Llangollen Railway

It's already been stated that the travel benefits are provided by the trust to its members, the plc aren't involved at that level.

 

Does seem sad, could some of the money also be bank loans to setup the workshop?

 

I've resisted posting in this thread until emotions have settled. (Mine and others.)

Llangollen seems to be caught in the middle. Not large enough to weather the storm (eg SVR, NYMR), but not small enough to be able to sit it out with minimal overheads (eg volunteer-based). They have the overheads of eg paid staff, but are not yet truly big-league. The contract business would - ideally - have been a cash producer in this difficult Covid time. In reality, the well discussed issues with the contract business put them on the back foot, and Covid has just knocked them over before they could recover.

I'm not an expert, but there is a lot of mis-information (although well meaning) on this thread.

To those saying the PLC has no assets: I suspect something had to be put up as collateral for any bank loan.
Similarly, it's receivership, not administration, so the bank has assessed that the railway is not a viable concern that can keep going and pay off the debts. Any recovery will look different to the current railway.
If you really want to give money, check carefully where it's going. If its the PLC, then you are giving it to the bank to give to a primary creditor.

Difficult times. My heart goes out to all involved - but the employees and supplies who are financially impacted have more to lose than volunteers.

Realistically, as enthusiast-based funding sources dry up, railways are only going to survive as businesses which attract income from primarily non-enthusiast audiences. I don't like it, but I think it's inevitable.

 

I would suggest that there are two issues. To what extent are the problems of Llangollen structural and to what extent are they the result of poor management? Fundamentally, if it is the former then the outlook is bad, if it is the latter, and the things that underpin the line are sound, then there is no reason for the line not to survive and flourish under new management.

Sometimes, good businesses suffer from bad management.

 

I would imagine that, like most heritage railway workshops, they are equipped with machine tools retired and donated by local business, with relatively little resale value. If they have some more specialised railway-engineering equipment such as a wheel or journal lathe that might have more value, but as far as I know they don't.

 

I’m no expert, but I imagine a learning point here might be the need to set up any operations servicing outside customers with concomitant liabilities as separate businesses. That way if it all goes wrong it can’t take the railway operation down with it?


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The catch there may be that such separation may undermine the ability of that business to secure capital to get going, or provide the necessary assurances that it can stand up to liabilities. It also presupposes that such an external business is started as a standalone, rather than developing organically.

 

It would have been better as a subsidiary, yes. However the bank may have required a guarantee from the parent company which they would now presumably now be calling on.

 

Probably not a popular observation but one I believe in... With any contract work someone is paying the bills, it is always wise with these sorts of jobs to properly check work being carried out before coughing up. That way any items not carried out to the standard required can be rectified before things get out of hand and before cold hard cash is handed over after which things get somewhat more tricky. It's rather easy to rattle the begging bowl and claim you've been hard done by but things are never quite that clear cut. Thorough project management is just as important as it is for a contractor to be working to the required standards, it is too easy to just 'trust'.

If you were having a house built you'd be having a surveyor in at stages throughout the build, steam engines should be no different.

 

This is the issue - you can do everything through SPVs (Special Purpose Vehicles - ie companies set up to do the thing) if you can get the funding. If you need the funding from a lender, then the lender will want security for their risk. If there's not enough security in the SPV, then to get the loan you end up having to give parent company guarantees. Unless you have assets to burn, any security is a risk.

 

Very Sad, all the effort going into the extension and then the Bridge repair potentially for naught

Puts into perspective the trolls jumping up and down on the management for putting the 'wrong kind' of canopy at Corwen, are they happy now there is potentially no railway ?

 

I think that's a bit of an unnecessary dig - that issue is in no way related to the collapse as far as I can see. It seems to be largely accepted that it was that same management being jumped up and down on that got the railway in this mess to begin with.

 

Very much agreed.

It worries me that a lot of preserved railways do well in a little sheltered niche, and put their heads into the world of non-volunteer/non-charity businesses and will expose themselves to forces that are much stronger than they appreciate. The Banks will enforce their covenants if payments are not kept up. The assets we cherish are of much lower value to the wider world, and costs go up very fast if you are outside the "cottage industry". I hope anyone complaining about things being done "on the cheap" or not "heritage" will allow for the need of the railways to cover this risk.

An "ugly" canopy is not an existential threat to the railway. A receiver's appointment is.

 

One issue is the distances involved between the owning groups & where the work is being done. That then ties into the availability of someone to go & check the work.

From one projects public address to Llangollen is a 3hour+ round-trip.


Maybe there will be more use of photo/video reporting for project stages.

 

Difficult news to read on the BBC this morning.

We have all read speculation on here about the Engineering side of the business over the last year or two.

This latest news is surely confirmation, if it were ever needed, that while locomotive repair and overhaul services can be an income generator for a line/organisation, they are not devoid of significant risks.

Perhaps others will be looking on this salient event and asking how much risk their engineering operations present to the wider organisation?

As is always the case, adept management and deep engineering competency are fundamentally important. If either is wanting....well....

I have every confidence the railway will get through this and come out of the other side stronger for it.

 

Surely that is known about up front though? If you contract out a project, you have to consider how you will exercise suitable oversight, and distance from home is one of the factors that might make you prefer one contractor over another. Contracting a job to a third party doesn’t absolve you of responsibility for the successful outcome, you just swap one set of necessary skills and costs for another.

Tom

 

Exactly, it’s surely a complete non issue. If you are spending thousands and thousands of pounds contracting a company to do something for you, then the odd half day of your time to check on progress is nothing.

 

I think it potentially goes further than that.

There's a conflict between the external/contract work & any urgent internal work;
You have an external contract which takes up 6hours per day for 20 days/a month. (with the usual completion clauses etc)
A loco owned/hosted by the railway that owns you fails in the season, & needs 3hours to fix. You choose to do the work, because you can catch up the contract work.
What do you do if another one fails & needs 6hours work, say in week 2 of the contract?


Internal work needs to be properly charged for. If there's a discount, does the price charged still cover all costs.


Is there an expectation/assumption that the business will always make a profit distribution to the owning railway?
The business should be retaining some for reinvestment, & there could be years when it doesn't make a profit.

 

I work in a business that applies activity based costing to work. It is demanding to set up, and requires a lot of effort to operate; I would never recommend it seriously for a cottage industry sized firm. None of which is to deny that understanding and controlling the interaction of internal and external activities is essential.

 

Yes, indeed!