First Group: General Discussion

[Cesarcollie]

Of course all companies do, but it's about culture at the end of the day isn't it?

I've worked in some companies where it simply wasn't tolerated and that high standards were expected across the board and if they were not people were held to account and ultimately wouldn't be in their job for very long unless they addressed them sooner rather than later. It is the job of senior management to make sure that everyone is pulling their weight in the individual operating companies and doing the basics as well as doing the more important and bigger things.

For example, as I said before, there's one operating company who has year old timetables at their stops, it's the same at Aircoach in Dublin. There are timetables 4-5 years old at their stops. There are stops that have been moved that still have trueform stops in places they haven't served for ages that I saw people waiting at as the timetable is still up showing a service evern 15 mins - only for taxi drivers to take huge swaves of passengers who then give very negative online reviews of the services online.

It's just crying out for fresh blood in places. Some of the longer serving and more experienced managers are the worst who see it simply as a job and couldn't care less about the passenger experiences or the nuts and bolts of a service such as passenger information, customer service and making sure their timetables are up to date. So many people in First think running a bus company is just about operating buses and everything else is optional and doesn't need to be worried about..

First just seem to have a lot of people with a lot of experience but very few with any passion about the job or attention to detail.

This may be for a whole load of reasons:
1. Genuinely have no passion or attention to detail.
2. Used to have both, but after increasing centralisation of management decision-making in the Lockhead era (still not fully reversed I understand), and local initiatives being stifled/criticised, have lost the willpower/ability to exercise either.
3. Do have passion and attention to detail, but following extensive removal of local staff, have no one to act upon things like roadside timetables, and no budget allowance to repaint or refurbish buses (to give just one example).

Whilst there will be some who fall into the category you describe, I think it probably unfair to tar the majority with the same brush. It's hard to do some of the 'right' or 'basic' things with no money. And anyway, where's the fresh blood going to come from? There's a shortage of good people out there, and those that do exist are probably not going to rush headlong into Firstgroup in the current scenario.

 

[F Great Eastern]

Whilst there will be some who fall into the category you describe, I think it probably unfair to tar the majority with the same brush. It's hard to do some of the 'right' or 'basic' things with no money. And anyway, where's the fresh blood going to come from? There's a shortage of good people out there, and those that do exist are probably not going to rush headlong into Firstgroup in the current scenario.

Aircoach generated €14m in profits over the last two years but cash has been diverted to prop up loss making operating companies. End result is no money to replace the vehicles that have made the operation profitable in the first place. So you've seen high end coaches built to a comfortable spec replaced with shorter more basic ones built to a price from Plaxton just to save £2m which has been exploited by the competition. If they didn't have to keep other operating companies alive, they'd not need to do this and would easily see off the competition.

This illustrates the problems in First - some operating companies are having their profits leached by others which are in what seems like terminal decline. If you made several million profit a year and were told all that profit is being diverted elsewhere and by the way you've also got to substantially downgrade your offer to cut costs to the point where it will harm performance, despite performing exceptionally, you wouldn't want to stay around would you? So I can see why they can't attract good talent.

So I can see why such management wouldn't be motivated. But at the same time, how long does it take to go to stops which you have access to and change a timetable? Print a sheet, put a new one in the housing on all your stops. I mean Aircoach has about 40 stops in the whole network and they own them all. That's it. Send someone with an out of service bus. You could do it all in 3 hours at the very most.

But as I'll keep saying, whilst the profitable First businesses keep having to supply all their profits to the rest of the terminal decline businesses, First will not go forward. They'll just end up with a bus unit that every single business will struggle with. It really is time to cut off some of the arms and let them die before the whole of UK bus does. It makes no sense to keep an ongoing blood transfusion from the profitable arms to the ones who are constantly bleeding. Because sooner or later the healthy ones will run out of blood.

 

[Robertj21a]

Aircoach generated €14m in profits over the last two years but cash has been diverted to prop up loss making operating companies. End result is no money to replace the vehicles that have made the operation profitable in the first place. So you've seen high end coaches built to a comfortable spec replaced with shorter more basic ones built to a price from Plaxton just to save £2m which has been exploited by the competition. If they didn't have to keep other operating companies alive, they'd not need to do this and would easily see off the competition.

This illustrates the problems in First - some operating companies are having their profits leached by others which are in what seems like terminal decline. If you made several million profit a year and were told all that profit is being diverted elsewhere and by the way you've also got to substantially downgrade your offer to cut costs to the point where it will harm performance, despite performing exceptionally, you wouldn't want to stay around would you? So I can see why they can't attract good talent.

So I can see why such management wouldn't be motivated. But at the same time, how long does it take to go to stops which you have access to and change a timetable? Print a sheet, put a new one in the housing on all your stops. I mean Aircoach has about 40 stops in the whole network and they own them all. That's it. Send someone with an out of service bus. You could do it all in 3 hours at the very most.

But as I'll keep saying, whilst the profitable First businesses keep having to supply all their profits to the rest of the terminal decline businesses, First will not go forward. They'll just end up with a bus unit that every single business will struggle with. It really is time to cut off some of the arms and let them die before the whole of UK bus does. It makes no sense to keep an ongoing blood transfusion from the profitable arms to the ones who are constantly bleeding. Because sooner or later the healthy ones will run out of blood.

I'm not 100% sure that there is any reluctance from First to dispose of their more troublesome operations - however, I'm fairly sure that there isn't any great queue of willing buyers out there trying to thrust £20 notes into the hands of T'oT.

 

[F Great Eastern]

I'm not 100% sure that there is any reluctance from First to dispose of their more troublesome operations - however, I'm fairly sure that there isn't any great queue of willing buyers out there trying to thrust £20 notes into the hands of T'oT.

Sure - but at the same time, those troublesome operations are a big threat to the operations which are performing well because they keep eating up the profits generated by other arms, which then also puts the profitable arms at risk because they don't get to reinvest those profits and as such their performance drops.

The end result will be every single operating company on life support. Far better to run some troublesome operations into the ground and starve them of cash until they die if they can't get rid of them any other way in order to preserve the health of the ones that are performing well.

 

[Robertj21a]

Sure - but at the same time, those troublesome operations are a big threat to the operations which are performing well because they keep eating up the profits generated by other arms, which then also puts the profitable arms at risk because they don't get to reinvest those profits and as such their performance drops.

The end result will be every single operating company on life support.

Agreed, but *how* do you get rid of them when there's no great demand from anyone else - presumably, you accept a 'fire sale' price just to get rid of it, or you simply announce closure in X months (with massive redundancy payments) ????

 

[F Great Eastern]

Agreed, but *how* do you get rid of them when there's no great demand from anyone else - presumably, you accept a 'fire sale' price just to get rid of it, or you simply announce closure in X months (with massive redundancy payments) ????

Well honestly is that such a bad thing of having a fire sale? If the current situation continues where the profit making operating companies are bled dry by the delinquent ones then there will be nothing left of UK Bus as every single one of them will end up delinquent,

How many years have they been tried to turn these operating companies around now? How many have they actually succeeded in doing that for? How many well performing operating companies have seen their performance decline because their profits have been leached to attempt to turn around said companies which clearly are in terminal decline?

The last, who knows how many years has been focused on turning the poorly performing operating companies around, an approach which has failed at the expense of the ones which were performing well. It really is time to focus on the well performing ones before it's too late. Instead it seems to be some obsession with trying to keep the group together and turn bad companies around whilst the rest of UK Bus collapses around them.

If a fire sale is needed to get rid of the delinquent arms then so be it, far better to have a smaller group without them, leaving more money to spend on the arms that are performing well than a massive group where the well performing arms are in constant decline to prop up the troublesome parts. Might mean a few people admitting they've failed though or hurting a few egos though, so I expect it not to happen.

 

[DMU180]

Aircoach generated €14m in profits over the last two years but cash has been diverted to prop up loss making operating companies. End result is no money to replace the vehicles that have made the operation profitable in the first place. So you've seen high end coaches built to a comfortable spec replaced with shorter more basic ones built to a price from Plaxton just to save £2m which has been exploited by the competition. If they didn't have to keep other operating companies alive, they'd not need to do this and would easily see off the competition.

This illustrates the problems in First - some operating companies are having their profits leached by others which are in what seems like terminal decline. If you made several million profit a year and were told all that profit is being diverted elsewhere and by the way you've also got to substantially downgrade your offer to cut costs to the point where it will harm performance, despite performing exceptionally, you wouldn't want to stay around would you? So I can see why they can't attract good talent.

So I can see why such management wouldn't be motivated. But at the same time, how long does it take to go to stops which you have access to and change a timetable? Print a sheet, put a new one in the housing on all your stops. I mean Aircoach has about 40 stops in the whole network and they own them all. That's it. Send someone with an out of service bus. You could do it all in 3 hours at the very most.

But as I'll keep saying, whilst the profitable First businesses keep having to supply all their profits to the rest of the terminal decline businesses, First will not go forward. They'll just end up with a bus unit that every single business will struggle with. It really is time to cut off some of the arms and let them die before the whole of UK bus does. It makes no sense to keep an ongoing blood transfusion from the profitable arms to the ones who are constantly bleeding. Because sooner or later the healthy ones will run out of blood.

This is exactly the problem with Aberdeen coaching which makes very healthy profits which get given away to supplement the service buses in Aberdeen which make poor profits nowadays. Once upon a time they had decent spec coaches doing tours of Europe and the UK, now they do school runs and the occasional private hire/rail replacement with life expired vehicles transfered from other First operations. The vehicles have no resale value and so are sent to Aberdeen where they are used intensively and worn into the ground. The problem is they arent looked after and eventually they will no longer be acceptable to clients and Aberdeen coaching will die a death. Very sad situation.

 

[F Great Eastern]

It must be incredibly frustrating for those able and passionate managers who do a great job in difficult circumstances for the last few years, to see all their efforts basically come to nothing when they realise that no matter how good their numbers are, that they cannot reinvest their profits because of extremely poor management from HQ or other arms which have been run very badly for years on end.

First has no chance in a competitive market place unless the delinquent arms stop leaching the healthy arms and the competition know that too and are only too happy to take advantage of it. One way or another they have to stop that happening. Carrying on as is, is not an option if they want to have a functioning UK bus division before it's too late and the whole thing turns into a division where every operating company is a hopeless case.

This is exactly the problem with Aberdeen coaching which makes very healthy profits which get given away to supplement the service buses in Aberdeen which make poor profits nowadays. Once upon a time they had decent spec coaches doing tours of Europe and the UK, now they do school runs and the occasional private hire/rail replacement with life expired vehicles transfered from other First operations.

In Aircoach they've replaced high spec tri-axle coaches with more basic shorter ones seating more people, taking much of the luxury that their success was built on away. The competition then ran a marketing campaign about how they have less seats on board which leads to more room and have successfully managed to convert passengers over from Aircoach by doing so.

Think about that. Profitable parts of First are vulnerable because delinquent arms are sucking the money to such a large degree that even a company that is able to pay a €16m dividend retains so little that it has to make cuts to the point where they undermines what made it successful in the first place. Just a small fraction of that €16m being retained would pretty much see the competition off.

 

[Cesarcollie]

This is exactly the problem with Aberdeen coaching which makes very healthy profits which get given away to supplement the service buses in Aberdeen which make poor profits nowadays. Once upon a time they had decent spec coaches doing tours of Europe and the UK, now they do school runs and the occasional private hire/rail replacement with life expired vehicles transfered from other First operations. The vehicles have no resale value and so are sent to Aberdeen where they are used intensively and worn into the ground. The problem is they arent looked after and eventually they will no longer be acceptable to clients and Aberdeen coaching will die a death. Very sad situation.

Really? Goodness. It is quite.....er.....unusual for any coaching operation to make a decent profit, particularly one run by what is essentially a bus company. Do we have any evidence of Aberdeen's coaching profitability?

 

[DragonEast]

Is the problem with the structure of FirstBus? Other companies have good and poorly performing depots within every region, but can handle them to recover. Their business is built around a viable commercial network, subsidy is a bonus. Is First? Yes, it ought to be, but is it?

Apart from the old Badgerline group in the West - where that seems to be happening, First never achieved any significant regional consolidation. Even in the North, where they have a a regional director, it doesn't seem effective. They got rid of their regional structure, which was ineffective anyway. What exactly does Fearnley do, apart from pop up in Route One from time to time with the latest excuse, or to whistle in the dark?

So if the OpCos concentrate on singing the Corporate tune, and keeping top management off their backs, who can blame them? They don't have any alternative. And you can hardly get rid of an OpCo that's doing what you tell it, can you? It isn't black-and-white: too often the delinquents are the areas which ought to be successful, which seems to be a problem unique to First. How they manage it, turning gold into base metal, I don't understand. They don't seem to understand the business, either.

I'm afraid that when they said investment would be concentrated on areas that attracted public subsidy, it sounded to me like a terminal case looking for life support. Perhaps not just to me?

The First conundrum is perhaps illustrated in the east. Essex are the bigger business, even with public support, but are the less successful on every measure than Eastern Counties, under the same management. How come? First, it shouldn't have some to this, but it has and First seem to have no idea how to deal with it. I couldn't see that happening with ANY other operator. (May have something to do with all the competitors being staffed by ex-First people who left, long ago. Even EC lost their two most successful MDs in succession, in unexplained circumstances: as the old saying goes once might be a coincidence, twice is making a habit, so may be it says something about First). But presumably as long as they keep Giles and Tim quiet with their excuses, I suppose that is all that matters.

 

[F Great Eastern]

Their business is built around a viable commercial network, subsidy is a bonus. Is First? Yes, it ought to be, but is it?

If a viable commercial network is not being allowed to retain it's profits, and instead the profits are going to prop up a nonviable network, then the viable commercial network itself risks becoming nonviable because it is unable to properly defend it's position, let alone use it to drive further success.

So if the OpCos concentrate on singing the Corporate tune, and keeping top management off their backs, who can blame them? They don't have any alternative. And you can hardly get rid of an OpCo that's doing what you tell it, can you?

You certainly could and should get rid of an OpCo that's doing what you tell it, if it is having a negative impact on the business as a whole. In business there is no room for sentiment. Part of being senior management means making difficult decisions which are needed for the good of the future prospects of the business even if they involve major changes or sacrifices. First need to be ruthless. If they need to amputate parts of UK Bus to save the rest of it, then that is what they should do.

But presumably as long as they keep Giles and Tim quiet with their excuses, I suppose that is all that matters.

And the lack of decisive management from the top who are scared to make the big decisions that are very much needed is why that the division is in terminal decline. I get the feeling that Tim and Giles see taking drastic action as an admission that they failed with their turnaround plan. Thing is though if they carry on as is that I can only see the good performing divisions declining rather than poor ones improving.

 

[overthewater]

If a viable commercial network is not being allowed to retain it's profits, and instead the profits are going to prop up a nonviable network, then the viable commercial network itself risks becoming nonviable because it is unable to properly defend it's position, let alone use it to drive further success.

YET First were very happy to allow this to happen for over 14 years at Central Scotland, with the Scotrail and early CC/MCC or what ever it was called instead of selling something off. It was all about being the biggest... And parts of Glasgow were like this aswell.

 

[F Great Eastern]

It isn't black-and-white: too often the delinquents are the areas which ought to be successful, which seems to be a problem unique to First.

And I understand that is the reason that they have tried to turn these arms around, because some of these areas should in theory be successful and shouldn't be a delinquent division. But there comes a point where you simply have to cut your losses and honestly some parts of First have reached that at this stage.

When a strategy you've spent year after year throwing all your money at putting out the fires in the delinquents and it hasn't worked and it gets to the point where continuing such strategy threatens the profitable divisions, then really you need to change strategy before the whole thing burns down.

 

[DragonEast]

I think being the biggest is at the heart of it. It's an American thing isn't it? And let's be blunt: in good 'ole blighty if you don't trust your boss isn't the favourite strategy to stay big so you've got sommat to cut and you're too big to let fail? The Civil Service taught us something, after all.

Looking at the competitors, including the big boys locally, their success seems to be down as much to what they don't do as to what they do. They concentrate on a few routes, admittedly dominant, which they run well. They use the competition as a help, not a hindrance. First so often seem to try to get, or keep, their hands on everything, and consequently it seems to do nothing well. Who are they serving, not often the passengers, perhaps it's top management? And if you want to impress the boss who wants everything, then cutting costs is "the easy way" to overstretch your resources. Damaging the business comes later. Someone needs to question the nonsense. A few, perhaps too few, investors seem to be wising up.

It's not just about getting rid of OpCos, perhaps there are few enough of them, but about individual routes too. Too many and too much duplication. You can't make an omlette without breaking eggs, or run a business without upsetting someone, somewhere along the line. First though too often seem to be cooking the meal without a recipe or a chef. They can certainly upset the passengers and waste resources, but pointlessly, even wrongly, due to the lack of elementary thought and planning.

 

[Volvodart]

Really? Goodness. It is quite.....er.....unusual for any coaching operation to make a decent profit, particularly one run by what is essentially a bus company. Do we have any evidence of Aberdeen's coaching profitability?

It could not have been that profitable because they scaled back when they were looking for cuts a couple of years ago and they got rid of the coaching manager. The increasingly elderly fleet was not really suitable for high spec work and touring work by then. Most local coach companies up here now buy new coaches, which was not the case so much in the past. There had been rumours over the years before that of cuts to coaching, so what happened then was no surprise.

 

[DMU180]

Really? Goodness. It is quite.....er.....unusual for any coaching operation to make a decent profit, particularly one run by what is essentially a bus company. Do we have any evidence of Aberdeen's coaching profitability?

I dont have any hard evidence but that is what all the drivers say and for them all to be saying the same thing must have some basis for being true.

 

[DMU180]

It could not have been that profitable because they scaled back when they were looking for cuts a couple of years ago and they got rid of the coaching manager. The increasingly elderly fleet was not really suitable for high spec work and touring work by then. Most local coach companies up here now buy new coaches, which was not the case so much in the past. There had been rumours over the years before that of cuts to coaching, so what happened then was no surprise.

The coaching have very low costs, the coaches have all paid for themselves several times over before even reaching Aberdeen and so it is just drivers/maintenance/fuel/wear and tear that needs to be deducted as costs. They sent back all leased vehicles as they didnt want the additional cost even though they more then paid for themselves each month.

 

[Volvodart]

Most coaches are not used that much, about 5 hours a day Monday to Friday and a lot are spare anyway.

 

[DragonEast]

And I understand that is the reason that they have tried to turn these arms around, because some of these areas should in theory be successful and shouldn't be a delinquent division. But there comes a point where you simply have to cut your losses and honestly some parts of First have reached that at this stage.

When a strategy you've spent year after year throwing all your money at putting out the fires in the delinquents and it hasn't worked and it gets to the point where continuing such strategy threatens the profitable divisions, then really you need to change strategy before the whole thing burns down.

I suspect you're right. They've left it too late for recovery and need to amputate the unprofitable limbs. There are enough competitors to take up the slack. As for funding closure, they can do what every failed business does, and dispose of their property assets for housing, which keeps the economy afloat. What could they salvage out of the mess? That's a question for another day. Possibly nothing as First, but under different ownership . . .
The only thing stopping them is their own pride. Though what they have to be proud of, escapes me.

 

[overthewater]

Why does pride always come into it with first? It's like we trim back and back and back.. Yet others like stagecoach said sod it 90 % and the towns depot king Lynn is gone..
Maybe first are all one nations torys from the 50s?

 

[TheGrandWazoo]

Christ, there’s some tosh being spouted.

Pride isn’t the issue - it’s the massive P&L hit that comes from writing off assets.

Amazed that all the luminaries telling First how to do it have the time to comment whilst running their own highly successful businesses

 

[overthewater]

That's answers that.

 

[DragonEast]

Yes, we know. FirstBus have a very successful, and simple, strategy. They are too big to fail. If anything, like the nationalised industries of old. NBC reincarnated, or perhaps it never died.

 

[TheGrandWazoo]

Yes, we know. FirstBus have a very successful, and simple, strategy. They are too big to fail. If anything, like the nationalised industries of old. NBC reincarnated, or perhaps it never died.

Indeed, and the people who know how the country should be running are cutting hair and driving taxis.

My point is that isn’t as simple as people seem to make out.

 

[Robertj21a]

Indeed, and the people who know how the country should be running are cutting hair and driving taxis.

My point is that isn’t as simple as people seem to make out.

That explains why I haven't seen or heard of Giles Fearnley for some time !

 

[DMU180]

Most coaches are not used that much, about 5 hours a day Monday to Friday and a lot are spare anyway.

Im unsure where you have heard that but often all the coaches and drivers available are out and about and they are still often having to contract work out to simpsons and peace coaches, which they still make profit on.

 

[TheGrandWazoo]

That explains why I haven't seen or heard of Giles Fearnley for some time !

Ha ha. The problem isn’t that First employ idiots; there are, of course, some who are more skilled or talented than others and that’s reflected in all businesses. In fact, the oft quoted refrain was that First never let their managers have their head and now its there’s not enough control. It’s perhaps all a bit more nuanced than that especially when the same management teams can seemingly manage one subsidiary but not another.

Also, it may seem straightforward to simply jettison anything that isn’t making a turn or a marginal one. However, simply having a fire sale means that there will be a shed load of exceptionals - see the Plymouth sale for evidence of that IIRC.

In 2012/3, you can argue that there was a golden opportunity to clear the decks but at the same, they were looking to move most of those ops back toward double digit profit. Unfortunately, esp in the Northern powerhouse companies, this just isn’t happening and much of that may be external factors.

Still, we can see what’s happening next Thursday (31st)...

 

[Robertj21a]

Ha ha. The problem isn’t that First employ idiots; there are, of course, some who are more skilled or talented than others and that’s reflected in all businesses. In fact, the oft quoted refrain was that First never let their managers have their head and now its there’s not enough control. It’s perhaps all a bit more nuanced than that especially when the same management teams can seemingly manage one subsidiary but not another.

Also, it may seem straightforward to simply jettison anything that isn’t making a turn or a marginal one. However, simply having a fire sale means that there will be a shed load of exceptionals - see the Plymouth sale for evidence of that IIRC.

In 2012/3, you can argue that there was a golden opportunity to clear the decks but at the same, they were looking to move most of those ops back toward double digit profit. Unfortunately, esp in the Northern powerhouse companies, this just isn’t happening and much of that may be external factors.

Still, we can see what’s happening next Thursday (31st)...

Tim o'T will be toast if he doesn't come up with something very specific to please the shareholders. He's got away with it for a very long time now and I'm sure their patience has finally run out.

 

[TheGrandWazoo]

Tim o'T will be toast if he doesn't come up with something very specific to please the shareholders. He's got away with it for a very long time now and I'm sure their patience has finally run out.

As I’ve said before, the well of goodwill may well have run dry, hence West Face’s comments!

 

[Cesarcollie]

I dont have any hard evidence but that is what all the drivers say and for them all to be saying the same thing must have some basis for being true.

Ah well - if the drivers say it, it must be true.