Sunday

What'll You Give Me For It?...Corporate Communications, Overland Park, KS

The auction method of marketing not only means finding information about the product but also determining an estimated value.  For cars, you can look up the blue book value.  For antiques, you can look in numerous price guides.  But, what happens when you're faced with more unusual items?

Think of him as Colombo with a gavel in his hand.  There's no end to his affability.  He'll charm your socks off, even over the telephone.  But don't let his sweet-as-a-pussycat demeanor fool you.  This is one tough detective who's in an unrelenting, uncompromising, no-holes-barred search for "just the facts, ma'am" when it comes to knowing the value of the items he's being asked to auction.  Even unusual items -- such as spring-making equipment designed for a specific purpose and industry that may have long since died away -- can't get the best of him.  "There is nothing that's been made that you can't find the value on," he says.

This is a man who should know.  Bernie Dworkin, Plano, Texas, who says he's retired after 40 years in the auction business (but does this kind of zeal ever really retire?), once stood atop a snow-covered gold mine.  Only in his sixth year as an auctioneer, Dworkin saw a major opportunity in what turned out to be $100 million worth of surplus equipment for the trans-Alaska pipeline in the late 1970s.  Eventually he conducted an historic series of auctions -- the first successful heavy equipment auction in Alaska -- for Alyeska Pipeline Service Co., but first he had to dig the stuff out.  (During an inspection, while walking in the snow, he discovered he was actually walking on top of pallets of brand new Caterpillar parts.)  Then he had to determine the value of all that equipment.  He rose to the challenge then, and has been ever since.  He most emphatically declares that all the research he does makes the ultimate difference in his business success.  (He is arguably one of the most successful auctioneers of all time.)  "Because of all the research I do, and all the time I spend understanding the industry I am serving, I am able to speak with more authority, both before and after I sign the client.  I am more confident and this, in turn, inspires the confidence of others in me," he says.

Dworkin's doggedness for detail is probably his chief resource for determining the value of items being auctioned, but it's not in the top three of the resources he ticks off. Those are: (1) the Internet, (2) the Thomas Register of American Manufacturers, and (3) dealer and industry trade magazines.  A specialist in manufacturing equipment, Dworkin also spends countless hours on the telephone, talking to the owners of equipment, original manufacturers, used equipment dealers and anyone else who might have even a sliver of a lead on how much an item is worth.

The Thomas Register, which used to stand in heavy volumes along Dworkin's office walls, has advanced along with the technological age and is now available online.  With just a few keystrokes, he can access detailed information on 168,000 American and Canadian manufacturing companies, almost 64,000 product and service categories, almost 7,800 online supplier catalogues and even view thousands of CAD drawings of individual items.

Dworkin is surprised -- and more than a little miffed -- to see a stead stream of reports in the news media that paint a picture of auctioneers as nothing more than entertainers with a microphone in one hand and a gavel in the other.  The image bothers him, first, because he is so deeply involved in research and all of the other aspects to serve the client.

"I handle an auction like I would run a store," he says.  "Everything has to be professional.  All of the signs are professionally painted, and the merchandise and surroundings are clean."

He thinks the news media's projection of the profession is dangerous and a throwback to the mid-20th century.

"There was a time when the federal government classified all jobs and auctioneers were put in the same category as carnival barkers," he laments.  That's a wrinkle he doesn't want to see again, but he thinks it's possible unless the media starts getting more information about auctioneering as a genuine research-based and technology-adept profession.  He wishes, too, that reporters would write more about these aspects of the industry and less about the entertainment value of individual styles of bid calling.  He believes that auctioneers can help themselves and the future of the industry by consistently digging in and doing the research.  "I believe all auctioneers should be trained appraisers," he says.  "Being able to appraise property is much more important than an individual style of bid calling."

Other auctioneers agree.  It's their dedication to going the extra mile in understanding the industry and researching auction item value that brings in the vast majority of new clients.  Diane Bendis and her husband operate Bendis Companies Inc. in Riverside, Calif.  The company, founded in 1984, combines certified appraisals, technological innovation, and attention to organizational detail in the evaluation and sales of machinery and equipment throughout the U.S. and Canada.  The company has served a long list of impressive clients, including numerous government agencies (the Federal Deposit Insurance Corp., the Internal Revenue Service, the Department of Transportation), as well as school districts, local quasi-government agencies, numerous banks, and the U.S. Small Business Administration.

"Our clients are drawn to us because of our marketing expertise and our strong ability to determine the value of the items to be sold, particularly during rapidly changing ecpnomic times," says Diane Bendis.  As with Dworkin, the Internet has become a chief resource for Bendis' research.  She, too, spends considerable time calling manufacturers and used-equipment sales people (the latter is a natural because her husband began as a salesperson in the equipment industry, and their auction business evolved from there).  She also points to continuing education courses, such as those offered by the National Auctioneers Association, the American Marketing Institute, and appraisal industry associations as invaluable in helping auctioneers stay ahead of the curve and serve their clients better.

Determining the value of a piece of equipment isn't as easy as finding its original value and calculating depreciation.  It's not even as easy as finding similar items sold today and determining a ballpark figure from that.  There are numerous other considerations, such as the region of the country where the item will be sold, whether any new applications for the item have emerged, and if the item is unique (fabricated or mass produced).  Also, is there any aprticular value to anyone for the item's existence today?


"It's not enough to know the original value," says Dale Ackerman, an NAA auctioneer who handles heavy equipment and business liquidations in Salmon, Idaho.  "You also have to know where it fits into the market today.  You can compare it to going to the dentist.  I might pay $500 to get a filling in my tooth, but I bet you wouldn't want me to pull it out of my mouth and hand it to you and you wouldn't want to touch it.  The same can be true of some types of specially designed heavy equipment."

Fellow Idahoan Bill Fivecoat, an NAA member since 1987, who conducts auctions of heavy equipment and construction equipment ("tractors, backhoes, that sort of thing") has found significant variations in sales prices depending on geographic location of the sale.  "Some states will pay more for certain types of equipment than others," he says.  "California seems to have more fluctuations than many other states.  When times are good, people in California pay top dollar.  But when times turn sour, prices fall drastically."

Like his peers, Fivecoat harvests a lot of information from telephone calls to manufacturers.  When he comes across unfamiliar-looking equipment, he also relies heavily on industry trade publications.  Specifically, he peruses advertising to find the current asking price of similar equipment.  Another key source is construction equipment books, such as Last Bid, which produces an annual guide to construction equipment, listing the "last bid" price various types of equipment elicited.

Researching the value of all the items in an auction, even the very difficult ones, is critical to an auctioneer's credibility.  "If a D-9 Caterpillar is worth $250,000, you certainly don't want to be up there opening the bid at $20,000," Fivecoat says.  "You're not doing a service to yourself and certainly not to your client if you don't know the value of what you are selling."

All of the auctioneers interviewed also agreed that lack of knowledge does not bode well for the auction industry's future.  Even so, Fivecoat is extremely positive about many of the young, up-and-coming auctioneers because they have been steeped academically in the heavy equipment and construction industries.  "A lot of young auctioneers really know their equipment because many of them were equipment sales people before they were auctioneers.  They have attended all different types of equipment schools and seminars -- they know the equipment inside out," Fivecoat says.


It's a long way from dusty volumes of manufacturers' listings to surfing the Internet, but whatever form it takes, research is a vital part of the marketing specialty called auctioneering.  And this is an industry that's center-stage in the technology age and coming into its own with a tough and resourceful breed of marketing specialists who know what it means to "know their stuff."