Wrightbus enter administration

[tbtc]

Whether or not that was the key plan, I think it's fair to say that it was a surprise to unravel the sheer number of companies with family connections that were involved under the Wrightbus organisation. It would make many people wonder why so many inter-related companies, some with financial arrangements with the others, were necessary.

This is how I'm reading it - it looks like one of those set-ups that has become depressingly familiar in the modern world, where the company that actually does the "work" is beholden to other "sister" companies, so that you can massage away any profits to avoid paying tax on them.

So, whilst it may be profitable to build a bus, the arm that is building the bus may have to pay a licensing fee to another arm, which means the money can end up off-shore or with a charitable wing or whatever - which makes it pretty difficult for someone else to buy out the business (because they wouldn't actually be buying the whole operation). The country seems full of viable businesses that have been designed to make a loss on paper due to the debts lumbered on them or the complex internal agreements that siphon off money to sister companies...

...it's getting to the stage where we might as well abandon Corporation Tax since any savvy business has found ways round it - the only companies paying their fair share are effectively having to subsidise the sharp operators. All of these firms structured to minimise tax liabilities (e.g. when you buy from Amazon, the UK part only gets a fraction of the revenue because all it technically does is fulfil an order that you've placed with the Luxembourg part of Amazon, so the majority of the cash goes to Luxembourg, where they coincidently pay a tiny tax rate).

Looks like a potentially good business gone bad because of the way it's been run, plus a combination of a shrinking bus market, increased competition due to ADL making better vehicles, and the two big contracts that they were most reliant upon (First and TfL) drying up. But I'd be apprehensive about bailing them out, especially since the administration looks like a way of either writing off the liabilities that they don't want (dump the problems on the taxpayer-funded Pension Protection Fund) or a way of forcing the DUP's hand into subsidising a large employer.

 

[Busman84]

Sometimes buying lightweight and smaller engine vehicles is a false economy.. These buses with lightweight chassis are they going to take the abuse and awful road conditions and last compared to the heavyweights that used to be ordered.. Volvo and Scania are still heavy duty chassis which ADL have the E400 MMC built on. Then smaller engines if a driver has is foot flat to the floor most of the shift are you going to save much fuel. The B7TL can be an example of that high revs all the time virtually won’t be much/any better mpg than a B9TL.. The B5TL I wonder if it’s much better with fuel consumption to the above.

This is similar to some cars. Take VW/Audi for example. They offer 1.6 and 2.0 diesels. While the smaller is cheaper and less powerful on cars like a Passat, Audi A4 or Skoda Superb MPG there’s practically nothing in it so your better with bigger engine where the engine takes less abuse..

 

[Robertj21a]

This is how I'm reading it - it looks like one of those set-ups that has become depressingly familiar in the modern world, where the company that actually does the "work" is beholden to other "sister" companies, so that you can massage away any profits to avoid paying tax on them.

So, whilst it may be profitable to build a bus, the arm that is building the bus may have to pay a licensing fee to another arm, which means the money can end up off-shore or with a charitable wing or whatever - which makes it pretty difficult for someone else to buy out the business (because they wouldn't actually be buying the whole operation). The country seems full of viable businesses that have been designed to make a loss on paper due to the debts lumbered on them or the complex internal agreements that siphon off money to sister companies...

...it's getting to the stage where we might as well abandon Corporation Tax since any savvy business has found ways round it - the only companies paying their fair share are effectively having to subsidise the sharp operators. All of these firms structured to minimise tax liabilities (e.g. when you buy from Amazon, the UK part only gets a fraction of the revenue because all it technically does is fulfil an order that you've placed with the Luxembourg part of Amazon, so the majority of the cash goes to Luxembourg, where they coincidently pay a tiny tax rate).

Looks like a potentially good business gone bad because of the way it's been run, plus a combination of a shrinking bus market, increased competition due to ADL making better vehicles, and the two big contracts that they were most reliant upon (First and TfL) drying up. But I'd be apprehensive about bailing them out, especially since the administration looks like a way of either writing off the liabilities that they don't want (dump the problems on the taxpayer-funded Pension Protection Fund) or a way of forcing the DUP's hand into subsidising a large employer.

You've summed the whole situation up very well. It seems highly unlikely that any buyer would now want to buy Wrightbus. I wonder if somebody will be able to just pick up the part that supplies spares, body panels etc.

 

[F Great Eastern]

Sometimes buying lightweight and smaller engine vehicles is a false economy.. These buses with lightweight chassis are they going to take the abuse and awful road conditions and last compared to the heavyweights that used to be ordered.. Volvo and Scania are still heavy duty chassis which ADL have the E400 MMC built on. Then smaller engines if a driver has is foot flat to the floor most of the shift are you going to save much fuel. The B7TL can be an example of that high revs all the time virtually won’t be much/any better mpg than a B9TL.. The B5TL I wonder if it’s much better with fuel consumption to the above.

The B5TL is not a heavyweight chassis, it's had quite a bit of weight shaved off vs the B9TL and is a fair bit more fuel efficient than the B9TL and much more than the B7TL.

Same way that in the coach world that the B11R is far better on fuel than the B12B series.

Not to mention the latest Volvo products are better for the environment.

 

[TheGrandWazoo]

Interesting perspective from the First WoR staff rag (via public transport experience blog) following Wrightbus’s collapse:

This collapse is having a direct effect on us here at First West of England, in two ways:

On a day-to-day level all warranty work and parts supply has ceased immediately. This will make it difficult for our engineering colleagues to deal with any repairs that may be needed until alternative arrangements can be put in place and parts sourced from elsewhere.

More immediately, it gives us a severe bus shortage here as First UK Bus Division was in the process of taking delivery of a batch of 50 Streetdeck double-deckers for operation in Leeds.

Their arrival would allow 23 middle-aged Volvo double-deckers to be transferred to us. Unfortunately not one of these buses has been delivered to Leeds, so no cascade can even start until they do. My information is that 30 buses have been completed and are ready to ship while some 20 vehicles are in various states of construction on the (now stopped) production line.

We are hoping that negotiations with the administrator will lead to the release of these buses within the next few weeks. In the meantime, we are going to be very tight for buses!

 

[deanmachine]

Sometimes buying lightweight and smaller engine vehicles is a false economy.. These buses with lightweight chassis are they going to take the abuse and awful road conditions and last compared to the heavyweights that used to be ordered.. Volvo and Scania are still heavy duty chassis which ADL have the E400 MMC built on. Then smaller engines if a driver has is foot flat to the floor most of the shift are you going to save much fuel. The B7TL can be an example of that high revs all the time virtually won’t be much/any better mpg than a B9TL.. The B5TL I wonder if it’s much better with fuel consumption to the above.

This is similar to some cars. Take VW/Audi for example. They offer 1.6 and 2.0 diesels. While the smaller is cheaper and less powerful on cars like a Passat, Audi A4 or Skoda Superb MPG there’s practically nothing in it so your better with bigger engine where the engine takes less abuse..

Fuel wise, yes, Streetlites use much less fuel. Trust me, when you're in the fuel queue at my depot and there's a Streetlite on one pump or a Scania/Volvo on the other, you pull in behind the Streetlite.

 

[winston270twm]

Interesting perspective from the First WoR staff rag (via public transport experience blog) following Wrightbus’s collapse:

This collapse is having a direct effect on us here at First West of England, in two ways:

On a day-to-day level all warranty work and parts supply has ceased immediately. This will make it difficult for our engineering colleagues to deal with any repairs that may be needed until alternative arrangements can be put in place and parts sourced from elsewhere.

More immediately, it gives us a severe bus shortage here as First UK Bus Division was in the process of taking delivery of a batch of 50 Streetdeck double-deckers for operation in Leeds.

Their arrival would allow 23 middle-aged Volvo double-deckers to be transferred to us. Unfortunately not one of these buses has been delivered to Leeds, so no cascade can even start until they do. My information is that 30 buses have been completed and are ready to ship while some 20 vehicles are in various states of construction on the (now stopped) production line.

We are hoping that negotiations with the administrator will lead to the release of these buses within the next few weeks. In the meantime, we are going to be very tight for buses!

Is that post suggesting that the 50 Streetdecks for First Leeds are being built for a second time? Or is the blogger not aware that First Group cancelled the order approx 2 months before collapse

 

[TheGrandWazoo]

Excellent buses those Primo's, massive rear overhang as well

The Wright Streetlite is far from great but it doesn't even make it into the top 10 worst buses.

Perhaps the Plaxton Primo easily beats it, as does the Quest 80, Dennis Lancet, Plaxton Prestige (on a Daf SB220LF chassis), Optare Alero, Guy Wulfrunian, Daimler Roadliner, AEC Merlin/Swift, Optare Vecta, Temsa Avenue.....

 

[TheGrandWazoo]

Is that post suggesting that the 50 Streetdecks for First Leeds are being built for a second time? Or is the blogger not aware that First Group cancelled the order approx 2 months before collapse

No Winston - this isn't the blogger saying this. It's a direct quote from the First staff magazine.

The circumstances of the cancelled First Leeds order might not be as clear as initially envisaged.

 

[winston270twm]

No Winston - this isn't the blogger saying this. It's a direct quote from the First staff magazine.

The circumstances of the cancelled First Leeds order might not be as clear as initially envisaged.

There were also suggestions that the original one's had been built to the wrong specification, that now seems more plausible than totally cancelling the order given the latest info.

 

[Volvodart]

Someone who should know from the Firstbus enthusiasts Facebook group denied that the order had been cancelled a few weeks ago.

 

[JL1]

What about the StreetLites for Hemel Hempstead? I've heard most of them have arrived.

 

[TheGrandWazoo]

What about the StreetLites for Hemel Hempstead? I've heard most of them have arrived.

It will depend. If they’re built and ready for delivery, then it will be subject to agreement with the administrators.

If not, then that’s a much more difficult question to answer

 

[SpeedbirdA350]

Hi guys,
Not as knowledgeable with buses as I am with trains,but just a couple of questions with regards to Wrightbus collapsing and I hope I dont sound stupid!
First of all, I live in Bradford and with all those new Streetdecks in Leeds,would they usually be under some kind of warranty in normal circumstances?
Secondly,if First take a financial hit because of Wrightbus going bust,could we perhaps see a fare increase?

No such thing as a stupid question - if you don't ask, you won't ever know.

Warranty is given with every new bus but just like what happened with Comet, Woolworths etc, if the place has ceased trading, it's harder to claim warranty work. However, we don't at this moment know what the outcome will be, ie will someone pick the bones to take part of the company for to deal with parts and such? Will it rise from the ashes? Only time will tell. It also depends on the contract and deal of course they had with Wright, which we are not privy too.
As for bus fares, I doubt that the collapse of Wright would directly lead to increase in fares, however does any company need a big excuse let alone any excuse to increase? If Leeds have not increased in the last 12 months, then it's fair to say to expect an extra 10p or so per journey.

 

[jammy36]

The circumstances of the cancelled First Leeds order might not be as clear as initially envisaged.

There seem to be three stories doing the rounds, each claimed to be from "reliable sources":

1) Cancelled order
2) No cancelled order
3) Wrightbus speculatively built more First Group spec Streetdecks to keep lines running/staff employed in the expectation of future orders

Only First management know the truth, the rest is speculation.

 

[Gingerbus1991]

Sometimes buying lightweight and smaller engine vehicles is a false economy.. These buses with lightweight chassis are they going to take the abuse and awful road conditions and last compared to the heavyweights that used to be ordered.. Volvo and Scania are still heavy duty chassis which ADL have the E400 MMC built on. Then smaller engines if a driver has is foot flat to the floor most of the shift are you going to save much fuel. The B7TL can be an example of that high revs all the time virtually won’t be much/any better mpg than a B9TL.. The B5TL I wonder if it’s much better with fuel consumption to the above.

This is similar to some cars. Take VW/Audi for example. They offer 1.6 and 2.0 diesels. While the smaller is cheaper and less powerful on cars like a Passat, Audi A4 or Skoda Superb MPG there’s practically nothing in it so your better with bigger engine where the engine takes less abuse..

Generally from one manufacturer to another, they've all got there own way of improving fuel economy, some 1.4 petrol cylinder-deactivation engines found in some VW group cars are rather efficient.

The 5.1 engine found in the latest B5TL will most likely be greater in efficiency than the older 9.4 in the B9TL, particularly when used in city operations where engine speeds are generally lower, this is where a 4-cylinder captures its fuel economy over the larger 6-cylinder units, of course cummins have turned to using stop-start like modern cars do, mind you only at bus stops, I personally think it should operate everytime the handbrake is applied.

I am a huge fan of the B9TL but even maintenance costs will be significantly lower, the 5.1ltr take 15ltr of oil each change where as the 9.4ltr uses 33ltr!

The life cost of such a vehicle is just as important.

The life cost of wrights own Streedeck, with a Daimler engine, with the same ZF Ecolife gearbox as Volvo have used plently, Mild-Hybrid recuperation and stop-start and its relative lightweight for a decker, the streetdeck should benefit from those measures over older vehicles.

 

[Robertj21a]

There seem to be three stories doing the rounds, each claimed to be from "reliable sources":

1) Cancelled order
2) No cancelled order
3) Wrightbus speculatively built more First Group spec Streetdecks to keep lines running/staff employed in the expectation of future orders

Only First management know the truth, the rest is speculation.

4) First refused to pay until they met the necessary quality standard

 

[6Gman]

The Wright Streetlite is far from great but it doesn't even make it into the top 10 worst buses.

Perhaps the Plaxton Primo easily beats it, as does the Quest 80, Dennis Lancet, Plaxton Prestige (on a Daf SB220LF chassis), Optare Alero, Guy Wulfrunian, Daimler Roadliner, AEC Merlin/Swift, Optare Vecta, Temsa Avenue.....

Don't forget the Marshall Minibus.

 

[Jordan Adam]

The Wright Streetlite is far from great but it doesn't even make it into the top 10 worst buses.

Perhaps the Plaxton Primo easily beats it, as does the Quest 80, Dennis Lancet, Plaxton Prestige (on a Daf SB220LF chassis), Optare Alero, Guy Wulfrunian, Daimler Roadliner, AEC Merlin/Swift, Optare Vecta, Temsa Avenue.....

But the difference is very few of those are still on the road or sold in the numbers that the Streetlite did. Also i disagree regarding the AEC Swift, certainly Aberdeens examples were liked and well thought of.

On a side note you forgot to mention the entire BMC & King Long product ranges

 

[randyrippley]

Right now the administrators will be caught between the proverbial rock and a hard place.......
My guess is the Wright family will have made a derisory offer to buy back the stock and assets (including goodwill) of the company, safe in the knowledge that no-one else can operate the business without owning the site. Theirs will be the only deal in town.
Of course they will currently be charging the administrators rent on the site while the administration proceeds: even though they've bankrupted the company they will still be taking money out of it.
If the administrators have any guts they'll refuse the blackmail and sell the goodwill to a third party (probably chinese) and all the stock and tooling for scrap - but they'll have to be quick to do that as the family will almost certainly have given them a date by which they have to be off-site.
Bu ultimately it depends on someone actually wanting to purchase the goodwill: how much unique technology did Wrights have? Other than the plans was there anything?
And of course theres a complication: what was the legal status of the chassis and engines - had they changed hands or were they still the property of the suppliers? In cases where the bus company had placed a supply and service contract with a chassis manufacturer, not with Wrights then the question could be complicated

 

[TheGrandWazoo]

But the difference is very few of those are still on the road or sold in the numbers that the Streetlite did. Also i disagree regarding the AEC Swift, certainly Aberdeens examples were liked and well thought of.

On a side note you forgot to mention the entire BMC & King Long product ranges

The 40 odd Aberdeen ones were perhaps overshadowed by the premature withdrawal of 650 London examples.

 

[F Great Eastern]

In cases where the bus company had placed a supply and service contract with a chassis manufacturer, not with Wrights then the question could be complicated

If it's for a Volvo Chassis vehicle then the order will be with Volvo Bus and Coach and therefore Volvo will have a lot of headaches in relation to service and warranty for bodywork, but ultimately that's Volvo's problem to fix, not the operators since their contract is with Volvo, not Wright.

 

[randyrippley]

If it's for a Volvo Chassis vehicle then the order will be with Volvo Bus and Coach and therefore Volvo will have a lot of headaches in relation to service and warranty for bodywork, but ultimately that's Volvo's problem to fix, not the operators since their contract is with Volvo, not Wright.

So Volvo may still own the chassis, with Wrights just a contract supplier to Volvo. Yet another problem for the administrators to sort out.

 

[Cesarcollie]

So Volvo may still own the chassis, with Wrights just a contract supplier to Volvo. Yet another problem for the administrators to sort out.

It is also possible (but I have no idea if this is the case here) that First have ordered chassis direct with Volvo and bodywork from Wright’s - particularly if that was a cheaper option.

 

[jammy36]

If it's for a Volvo Chassis vehicle then the order will be with Volvo Bus and Coach and therefore Volvo will have a lot of headaches in relation to service and warranty for bodywork, but ultimately that's Volvo's problem to fix, not the operators since their contract is with Volvo, not Wright.

Not necessarily. Vehicles may either be supplied by the body builder or chassis manufacturer. Depending on the arrangement Volvo's liability might only be limited to the chassis, and potentially only as a third party.

 

[F Great Eastern]

It is also possible (but I have no idea if this is the case here) that First have ordered chassis direct with Volvo and bodywork from Wright’s - particularly if that was a cheaper option.

That's not how the industry works these days with the advent of full service contracts. It would also make things more complex come liability time.

Far better to have deal with Volvo and have them handle it all. Far less hassle and arguments about who something needs to go to from the operator side

 

[Tetchytyke]

Hoping that politicians would decide that their business was "too big to fail" (and would therefore happily keep throwing public money at it, because the idea of the DUP sitting on their hands whilst one of the biggest private sector employers in Northern Ireland closed (especially one in Ballymena) would be unthinkable.

Stormont closing really hasn't helped their business model, put it that way.

 

[carlberry]

The 40 odd Aberdeen ones were perhaps overshadowed by the premature withdrawal of 650 London examples.

To be fair this was at the time that London Transport couldn't even get Daimler Fleetlines to work!

 

[Fisherman80]

No such thing as a stupid question - if you don't ask, you won't ever know.

Warranty is given with every new bus but just like what happened with Comet, Woolworths etc, if the place has ceased trading, it's harder to claim warranty work. However, we don't at this moment know what the outcome will be, ie will someone pick the bones to take part of the company for to deal with parts and such? Will it rise from the ashes? Only time will tell. It also depends on the contract and deal of course they had with Wright, which we are not privy too.
As for bus fares, I doubt that the collapse of Wright would directly lead to increase in fares, however does any company need a big excuse let alone any excuse to increase? If Leeds have not increased in the last 12 months, then it's fair to say to expect an extra 10p or so per journey.

Cheers for the reply Speedbird!
As I say I'm not that up to speed with buses,but I can say the Renown was my favourite Wrightbus. It's a shame what has happened.

 

[TheGrandWazoo]

To be fair this was at the time that London Transport couldn't even get Daimler Fleetlines to work!

Very true but with the exception of Great Yarmouth and Blackpool, Swifts and Merlins didn’t enjoy long lives.