LMS Hughes Crab 42859

Isn't this being all over complicated, I know I am comparing apples and pears, but one can lease property, vehicles, airplanes etc etc, all of which can depreciate at unknown rates at the date of lease and require unforeseen repairs during the lease term.

Its all a case of establishing rental/hire figures which take account of the type of lease ( for instance full repairing or not) and the consideration of the condition that the asset is to be returned it. Therefore if the locomotive is to be supplied in full working order and be returned needing overhaul the rent will be high, inversely if the lessee is to restore the loco, maintain it and return in an agreed order the rental figure will be lower.

Its not rocket science, just needs careful thought from both sides and ensuring that you have a well drafted agreement.

 

and that is the crux of the matter which heritage lines are often not terribly good at, leaving themselves vulnerable to exploitation or unable to enforce the terms if it means a high legal bill.
One must also remember that the drafter / signatories may no longer be around at the final reckoning stage and what form will an independent engineering assessment take 10-15 years down the line in the cottage industry of steam locos?
I can think of one or two fingers burnt episodes historically and one or two that might end that way in a few years time.

 

The issue with setting a realistic hire price to cover depreciation / wear and tear etc. is that it would actually make it so high that nobody would be able to actually hire anything!

The restoration, running and repair of nearly all these machines usually includes a large input of either free or subsidised labour which is the biggest cost element. When you make a calculation based on commercial labour rates it all goes out the window.

 

The head of traction & rolling stock on the NYMR is a former apprentice, as is the head of C & W and so are many of the fitters below them. The process of recruiting and training more goes on annually and there are more and more HLF awards that include an element of apprentice training, and there doesn't seem to be a shortage of applicants. I don't want to sound complacent but I don't think there's any need for panic yet.

 

So why are there locos on short/medium/long-term hire all over the country then?

 

Probably because the hire rate / rental agreement doesn't reflect the true costs involved in maintaining said loco to a permanently operable condition. A lot of owning groups and societies are immature in how they come to commercial arrangements with 3rd parties hence the enormous amount of out of traffic locos waiting for major repairs without enough in the bank to cover them.

 

I am not sure I agree with that. A well drafted agreement (which I suspect are not common in the preservation business) will not turn a bad deal into a good deal and defining overhaul standards to the necessary standard and level of detail required by the major owners would be challenging and probably try the patience (and budget for legal fees) of the parties. Lawyers although they will not admit it are in the sell and forget business, i.e. they don't have to live with the agreement as an operational document, and they are unlikely to find themselves being sued as they would point to their instructions from the client as they would not be in a position to think through some of the issues that could arise. I think practically the only way to do it would be for a loco owner to select a hirer in whom he had a high level of comfort (and even operators generally considered competent can have blips e.g. the incident with 43106's tender spring at the SVR) on the basis the hirer undertakes and pays for the initial overhaul, and is allowed to hand the loco back to the owner at the end of the hire term complete but as is i.e. probably in need of a further overhaul. This means it is unlikely that the hirer is going to agree to pay hire fees, which comes back to what is in it for the owner.

There is (what I assume is) a very brief precis of the agreement the Swanage Railway Company has with John S Bunch in SRT's 2015 annual report:
"Under the terms of the 25 year hire agreement, the Swanage Railway Company is responsible for ensuring that the current non-operational locomotives on hire from John S Bunch are restored to the same condition as at the commencement of the lease. It has entered into this contract upon the proviso that the Swanage Railway Company shall accept responsibility for funding the restoration to working order of the two locomotives which are currently non-operational, i.e. 31874 and 31625. It is provisionally estimated that such restoration will cost in the order of £400,000 each i.e. a total commitment over future years of circa £600,000 [sic]."

That's one way of doing it although I imagine that the "same condition" could cause issues even if that condition is likely to be non-operable. It is easy enough to have problems with a car hire firm as to what is the "same condition" after a couple of days.

 

I guess there is the owners attitude to what is a priority as well. In some cases sadly '.............I'd like to see it run in my lifetime......'

I'm sure owners may well accept they aren't going to make any money out of a loco & view it more of a labour of love.

At the end of the day it's an expensive asset & how much do you want to invest & keep investing in it........? Some owners have their moment (s) of glory & then sell the loco on, something that I feel is going to happen more & more, or say enough is enough & retain as a museum exhibit as per 60009 & leave it for the next custodian.............

 

Hi all - this has drifted way off topic. I would like to find out what has happened to the Crab, rather than dozens of posts about pros and cons of hiring locos when the subject of this thread may not even exist!

 

Maybe so, I still don't understand why people think its any different to the plethora of other industries where commercial equipment is leased out every day and has been for donkeys years? If it doesn't appeal for either side then don't do it, ultimately its merely another marketplace at the end of the day, The FRT seem to do OK and they are essentially a locomotive hire operation.

I suspect your penultimate paragraph possibly suggests where much of the issues lie, not being able to add £400k together or proof read what you are sending out suggests a reason why such agreements are often fraught.

 

Post 562 seems to have finished off the sad story of the crab........

I went to binbrook. I went to lincs wolds. I went to the scrapyards. There is nothing to photograph.

Dead crab. Past tense. Gone.

 

The discussions appear to be slightly at cross purposes because the OP was about loaning a loco for a long term ie an owner putting their asset under contract into the custody, care and maintenance of others for the duration of an operational life cycle. This is somewhat different to the short and medium term hires which proliferate where an owner enters into a hire contract with a railway but retains full control as well as responsibility for anything other than running repairs.
The former is rare, the latter commonplace. Draw your own conclusions.

 

#Post 580

"I recall one of the magazines carrying a picture of the frames and foundation ring resting on top of them at the private site. Hence, I have been rather dubious of and surprised by the certainly with which 2 posters are stating the whole loco has been cut."

Funny enough I remember seeing that photo as well. My guess is that its remains are squirreled away somewhere private and out the way.

 

If you are not very astute as an owner, I daresay it would be very to be seduced into believing you were getting a good deal only to find it less so at the end.
As is said, knowledge is what you get when you read and understand the small print, experience is what you gain if you don't

 

There does seem to be an implication that the only measure of whether a deal is any good for a loco owner is if he hasn't lost any money at worst. If that was the case then surely all these contracts draw up between loco owning groups and railways ought to negate the need for loco owning groups to raise any money at all, but of course they still have to. If I was ever lucky enough to own a loco, I'd be aware that it's going to consume a certain amount of my own money even in a loan agreement, the offset to that would be to see it operating in steam rather than sat in a siding in bits because I refuse to sign an agreement where I come out on top.

 

There are distinctions between an individual private owner, an owning group and railway.
A private owner might acquire a loco asban investment similar to property. Loco prices have reasonably tracked the value of property over the decades so simply sitting onbthe asset ought to yield some growth provided it is not allowed to deteriorate over much. If you don't have either the cash or skill to make it work, lending it to someone else who has access to both might be an attractive option if it comes back to you no worse than at inception of the deal. You could either then sell or lease it out again.
For groups or railways, who have other motivations and imperatives this would be a much less attractive option I would guess.

 

So at the end of 32 pages we are no nearer to finding out the status of the Crab. One poster says it is no more and others say it is in a secret location.

Schrödinger's Crab - simultaneously both alive and dead.

 

Basically a typical thread on NP then.

 

Fair enough, I hadn't considered the investment aspect, I guess I'm looking at it more from an enthusiast's perspective. But surely there must be some individual owners who have motivations similar to loco owning groups, their just lucky enough to have enough cash not to need to form a group in the first place?