FirstGroup Back in the Rail Francise Game

FirstGroup is back in the Rail Franchise game having won a seven-year contract from the UK Department for Transport to operate trains on the South Western rail franchise, with rival Stagecoach among those missing out. And money is no object as part of the deal has FirstGroup pouring £1.2bn of investment over the course of the franchise into a fleet of 90 new trains and stations along the routes. Go to Digitallook>>

The award is a significant fillip to FirstGroup, which also operates the Great Western franchise to Wales and the west of England, Trans Pennine Express and Hull Trains. First will pay premiums with a net present value of £2.6bn over seven years for the right to run the service. The new operator will be obliged to introduce 90 brand-new trains by 2020 on suburban services around south-west London and running to Windsor and Reading. The trains will replace rolling stock dating back to as long ago as the 1980s. FirstGroup said it was in “advanced discussions” with a number of manufacturers about a potential order for the trains. The trains will add to an order of 30 new five-car trains from Germany’s Siemens currently coming into service on the route. Go to Financial Times>>

 More details on the financing indicate that this is a leveraged transaction with most of the money coming from investment partner MTR.

The franchise is to benefit from £1·2bn of investment, of which £80m will be directly funded by the operator. The extra capacity this will create is expected to help increase passenger revenues, which were £991m in 2015-16.  The new operator will make premium payments over the core period with a real net present value of £2·6bn in 2017-18 prices and discounted using the DfT's 'real' rate of 3·5%.

The joint venture shareholders will provide a loan of up to £30m, and £88m (of which 50% is bonded) in subordinated contingent loan facilities to the operator, as well as a £15m performance bond and a season ticket bond of up to £80m. The franchise terms include GDP and Central London Employment revenue protection mechanisms to mitigate the impact of exogenous economic factors outside the control of the operator, and a profit sharing arrangement whereby a proportion of profit in excess of pre-specified thresholds will be payable to DfT.

FirstGroup said it expects to achieve 'margins comparable with the recent overall industry average and to earn an appropriate return over the life of the contract, reflecting the franchise risk profile.' It expects a working capital inflow of approximately £100m principally relating to season ticket monies, to be treated as restricted cash. Go to RailwayGazette>>

The Union representing rail workers in the UK is not thrilled with the partnership with MTR which operates the Hong Kong subway.

RMT union general secretary Mick Cash warned that the Chinese state was "set to make a killing at the British taxpayers' expense". "The nonsense is that with the government triggering Article 50 this week they would be free to ignore EU rail directives that slam a block on public ownership," he said.

"It is frankly ludicrous that the Tories are continuing with the 'any state but the British state' policy which has plundered our railways for ‎over two decades. "RMT is deeply concerned at exactly what this announcement will mean for our members, these crucial rail services and the safety of the travelling public. "We will be seeking an early meeting with the new owners to secure cast iron guarantees on the jobs and role of the guards, the future of the wider workforce and the safety and quality of passenger services." Go to Int. Business Times>>

According to Cash the deal would mean about 75% of UK rail routes would soon be operated by state-owned foreign companies, after an Italian state firm took over C2C. “Once again the government has refused to consider the public sector option for a major rail franchise and instead it’s a foreign state operator, in this case the Chinese state, which is set to make a killing at the British taxpayers’ expense,” he said. “That is nothing short of a scandal and reinforces the demand for nationalization of our rail assets for the benefit of the British passenger and taxpayer. The nonsense is that, with the government triggering article 50 this week, they would be free to ignore EU rail directives that slam a block on public ownership." Go to The Guardian>>


As a result of this news FirstGroup share prices have demonstrated an upward trend over the last few days.

Shares in FirstGroup also surged as much as 12.6pc to 116.1p after the business pleased investors by saying it expects “significantly increased cash generation” in the current financial year, spurring speculation a resumption of the dividend is on the horizon. “People can finally see this is the pay-off year,” Mr O’Toole said. “We think the generation of cash is sufficient to bring down our leverage and ultimately restore a dividend.” Go to the Telegraph>>

Sask Government Shuts Down 70 Year Old Bus Company

It was started by the government of Tommy Douglas back in the 1940's and now it is no more. 224 people are out of work as a result and rural communities no longer have transportation services. The Provincial Government says the closure was necessary and will save the Province $17 million a year. Decreased ridership has hit the bus business hard with only two of STC's routes being profitable. Ridership is down by 77% since its peak in 1980.

Read more>>

Finance Minister, Kevin Doherty, announced that STC was no longer financially sustainable with financial subsidies estimated at $85 million over the next five years. STC per passenger subsidy had grown from $25 ten years ago to $95 today. In the last five years ridership dropped 35%. Only two of STC's former routes were profitable between Regina and Saskatoon. A Greyhound spokesperson has said that they are assessing the situation and could possibly increase their service in Saskatchewan.

Read more>>

UNION? A Good Idea As Long As It Costs Me Nothing!

You hear these types talking all the time about how they are "proud" to be Union, and that they support the "Union Movement," but in the same breath they will say they don't understand why their union dues are so high, or why does the Union have full time positions when all the Union work could be done in a couple of hours a week - after all it's just attending a couple of discipline hearings a few times a year, and one or two meetings every three years to negotiate a new contract!

If that is the way you think then you do not understand what Unions do and the amount of time it takes to do all the things a Union has to do in order to properly represent its' members.

At a very basic level a union is workers joining together to pursue policies and goals beneficial to one and all. Nothing more, nothing less. In other words, a union is you and your fellow workers, acting in concert to better your everyday working conditions. A union is what gives the individual worker a voice in decisions and events that directly affect him or her in an undertaking that constitutes a major portion of life, that is, work.

The idea is that the union allows workers a say in changing workplace conditions and solving workplace problems. With a union contract and grievance procedure to back them up, workers don’t have to suffer in silence or feel that their only option to unacceptable conditions is to quit their jobs. As a worker, you have a right under the Canada Labour Code to form a union, select representatives of your choice and bargain collectively with your employer.

This helps balance the power that employers have over individual employees. Belonging to a union gives you rights under law that you do not have as an individual. Once you have formed a union, your employer must bargain with you over your wages, hours and working conditions.

The union leadership is elected in a strict democratic process. The officers are nominated and elected from among each individual local’s membership. Elections are held for officers in most local unions every three years. It is important to note that as described above, every local union officer is a member. Every officer has worked under a collective bargaining agreement like every other member. All local union elected officials were selected to run the day to day business of the union because of their skills, commitment and ability to serve the membership.

Just as with any fraternal or social organization, it does cost you to belong to a union. When you join a local YMCA or YWCA or health spa, you generally pay an initiation fee and a membership fee. The same holds true when you join the Elks Club, or the Legion, or the Community Association, or the bowling league.

Cost, obviously, is relative. It’s relative to the services provided, to what you get for your money. How often have you made the statement, “I don’t mind paying the cost as long as I get my money’s worth?” 

Cost is a valid concern, because we all work hard for our money and we want to be sure it is spent wisely and for some particular benefit to us. That is why you should look at the cost of belonging to a union — your initiation fee (if applicable) and your monthly dues — as an investment. A very wise and very sound investment when you consider what you get for your money.

Whether it’s bargaining a contract, handling a grievance or arbitration, negotiating a pension plan, providing advanced training, administering a health and welfare program to provide medical services, prescription drugs and dental services, your dues money is being invested in your well-being today, for your progress and stability tomorrow. And every cent of your money is strictly accounted for by your Local Union president working with the Local Union financial secretary, and the Local union Board of Auditors.

Every organization needs funds to operate, and unions are no exception. Before talking about the law relating to union dues, it is important to know what union dues buy. By law, a union must fairly represent everyone in the bargaining unit. The most common actions that involve union representation are negotiating, enforcing and administering collective bargaining agreements.

CBAs set basic rights for all covered workers, such as wages, sick pay, vacations, benefits, freedom from discrimination and safe working conditions. CBA terms include employee rights to file grievances over working conditions and unfair treatment, including discipline and discharge without good cause. If grievances are not settled, employees can appeal to higher levels and even take their grievances to arbitration before a neutral arbitrator paid for by the union. The grievance process and arbitration decisions become part of the "law of the shop."

This sort of representation costs money. Benefits can include complex legal rights, such as pension and benefit plans. Representation when negotiating a contract or bringing a grievance can be expensive, often requiring lawyers, accountants or actuaries to assist the union. Union dues are the only source of funds available to unions to pay these costs of representation.

The analogy to taxes is obvious. We are required to pay taxes because we all benefit from the public goods our taxes buy - bridges, fire and police protection, and courts, for example. While we may object to some of the ways our taxes are used, if anyone could opt out of paying for these public goods, eventually, none of us would have these benefits.

Attempts to restrict a unions' ability to collect dues, reduce the resources of unions and limits their ability to fight against

the power of corporations. The more union dues shrink, the less unions are able to protect and advocate for the workers they represent - a responsibility that grows increasingly crucial as corporate influence looms ever larger. Though no one loves paying taxes - or dues - both are vital to the survival of our democracy and the survival of unions.

http://www.dc37.net/news/PEP/10_2002/uniondues.htm

Fatigue Management Ongoing Problem in Transportation

Some CN railroad workers in Edmonton say they are fed up with a “culture of fear and intimidation” that keeps them working longer hours than they can handle.

Workers rallied near Grand Trunk Park on the city’s north side last Wednesday to push their employer to take workplace fatigue seriously.

“They’re forcing us to come to work when we’re tired and to remain at work tired, despite provisions in our collective agreement that allow for us to be the judges of our own condition while we’re at work,” said a locomotive engineer, who has worked with CN for 10 years.

The workers' union, Teamsters Canada Rail Conference Division 796, claims CN train crews are commonly forced to work beyond the time their rest periods are scheduled to begin.

The engineer who spoke to Metro said employees have been ignored, and in some cases disciplined, for raising concerns about fatigue to their supervisors.

He said CN’s failure to deal with the problem is putting not only employees but the public at risk.

“Operating a train requires a lot of focus and attention to detail. When someone is deprived of sleep it impairs both their physical as well as their cognitive ability to do so,” he said.

Source Edmonton Metro News>>

Stagecoach Revenues Face Downward Pressure

Stagecoach said the US market remains “challenging due to the effects of sustained lower fuel prices, through heightened car and air competition” with like-for-like revenues from its megabus.com division down 10.1 per cent and revenue from its other North America businesses up 0.1 per cent.

Stagecoach said: “UK Rail industry revenue growth has slowed over the last year and the outlook for the industry remains uncertain, particularly given its sensitivity to economic conditions.”

Adding: “As previously highlighted, we believe the reduced rate of growth reflects the effects of weakening consumer and business confidence, increased terrorism concerns, sustained lower fuel prices, the related effects of car and air competition, slower UK GDP growth and slowing growth in real earnings.”

Earlier in the week the rail union RMT confirmed Virgin East Coast staff will stage a a 24-hour walkout on October 3 in a dispute over job security and working conditions.

The RMT has claimed the jobs of around 200 of its members are under threat though operator Virgin Trains has insisted compulsory job cuts are not being considered.

Stagecoach notes in the trading update: “We will continue to take steps to mitigate the effects of lower revenue growth, focussing on cost control as well as additional initiatives to grow revenue.

Read More>>

Managers Minimize Employee Training and Skills

James M. Kanalley Jr. is a mechanic and a member of ATU Local 1342 representing transit workers at the Niagara Frontier Transportation Authority. The members of his local have not had a raise in 8 years and and a group of them were recently at Bisons baseball game leafleting those in attendance and making the public aware of labour issues at the NFTA.

At the same time members of NAFTA management were holding a recruitment drive for new drivers and mechanics due to a shortage of each. One of the ATU members approached an upper level manager and asked some questions about the recruiting process. The manager's response was very telling, he said as much that "Well, you chose this. That's why I went to college."

Kanalley says this speaks volumes about the little regard management has towards maintenance and transportation department employees. He goes on to say:

To me, this implies that maintenance and transportation department employees are uneducated and unable to handle difficult positions and not worth paying a decent wage.

This shows the view that upper management has toward the men and women who come to work every day, despite not having had a raise in the past eight years. Many of us, myself included, do in fact have a college education.

I don’t think people realize that the skills and licenses one has to acquire to be able to properly and safely drive, diagnose, repair and maintain these increasingly complicated vehicles are very difficult and take years to acquire.

Janitorial employees willingly take health risks every time they step on a bus or railcar to thoroughly clean it so that passengers have a safe, clean and healthy ride to their destination. These workers should not be looked down upon.

As a mechanic, I would love to ask a manager how he would go about diagnosing a fuel injection issue on a diesel engine. Or how to read the schematics on a multiplexing computer system that controls the interlock and door operating system of a bus. Or how to make sure the AC system is cool enough for rider comfort, but follow the regulations for environmental safety, and diagnose an issue with said system when the defect write-up simply says, “No AC.”

“Well, you chose this.” Yes, we did choose this. I chose to go to vocational school in high school and to college in Nashville, Tenn., to get a degree in diesel and automotive technology.

I chose to be a mechanic because that’s what I’m good at and have advanced skills in. It’s how I can best make a living and contribute to the mission the NFTA has in providing transportation for our many thousands upon thousands of riders.

I didn’t, however, choose to be knocking on the door of being poor simply because I recognized that I’m not cut out for managerial office work.

We have families and homes that we are struggling to provide for and pay for.

So please take into consideration the many men and women whose lives are affected by this disregard for and disdain of employees and the system’s riders. We aren’t asking to be paid on the same level as those in upper management, but we are asking to be paid fairly for the hard work we put in every day and for the knowledge we’ve acquired to do our jobs properly and ensure that this region’s residents have safe and reliable public transportation.

Well said Mr. Kanalley. Read More>>

The MegaBus Business Model

The brand name that reinvented intercity bus travel, the home of the $1 fare and double decker buses, MegaBus, is fine tuning it's business model and adjusting its' routes and scheduling to pump up revenues in tough economic times.

Low gas prices are eating into the bus carriers preferred market demographic of the young and affluent who are more likely to own a car.

The Akron Railroad Club quotes Joseph Schwieterman, a professor at DePaul University in Chicago who studies intercity bus transportation, (and) told The Plain Dealer that the intercity bus industry is contracting after several years of rapid growth.

“Gas prices are raining on the parade of bus companies in a big way,” Schwieterman said. “It’s surprising how quickly people change their habits when fuel is cheap.” It was also surprising that Megabus passengers tend generally to be more affluent, younger and more likely to own cars.

So when gas prices drop, they are inclined to drive rather than take public transportation.

In the 1960's intercity bus travel became less and less popular with increased automobile ownership, and the post war boom in highway construction. Ridership and service to rural areas declined even further in the 1980's after deregulation of the intercity bus industry.

A 2014 paper published by the AARP cited U.S. Department of Transportation Bureau of Transportation figures showing that 8.4 million rural residents lost access to intercity bus service between 2005 and 2010.

MegaBus has a business model that is not based on providing service to small towns. Here is how they do it instead according to the Akron Railroad Club article cited above.

Since starting service in April 2006, Megabus has operated much like an airline. You won’t find Megabus stopping in small towns or even small cities unless they happen to have a large state university.

MegaBus started out in 1996 as a subunit of CoachUSA/Coach Canada offering low fares and curbside pickup instead of traditional brick and mortar bus stations. In another Akron Railroad Club piece they describe how MegaBus began.

The initial route network fanned out from Chicago and included service to Cleveland. Four years later, the Megabus business model began making a transition from a hub and spoke orientation to a point-to-point model. Also like airlines, Megabus uses yield management to set fares. Although it has attracted much attention with its $1 tickets, Megabus imposes a $1.50 per transaction fee for tickets purchased online. Tickets can also be purchased by phone, but cannot be bought from bus drivers.

A review of the MegaBus website and schedules shows how its business model favors large cities with large colleges in close vicinity.

According to Schwieterman Megabus has done best in heavily urbanized areas, between cities that are between three and six hours apart, and in places where parking is scarce and expensive.