18 December 2013

Stagecoach Norfolk Green

Industry News

Stagecoach Group plc ("Stagecoach") is pleased to announce that Stagecoach Bus Holdings Ltd has completed the acquisition of Go West
Travel Ltd, trading as Norfolk Green, an independent bus operator in the east of England. London Stock Exchange

I know its not local news, but the announcement by Stagecoach that they have purchased Norfolk Green has come as a surprise to many. Norfolk Green are a well know high quality operation which continues to win awards. For many years it seemed that the Independent Operator of the Year award was a contest between Norfolk Green and our own Western Greyhound.

This news also shows how there are still a few quality operations out there for which the big groups are still happy to reach into their pockets and purchase.

21 comments:

  1. At this rate we will soon be back to the days of the national bus company (albeit in the form of the big groups) having control of all the buses in the country!

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  2. Always thought Norfolk Green would be a target for Go Ahead - would have nicely complemented Konnect and Anglian.

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  3. This makes me wonder if Stagecoach have also got their eye on Western Greyhound. Their network would seem to fit in with Stagecoach's Devon operation quite well - and they might then try to do a Barnstaple on First.

    Keith

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    1. I'm not so sure. In the past perhaps it was on their radar but times have changed and Cornwall is far from an attractive place to run buses. Most of the commercial work in Cornwall is with First and the tendered network is being targetted for cuts again and again and again by the Council. Little of WG is commercial and much of it is vulnerable to the winds of tendering and lack of funds available from the Council. I'm not really sure what there is that's worth buying. My experience of Stagecoach is that they would much rather run things commercially and there's little scope to do that by buying WG.

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    2. Who wants to buy Western Greyhound?

      An operation losing money, pressed with a need to replace a lot of non low floor buses in 18 months just to continue trading, a fire that's lost 35 buses from the fleet, plus a mostly tendered network which might well be lost next Easter to First.

      Go Ahead have a lot of issues in East Anglia, and Norfolk Green's owners will be well aware of the issues facing Go Ahead. If you look at GA's historic purchases outside of urban areas they make for a pretty sad story.

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  4. I'd have no doubt whatsoever that Go-Ahead will have been after it but presumably it was touted elsewhere too - and Stagecoach presumably offered more (probably for a number of reasons!),

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  5. When you think about it, Norfolk Green would have been a great fit for any of Stagecoach, Go-Ahead or First!

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    1. Ben Colson was previously a Director of a Stagecoach company, and at least one of the shareholders was a current Stagecoach employee so sale to Stagecoach perhaps not unexpected?

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  6. I doubt anyone has their eye on WG. Sadly the next round of tender cuts in Cornwall on top of the last lot the loss of the Truro PandR to First and the reduction in concessions to 50% won't be making it look attractive to anyone

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    1. The problem is that people believe the WG story and continue to think the business is somehow good because of the spin put out. It is in actual fact, not much better or worse than your average business and First could have seen them off a long time ago by operating a consistent, reliable quality service.

      WG has a lot of issues - those Vario buses that they insisted on buying after 2005 are now a millstone around their neck, in 12 months time they will be worth scrap value only. They have had to spend a lot of money buying SLF London double deckers just to carry on trading, but those deckers are old, and will continue to cost money in keeping going, which if you can manage it, is not a major problem if you know what you're doing.

      Add into the mix that WG is now without one of its founding directors, the MD is now over 65 and very much deserving of a well earned retirement.

      It is cheaper for competitors to let WG lose tenders to the point it is no longer viable, and WG will then be able to blame Cornwall Council, as they've just done in West Cornwall, which has allowed them to cut the PVR and focus on their core area.

      There is enough low floor DDA buses in the fleet to permit a commercial operation where they are known best, but they are extremely vulnerable when it comes to tenders as First has proved. The only people it might appeal to is Go Ahead, giving them some additional territory but they will make a complete mess of it.

      WG can't invest for additional tendered work at this stage - they've got to replace older step entry buses. First of course can transfer in as needed, even in the short term just to get things started but people will continue to believe that WG are somehow wonderful.

      It's the sort of operation that the owner should have sold 5 years ago when the going was good......

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  7. They tried to sell it to RATP but Cornwall CC slashed the concessionary rate before the deal completed and RATP walked away

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  8. How many of us would have done things differently if we knew how the next 5 years would turn out ? Very difficult to accurately predict the future but unfortunately the landscape has now changed for all operators.

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  9. I disagree. You certainly can predict the future if you've been in the industry a bit. Economic downturns run in cycles - and you can risk assess various things and how it will affect your business. It's just the kind of thing MH ought to have been doing, as he wasn't running the day to day operations - Mark had an operations manager to attend to that - he holds responsibility for strategic direction and he should have been doing this. What was he doing all this time?

    You can run a scenario whereby you assess what to do if you lose all your contracts, what to do if your concessionary rate is reduced, what to do if fuel costs rise. It's called forward planning.

    The Disability Discrimation Act and its implications, has been in place since 2000. WG have had all that time to get their fleet converted to DDA yet chose to buy step entrance buses to expand with - buses that, in a year will be fit for the scrapheap. For someone like WGL, that number of buses is equal to what they lost in a fire this year. Of course, they could have properly planned for this problem by purchasing brand new low floor buses as their fleet expanded, but they didn't do so and the cost of doing this falls in 2015 on top of the other problems the business has.

    It's a nonsense to suggest that the head of a company, with the experience that Mark has, couldn't have foreseen at least some of these problems? That would open up many questions about how WGL has been operated, and those observations don't tie in with the story that is put out about how wonderful the company is.

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    1. There was an article on the Route-One website recently about the possibility of being able to re-register some buses as coaches ( DDA not applicable until 2020).

      Now most of the WG step entrance fleet have dual purpose seats ( a good investment as they provide much comfort & have probably attracted many extra passengers over their life.),while standing would not be permitted,this could be a potential saviour for the company - or is this an Ace that someone at WG already knew about ?

      Back in NBC days coaches were often converted to DP status,so is there now a chance to go the other way ?

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  10. I accept that Western Greyhound is now not an attractive proposition for a buyer - for all the reasons set out above. I also agree that, if First had got their act together, they could have kept the very large number of tenders they lost a few years ago. They must have put in quite an aggressive tender to win the Truro Park and Ride.

    Cornwall used to be a very good local authority as far as public transport is concerned - they were prepared to work with operators to decide on the routes and level of service appropriate to each area rather than producing a network at County Hall and putting out the tenders to a tight Council specification. WG aimed for regular headway services to a frequency which many communities had never seen before - just compare current timetables with the Western National book of forty years ago. The appeal of WG to passengers is frequent, reliable services at sensible fares and WG's reward has been good loadings, even on unpromising rural routes. They also have services which are timed to connect - so, at the moment, Cornwall has a good network of services which allow a wide variety of journeys to be made relatively seamlessly. WG isn't 'wonderful' - but it does provide a very good bus service; their plus points are service-frequency, exemplary roadside publicity, smart, clean vehicles driven by smart, helpful staff and, above all, reliability.

    Now whether all this is profitable I don't know. A small private operator has much lower overheads that one of the big groups - for a start, a much higher proportion of their staff are out driving buses, and wages make up about 60% of an operator's costs. I do doubt that First in Cornwall is profitable - and they may find that they have shot themselves in the foot with the new £2 minimum fare. The bosses in Aberdeen are merciless if profit targets are not met - and First's targets are probably the most demanding of the major groups'.

    If First call it a day in Cornwall, then Plymouth will be a very small unit which is quite isolated geographically. If WG collapses, then First may do some mopping up and strengthen their whole operation in the South-West - and Cornwall Council will have a giant-sized headache.

    2014 promises to be an interesting year.


    Keith

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    1. I suspect the plan was to have sold up by now but events (yes, some predicable ones, others less so) have probably seen that boat sale. A managed decline may now be the only option whilst all the dust of the last few years settles down.

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    2. While I hope both First & WG continue to provide services in the locality,I have to take issue with the comment that the bosses in Aberdeen are merciless if profits are not met.The latest statutory accounts for FDC ( year ending 30th March 2013) show a loss before tax of 5.6m - last year a loss of 3.7m .It has been a similar picture for many years now & there is a shareholder deficit of 27.6m pounds.While some of this is related to the Barnstaple area which is has been closed down,the people of Devon & Cornwall have been very fortunate to have their services effectively subsidised for so long.

      It would be nice to think that a turn around plan is underway, but the Corporate Shareholders are getting impatient - the last dividend was cancelled & the share price has collapsed after the rights issue.

      NB F Somerset & Avon also made a loss of 2m but historically has been relatively proftable

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    3. Keith said 'If WG collapses, then First may do some mopping up and strengthen their whole operation in the South-West'. I hope that W G doesn't collapse, with First already running all of the rural train services and most of the main line services there would be no competition.

      I have never understood how they were allowed to buy Truronian.

      Roy

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  11. Come on Keith, lets end the fantasy about First leaving Cornwall. New senior team, allowed to get on with the job by London (not Aberdeen) sensible expectations of profit levels that are achievable in the short and long term, and clearly a grasp of what fares should be to make running buses profitable including the amount you get for an OAP.

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  12. Some very interesting and well-informed comments thus far.

    Stagecoach did indeed get SO close to buying one of the Cornwall operators in 2013 (the same source told me of the Norfolk Green deal several weeks before it was announced).

    I do share the view that WGL has been, especially in recent years, just average. My experience has included some filthy, unblinded vehicles driven poorly by scruffy drivers, but that is partly symptomatic of the size and geographical coverage the company achieved by 2011. However, it has been competing against, in First, a shambolic, down-at-heal operation. I could trust WGL to turn up and the driver not to get lost, together with, as has already been mentioned, clever scheduling resulting in previously unheard-of coverage of remote rural areas.

    Had vehicle investment up to 2011 continued at the same rate hitherto I think WGL would have been in a good position to replace all their Varios by the end of this year. However, the whole business plan appeared to rely on the emphasis that CC put on quality v price, which of course with the criminal squeeze central government is putting on local authorities (unless in London) is a thing of the past. WGL lost 12 routes in 2012, had the fire plus loss of the P&R in 2013 and now, together with all operators, faces five more years of cuts in funding of tendered services. CC may of course take the armageddon approach of other authorities and remove all subsidy, but the outcry in Penwith and consequent buying back of services in the face of WGL's withdrawal, suggest this would only be as a very last resort.

    As regards DDA, or PSVAR as it should be correctly referred to, there is a loophole which gives WGL a few more years. In the regulations the only difference between a bus and a coach is that standing is not allowed on coaches. All but a handful of WGL's Varios are licensed for no standing, which means they are classed as coaches under the regulations and thus should be able to continue to be used on scheduled service until the end of 2019.

    Given the above and the almost certain, and likely significant, reduction in council funding (and let's not even think about the ever-constant threat of the total withdrawal of BSOG) it is more than likely that WGL will not have to invest in any more vehicle replacements until the first Solos and Tridents wear out. I have no idea of the size of WGL's commercial operation, but it may well be that it can be wholly operated from their fleet of Solos, although it would that many more outstations would have to close to reduce the effect of overheads on the remaining routes.

    As regards First, I've been told that their Cornwall operation is financially healthier than the Plymouth one. Don't know how true that is.

    Interesting times - although rather depressing ones. It almost feels like we're reaching the endgame as regards a reasonable bus network in Cornwall.

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  13. The new Fal river bus services that have started around Falmouth and Truro are a great hope for the future. There has even been an experimental route 330 to Flushing from Truro to replace the First 500.
    I wish them the very best as First are appalling in mid Cornwall, you need to carry a tool box to travel with them.

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