For 60 years, Hugh Munro Construction Ltd. has been a mainstay in the heavy construction industry and has amassed an impressive fleet of every size and shape of excavators, loaders, dozers, articulated dump trucks, graders, scrapers, truck tractors, trailers, pickup trucks, and more.
But with dramatically reduced provincial spending on highway and bridge construction and repair, the company, now led by Colleen Munro (the daughter of Hugh, who died in 2008) has decided to make a dramatic transition out of the road building business and is selling off more than 1,200 pieces of equipment in what will be the largest auction Ritchie Bros. Auctioneers has ever held in Manitoba.
Hundreds of bidders from all over North America will bid in person or participate on-line for the multi-million dollar sales event on Aug. 15 at Munro's yards east of the city. Sam Webber, a Ritchie Bros. official, said there has already been more than 33,000 unique visits to the on-line site.
Munro had been one of the Ritchie Bros. best customers in Manitoba but it will be a bittersweet occasion for both the Munros and the Ritchies.
Colleen Munro, said, "My dad was huge fan of buying equipment from Ritchie Bros. from all over Canada. He was quite the collector of equipment. He had great relationship with Ritchie. But we now have lots of things we don’t need or don’t use. "
Vancouver-based Ritchie Bros. — also a 60-year-old business — is now a publicly traded company (posted revenue of just shy of $400 million for the second quarter earlier this week) and has grown so much that it has 40 permanent auction sites across Canada and around the world holding single day events that exceed $100 million in sales.
Webber said the Munro event won't be that large but the personal connection with the Munro family was so close that company founder Dave Ritchie will be on site for the event.
"Dave Ritchie and Dad were friends," Colleen said."I feel honoured he wanted to make the trip."
The auction will represent about 65 per cent of the company's equipment fleet and it signals a sea change for the company, which will step back from its long-time commitment to the road-building industry in Manitoba.
"My dad was huge fan of buying equipment from Ritchie Bros. from all over Canada. He was quite the collector of equipment. He had great relationship with Ritchie. But we now have lots of things we don’t need or don’t use. " – Colleen Munro
The company is planning to focus on some of the specialty niche jobs in the road-building process and will retain crusher and support equipment and drill and blast equipment that require smaller crews.
The company is also planning to get into the quarry business and is in negotiations on a location close to the city where it hopes to be able to supply the city and highway road-building industry.
Munro said low prices and competition from out of province is making it tougher and tougher to maintain her workforce, which gets up to 350 during the peak June to October work season. And the industry dynamics that have forced Munro's huge equipment sell-off is not unique to Hugh Munro Construction.
Chris Lorenc, CEO of the Manitoba Heavy Construction Association, said there is likely going to be more layoffs in the industry as August winds down, because there is just not enough work out there.
"The bidding wars are now showing prices that are at unheard-of low levels," he said. "Some are bidding cash just to stay afloat in the hopes that the highway program of $350 million per year will not be the norm."
Lorenc believes those levels — the province is spending only $350 million per year on highway infrastructure — will not only kill the industry but saddle the province, whose infrastructure deficit is already at $9 billion, with an insurmountable volume of work to overcome.
"What is lamentable," he said, "is that there is such a reduction in the volume of work in our industry largely because of these historic provincial cuts to the infrastructure program that companies, like Munro, are downsizing and reconsidering how long they are going to continue."
Munro is likely not the only one making this kind of decision.
"The other part that cannot be ignored," Lorenc said, "is that on top of the impact on our industry and the direct and indirect jobs it fuels is the long term impact on the Manitoba taxpayers."
Not only is the industry facing significantly reduced opportunities to bid on jobs, but Munro said it is getting increasingly difficult to handle the human resource issues of requiring workers to be on remote locations for extended periods of time.
"We have people who have been with us for more than 40 years. They are our most important assets," she said.
If the transition into the limestone quarry business is successful it will mean a permanent work site for her workers. At the same time, this fall she is opening up a new business as the Manitoba distributor for ClearSecure Unbreakable Windows.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.