The HDD industry has seen a fair bit of volatility over the last few years. In the months leading up to the downturn in 2000, machine prices were high, demand was high, and payment for jobs was high. It was a period where anyone with a backhoe or pickup truck to put up as collateral was being offered credit to buy a machine by every drill manufacturer.
Unfortunately, the industry was a victim of its own success. The high level of competition from people not necessarily skilled in drilling dropped the per-foot price of drilling through the floor and companies began falling off the radar left, right and centre, unable to afford to run at such slim margins.
The early part of the new millennium saw a correction take place. Drills with little wear and low hours could be had for pennies on the dollar, a result of them being repossessed by banks from companies that could not survive the downturn. The international market went crazy and machines moved quickly from the suppressed markets of North America to the developing markets of Europe and Asia at an enormous rate.
The last few years have seen a stabilisation of sorts take place in North America. Drill prices have risen back to levels in line with other construction equipment. A more cautious approach by manufacturers and drillers to machine pricing and job quotes has resulted in a much more stable industry.
Which leads us back to the original question, what is the drill worth?
Quite simply, the piece of equipment is worth exactly what someone will pay for it.
That may sound simplistic, but it is very true. The HDD industry has no rhyme or reason associated with it in terms of equipment value. A drill purchased new for $US80,000 might only be worth half of that a year down the road if no work is currently on the market for it. On the other hand, an older machine in high demand might fetch almost new prices if supply is short.
Going back through records from the last six years, used drill prices have almost doubled since the early part of this decade. Stories of large HDD machines going for less than $US20,000 used to abound in those first years of the downturn, but now it is uncommon for those machines to go for less than $US100,000 on the open market.
This volatility, combined with topographically driven demand, makes valuing a machine very tricky. Factor in a distinct trend favouring one manufacturer over another in a given area, and you get a most confusing and complicated scenario. Fortunately, a more global perspective allows a better valuation that can be gleaned from averages over much larger territories, or in some cases, the entire world.
There are no set rules, and unfortunately there is no “÷HDD Black Book’ with an industry-recognised set of values for equipment in this niche industry. Each piece of equipment must be individually rated for year, hours, condition, and territory before it can be valued. When buying or selling a piece of HDD-related equipment, a professional broker can be a great help. Their expertise in the process will ensure that buyers do not overpay for a package, and sellers do not over or under-value a package that they are trying to sell.
More information concerning the advantage of the services of a broker can be found at www.hddbroker.com