload accuracy of ±5% and stores payload weight, cycle segment times, cycle segment
distance and fuel, operator ID and actual clock time and date of each cycle. Available for off highway trucks.
Cat COMPACT – combines advanced compaction measurement, in-cab guidance and reporting capabilities to help
consistently meet compaction targets faster, more uniformly, and in fewer passes — reducing rework and material costs in
both soil and asphalt applications. Available on select Cat compactors.
Cat DETECT – combines safety and monitoring systems to enhance operator awareness. By expanding your view of the
working environment around your equipment, you can improve the safety and productivity of your entire operation and keep
your people and assets safe.
Cat LINK Technology – enables you to remotely monitor and manage your equipment so you can reduce costs, increase job
site efficiency, and effectively manage your business. Suitable to all types of equipment.
Cat Accugrade – cross slope systems are used for indicate-only guidance or to control one side of the blade to achieve
accurate surface cross slope without any off-board infrastructure. This foundational system for motor graders can be combined
with sonic, laser, GNSS or UTS technologies to make fine grading more efficient and productive. Machine mounted sensors are
used to calculate necessary blade slope positioning. The system makes automatic adjustments to the left or right lift cylinder.
The in-cab display delivers all of the cross slope information the operator needs to quickly and easily spread or cut material
at the correct cross slope. The operator can select which side of the blade to control automatically and swap direction on the
return pass without readjusting the settings. Elevation is controlled manually by matching grade or automatically by adding
an elevation control device (sonic or laser). The cross slope systems are ideal for maintaining accurate cross slope over long
distances without the need for infrastructure.
Global Navigation Satellite Systems (GNSS) use satellite technology to deliver precise 3D blade elevation and blade tip
positioning information to the operator in the cab. Using machine-mounted components, an off-board GNSS base station and
accuracy up to Real Time Kinematic (RTK) positioning, GNSS provides the information necessary for the system to accurately
determine blade positioning with centimeter level accuracy. GNSS systems compute the positioning information on the machine
compared to the position of the implement or machine relative to the design plane and delivers the information to the operator
via an in-cab display. GNSS systems put all the information the operator needs to complete a job in the cab, resulting in a
greater level of control. Provides precise location and elevation information for complex 3D contour applications, such as golf
courses and highway super elevated curves.
Laser systems provide precise 2D elevation control for grading with tight tolerances using a laser transmitter and receiver(s). A
laser transmitter is set up on the work site to create a constant grade reference over the work area. A digital laser receiver is
mounted on the blade of the machine and senses the laser signal as the machine moves across the work site. Laser systems
are ideal for the fine grading on job sites with flat, single or dual slope surfaces, such as industrial, commercial or residential
building sites.
Mining Technology & Autonomy products continue to have a positive impact on mining operations around the world.
Caterpillar offers a complete suite of technology products purpose built for the harsh mining environment. Products combine
the latest GNSS positioning technology with sophisticated electronic controls and software to help miners increase productivity,
monitor fleet health and lower operating costs. Cat MineStar provides the most comprehensive suite of mining technology
products in the industry. It consists of a number of configurable capability sets that allow you to scale the system to the mine
site needs. Cat MineStar helps manage everything from material tracking to sophisticated real-time fleet management,
machine health systems, autonomous equipment systems and more. The capability sets — Fleet, Terrain, Detect, Health and
Command — can be used in combination or individually to allow operations the flexibility and scalability it needs to be more
productive, efficient and safe.
Fleet – is a comprehensive mine management system featuring an advanced truck assignment engine, health and operational
event alarming, “what-if” analysis, productivity tracking, machine tracking, material management and a comprehensive
reporting package. Integrating with other Cat MineStar capability sets, Fleet improves productivity by 10-15%, eliminates
Volume 37, Issue 1, Summer 2021 18THE MTS JOURNAL
misdirected loads, improves information availability and provides greater flexibility to adjust for changing mine and market
conditions.
Terrain – for drilling increases hole placement and depth accuracy while removing the cost of drill pattern survey and staking.
Position and status information of other drills working on the same pattern is provided to operators in real time on the in-cab
display. Terrain for draglines enables production monitoring of all dragline activities, right down to individual bucket loads and
dump locations. Machine performance, productivity and payload are monitored and organized in reports to optimize dragline
output and minimize operating costs. Terrain for grading ensures accurate execution of the design plan and enables safe
operating practices. It can be used on a variety of machines in numerous applications from production dozing to reclamation,
all helping you mine more safely and productively. Terrain for loading provides accurate information on each pass helping
operators to move the right amount of material with every bucket load. Safety, productivity and efficiency are positively
impacted and the mine design plan accurately executed.
Object Detection – uses cameras and radars to improve the operator’s view of key areas around the machine, allowing
operators to make informed decisions. The system works with several machine types increasing machine perimeter awareness
during critical periods including start up, initial movement and reverse travel. The system consists of an interactive touch
screen display, radars and cameras on the front, rear and sides of the machine. Radar and camera configuration will vary by
machine type.
Vision – is a camera system available on mobile surface equipment. It provides multiple camera views that improve the
operator’s awareness of the vicinity around working equipment.
Proximity Awareness – is a GNSS based system which tracks machines and light vehicles, allowing operators to view other
machine locations and provide proximity based alarming.
Health – delivers critical event-based equipment condition and operating data for the entire fleet. It includes comprehensive,
proactive health and asset monitoring capabilities, with a wide range of diagnostic, reporting tools, analytics and
recommendations.
Command – for hauling enables total autonomous operation of large mining trucks. Advanced perception and sensing
technologies enable self-driving trucks within the autonomous operating zone to work safely and productively alongside
manually operated equipment, such as loading tools, cleanup and maintenance machines, and mine site personnel. Utilizing
a virtual mine map and dynamic routes managed from a central command center, autonomous trucks respond to calls to the
shovel, move into loading position, haul loads to the designated dump points, and even report to the maintenance bay, all
without an operator on-board.
This is an introduction and very brief summary of some of the capabilities of these technology systems. There is much more
information available on this topic and this was meant to be preliminary information for appraiser’s that may get involved in
projects that have these types of machines and technology systems.
As we are aware, technology in getting introduced everywhere in our world, some other examples are: global positioning
systems that seem to control most anything, alternative fuels, alternative sources of power, green energy just to name a few.
These are some of the things going on today – what will the industrial and equipment world look like in the future?
Volume 37, Issue 1, Summer 2021 19THE MTS JOURNAL
About the Author
Brad Hartsburg, ASA, CPPA, CSA is the president of Fortress Machinery Appraisals and Consulting Inc. which is based in
Calgary, Alberta, Canada and serves predominantly any area of Canada, including the Yukon, Arctic and Northwest Territories.
Brad is an Accredited Senior Appraiser (ASA) with the American Society of Appraisers, as well as CPPA, a Canadian Personal
Property Appraiser with the Canadian Personal Property Appraisers Group, and CSA, a Certified Senior Appraiser with the
Equipment Appraisers Association of North America and has 40 years of industry experience. He specializes in appraisals of
heavy equipment; heavy trucks and trailering equipment in the construction, oilfield, forestry, mining and transportation sectors
and other related industries for specific purposes of asset based lending, refinancing, insurance purposes, as well as mergers
and acquisitions.
Contact Brad Hartsburg at: brad@fortressappraisals.ca
Volume 37, Issue 1, Summer 2021 20THE MTS JOURNAL
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Volume 37, Issue 1, Summer 2021 21THE MTS JOURNAL
Aircraft Maintenance Condition and Asset Value
Barbara A. Spoor
The following article was originally published in Volume 32, Issue 3, 3rd Qtr 2016 issue of The MTS Journal
Is there a relationship between an aircraft’s maintenance condition and its value? Well, the short
answer is: generally, yes.
Let us first look at what comprises an aircraft. An aircraft is a machine that is itself comprised of
several other machines (machines within a machine). These individual machines (components)
all have their own NUL and scheduled maintenance requirements. Furthermore, each individual
component has a value that is part of the overall machine. (This does not necessarily mean the sum
of the parts equal the aircraft’s value – which is rarely the case.)
Delving a little deeper, there is value differential based on utilization of the asset. The more remaining
useful life available on the aircraft’s components, the greater the value of the machine in its entirety.
Sometimes valuation challenges arise when an aircraft (asset) has high time and recently overhauled
(restored) components, or the asset is a newer model with higher than average utilization.
If you had two assets and they were basically identical (meaning, same year of manufacture, make, model, etc.) and one had
more flight time (utilization) than the other, which one is worth more? You may lean toward the less utilized asset, and that may
be correct. However, what if the engines and landing gear had recently been overhauled and a major phase inspection had just
been completed on the aircraft with higher utilization?
What if you had two assets (again, both basically identical) and one asset had higher time and/or was a year or so older. You
may again favor the newer aircraft. But, what if the newer aircraft was coming up on a major and costly inspection, while the
older asset had engines that were covered by an hourly maintenance cost insurance program and was sporting new paint and
a lovely, refurbished interior?
Not quite as clear now, right?
One last example, what if an aircraft was involved in an incident resulting in damage? Sitting on the ramp after appropriate
maintenance and repairs were completed the aircraft might look better than new. How does its involvement in an incident
affect its value? What repairs were accomplished? Who performed the repairs? Did the airframe manufacturer authorize and
sign-off on the repairs? The asset’s value hinges heavily on the answers to these questions and the specific maintenance
performed.
Yes, maintenance does affect value.
Sometimes the older asset may be the smarter purchase and sometimes not. Experts will tell you that aircraft maintenance
condition analytics are neither simple nor linear. There are, in fact, several important aspects to consider, aside from the
aircraft’s flight hours, landings, or the passage of time (calendar-based maintenance events) which are the basis for any
aircraft’s Scheduled Maintenance program, and all play a role in determining the “better value” asset. These may include the
answers to questions such as: Where is the asset in its maintenance cycle? What is the cost of the maintenance coming
due? What is the value of the maintenance already completed? Last but not least, how does the asset place with respect to
desirability, marketability, and ranking among its peers (just like a credit score)?
An older aircraft may actually be a “better buy” based on maintenance status, overall condition, and utilization. Suppose,
for example, that the owner planned to operate the aircraft well below the industry’s average annual utilization. Purchasing
an older, less expensive, asset may be advantageous. On the other hand, the older aircraft may actually be coming up on
maintenance or required technical upgrades that cost more than the actual value of the asset (even after the improvements).
Volume 37, Issue 1, Summer 2021 22THE MTS JOURNAL
For these reasons, a thorough mission and maintenance status analysis needs to be conducted in order to determine the
asset’s Normal Useful Life and actual “value” to the prospective buyer.
Lastly, it is important to realize that some maintenance events do provide quantifiable additional value. Which events? How
much value? Those are both critical questions requiring a great deal of detailed analytics, specific asset knowledge, and
current market trend information. The staff here at Asset Insight would be pleased to help you steer a safe course toward a
financially optimized solution. Every aircraft has a final owner. The key is not becoming one – unintentionally.
About the Author
Barbara Spoor is a founding member of Asset Insight, LLC, one of the premier aviation valuation corporations in the world.
Barbara has been appraising aircraft and related equipment since 1991, has over 30 years’ experience in the aviation industry.
Barbara has an in-depth knowledge of most aircraft ranging from antiques to corporate jets to unique applications and beyond.
Contact Barbara at: bspoor@assetinsight.com
Volume 37, Issue 1, Summer 2021 23You can also read
