NEW TRICKS | Ravi Saligram, CEO of Ritchie Bros., has moved the auction company into different territories, including an online listing service, a brokerage channel and financial services
Ravi Saligram arrived at Ritchie Bros. two years ago with a mission to reorient the industrial giant. He got more than he bargained for
Turning around a company that’s been successful, says Ravi Saligram, is much more difficult than turning around a company that’s failing. “If you’ve been successful, there’s a mindset that ‘we’re great,’” says the CEO of Ritchie Bros., who took over the 58-year-old company in July 2014. “And there’s a lot of resistance to change.”
Ritchie Bros.—the world’s largest seller of used equipment for the construction, farming and mining industries, among others—did one thing very well before Saligram’s arrival: the “unreserved auction.” In this model, Ritchie Bros. provides a price estimate to the seller but no minimum price. The combine or telescopic forklift is auctioned at a live event, and buyers from anywhere in the world can submit bids online. While the seller takes a risk, the company’s global reach delivers a fair market price. Buyers love the unreserved model because they think they will get a deal—and for many years, it was a great cash engine and delivered high profit margins for Ritchie Bros. But by the turn of the decade, growth had started to stagnate. “An uncharitable person would say we were a one-trick pony,” says the CEO.
Saligram, who held the top post at Chicago-based retail giant OfficeMax before joining Ritchie Bros., previously knew nothing about the auction business. He was impressed by the drama of the events—at which excavators, wheel loaders and articulated dump trucks are showcased like prize cattle, and an auctioneer can sell a $1-million crane in a minute. He was also impressed by the passion employees had for the unreserved model: “It was seen as a sign of integrity, because at Ritchie Bros., no one influences the auction.” Still, he became convinced there was an opportunity to diversify—to deliver new ways for customers to buy and sell used equipment.
Some customers wanted more control over the sale, he says—and to that end, the company grew EquipmentOne, a reserve-model public auction site on which people can list items or place bids at any time. They also purchased Mascus, an online listing service; RB Private Treaty, a brokerage channel for specialized heavy equipment; and Xcira, a company that provides the platform for their integrated online and onsite auction. Finally, they launched a financing company, Ritchie Bros. Financial Services, to help customers buy their equipment.
The new moves seem to be paying off, with Ritchie Bros. recording US$136 million in net income in 2015—a 50 per cent increase over the previous year. Along the way Saligram has replaced executives unwilling to accept the cultural shift and added more women to the top ranks, including CFO Sharon Driscoll, a former senior executive at Rexall Pharmacies and Sears Canada. “To me, diversity drives innovation,” he says. “It’s not just about creating a world-class company that’s the best in asset disposition. I want this to be one of the most admired companies on the soft side.”