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Llangollen Railway

Discussion in 'Heritage Railways & Centres in the UK' started by 14xx Lover, Jan 4, 2010.

  1. The Dainton Banker

    The Dainton Banker Well-Known Member

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    Although I agree with some of the points made by you I feel you touch on one of the crucial factors affecting the hobby. We are, mostly, not real businesses.
    How many real business rely on a largely volunteer workforce and continuing support from donors? Most Heritage/Preserved railways are not businesses in the true sense of the word. As @osprey notes below "You go into to business to make money. As you go to work, you go work to get a wage to pay your way in life, buy a house, feed yourself...et al...." That is not the purpose of most people in our hobby, which is aimed at preserving some parts of the historical railway scene and having some enjoyment (or even, fun) whilst doing it. If you took the volunteer labour out of the equation only a handful of lines have the potential to operate in a truly profitable manner.
    In this case the Trust had, sensibly, established a separate Plc to run the operating side. Unfortunately the Plc expanded the workshop business without putting adequate safeguards in place. I am not clear on whether the workshop was entirely paid staff or included volunteers, but either way it was entering into large-scale contracts and taking on legal obligations with the expectation of making profits. as such it should have been established as another separate trading entity and run purely as a business. The collapse of the workshop has brought down the Plc, which was otherwise operating profitably, and this will certainly be damaging. However AIUI the Trust is largely unaffected by this so there is no reason that a new operating company should not be established and continue running trains on the railway.

    So, to summarise : The majority of railways in this sector are not true businesses, although some aspects are best isolated as stand-alone commercial operations. The best approach, in my view, is to adopt the adage "We are not a business but we will operate in a business-like manner". This allows for some decisions to be made on other than a purely commercial basis (such as the preservation of buildings or artifacts), provided that the finances are, or can be, available to cover the cost.

    As a side issue, I wonder if there is room for a discussion, on a separate thread, of the best structure and means of financing our railways ? The issue of "who controls what" comes up quite regularly (WSR and Peak Rail are recent examples). You refer to "shareholders" "fixated by the gloss and spin of the operating company and fail to take an interest in the finances" but this is a bit unfair. In many cases the people concerned merely wished to donate towards the running of the organisation but were sold "shares" as a marketing gimmick, with neither they nor the issuing party expecting them to be participatory shareholders in the real sense. Unless there is a majority shareholder this can result in considerable confusion, particularly where a large volunteer force also wants a say. With the changing world upon us, perhaps we need to go back to basics and see if our existing practices are suitable for the future.

    Mike
     
  2. flying scotsman123

    flying scotsman123 Nat Pres stalwart

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    This really is an excellent post, it hits so many marks all at once far more succinctly and precisely than I've managed in years on *ahem* another thread.

    One minor query;

    Do we actually know that the railway side was operating profitably? It was certainly the workshop that brought it down, and there's no particular reason to believe running the railway shouldn't be profitable, but do/can the accounts show this?

    Definitely an interesting issue, and particularly at the heart of problems on the WSR, where many, many pages have been devoted to that subject! At least Llangollen have most of their key assets tied up in the trust rather than the Plc, so whilst they might not have had the ideal setup for their situation, the important bits have been protected. When I tentatively mentioned the comparison in GWSR circles where our Plc owns everything I was quickly shot down with explanations of why it couldn't happen to us, which, while all perfectly valid, still left me feeling uneasy. Of course having an ideal structure is one thing, but getting to it from the myriad of current situations is quite another.
     
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  3. Steve

    Steve Resident of Nat Pres Friend

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    Heritage railways in isolation are generally not profitable and rely on donations, volunteer labour and grant funding to keep them afloat. OK, there are exceptions but I think this is a correct statement. This being the case, it would seem sensible to diversify into another income stream to support the heritage railway and I am fairly confident that this was the reason behind setting up the engineering business; to make money to plough back into the railway. It all sounds sensible. However, those railways that have followed a similar track have usually largely withdrawn from that business. the SVR went along this route a good number of years ago but have largely withdrawn from it. It also ran a wholesale business at one time. The NYMR put their toes in the water with a couple of boiler overhauls before pulling out and concentrating on their own fleet. The NNR took on Chatham Steam's business but I don't hear much about external boiler work being carried out these days. There are others. The one success in this respect appears to be the South Devon with their wheel business and boilermaking. However, I understand that the latter is more concerned with providing pressings using their 700T vice-ing press than undertaking boiler work, as such. I was told that it is a much neater and more controllable business model to produce new bits for boilers rather than take on the messy and diverse job of repairing them.
     
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  4. Jamessquared

    Jamessquared Nat Pres stalwart

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    That's an interesting group of examples.

    My own thoughts are that I am sure many railways would like a business providing an independent revenue stream to help support the core operation. However, that business needs to have certain characteristics. One is that it shouldn't divert significant management effort away from the core. The second is that ideally it wouldn't be very capital intensive. Thirdly, ideally it would be in a different business cycle to heritage railways, so it doesn't go down in profitability when the core business is also down. (That last point tends to argue away from doing contract railway engineering as your supporting business).

    Needless to say, it isn't very obvious what such a business might be - if it were easy to make money, everyone would be doing so!

    Tom
     
    Last edited: Mar 4, 2021
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  5. Monkey Magic

    Monkey Magic Part of the furniture

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    I think all lines operate under the cloud of 'there but for the grace of god go I'.

    I think if nothing else, Llangollen shows the importance of checks and balances, if what people have been saying is true and the financial situation has been grim for a number of years and trending in the wrong direction then I find it hard to work out why this wasn't spotted earlier and why issues such as the engineering business were not dealt with sooner.

    It appears that this was not a sudden crisis brought on by covid but rather a sustained problem and that the railway business was *just* about able to provide a sticking plaster over.
     
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  6. Paulthehitch

    Paulthehitch Member

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    Cranmore have been successful in contract work also.
     
  7. Bikermike

    Bikermike Member

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    I think the word "business" is a red-herring. If any preserved railway was a "business" (ie a commercial concern that pays it's way and is supposed to make a profit), they would have been wound-up years ago. Any that were left would be running Austerities pulling mark 1s as the cost of restoring anything else with paid labour would never be recovered through the farebox.

    Preserved railways only work because the workforce pays them (by time) rather than being paid, and probably due to many little favours done by big industry/governments over the years. This is true over a lot of the "3rd Sector", and it worries me. (It also annoys me. If you are the Dingley Dell sports and recreation club, you shouldn't try to present a "professional image", you should concentrate on making sure the pitches don't leak and the roof isn't falling off the pavilion.

    Any railway that considers itself to be run "as a business" is IMO deluding itself. If you play with banks, you will get burned if you break their imposed rules. Is that fair? don't know, don't care. That's the available game. Try to treat your volunteers like paid staff? You'll lose them, and the cost will be much bigger than the costs of annoying your paid staff

    What a railway can and (IMO) should do, is run itself in a "business-like" manner - understand how it really works (not how it should, or how we've always done it), where the money goes in and where the money goes out. Want to restore a 4-wheel wooden coach you find in a field? Fine - just make sure it doesn't cost more than you can afford.
     
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  8. Bikermike

    Bikermike Member

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    I think you'd be surprised how many business in the wider world live on that basis.
     
  9. keith6233

    keith6233 New Member

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  10. keith6233

    keith6233 New Member

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    Dart valley railway.
     
  11. Bikermike

    Bikermike Member

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    https://en.wikipedia.org/wiki/South_Devon_Railway_(heritage_railway)

    "South Devon Railway Trust[edit]
    In 1989, the DVR plc publicly announced that the Totnes to Buckfastleigh line was uneconomic, and had hence decided to find another operator or close it. In response, the volunteers who assisted in running the line proposed to take over operations. As the articles of association of the resident GWR 4900 Class No. 4920 Dumbleton Hall charity allowed it to operate a railway, the joint-team proposed using that charity as its commercial vehicle to take over the line. Renamed the "South Devon Railway Trust", the railway was renamed the South Devon Railway, and the volunteer supporting body renamed the South Devon Railway Association. The Trust took over the running of the line on 1 January 1991, with the first train running on 29 March 1991. The Trust subsequently bought the freehold of the line from DVR plc on 8 February 2010. The South Devon Railway was named the Heritage Railway of the Year in 2007."
     
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  12. jamesd

    jamesd New Member

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    there are exceptions to this - the Brecon Mountain Railway and Lakeside and Haverthwaite spring to mind, possibly Llanberis lake and almost certainly Snowdon Mountain Railway. These are run as businesses and don't rely on any volunteer labour as far as I know.
     
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  13. The Dainton Banker

    The Dainton Banker Well-Known Member

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    Thanks FS. With regard to the profitability of the operating company : it was my understanding from the previous correspondence that that was the case. I am happy to be corrected if I understood wrongly.
     
  14. RichardBrum

    RichardBrum Member

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    I'm putting these together because they are connected.


    From the public accounts, & assuming not much more info was sent to shareholders, we don't know if steaming fees were being deferred, or if the railway side was profitable.

    The accounts are an inconsistent mish-mash;
    employees are separated out for Engineering & Admin/sales,
    but there's no separating out when looking at employee costs, turnover, cost of sales, etc etc*

    This means that the shareholders have very little visibility into the business, & which parts are doing well, & which parts aren't.
    Also, how many heritage railway shareholders read more than the positive PR piece sent once a year, & dig through the accounts?


    Excluding donations & government grants, since 2009 there has only been one year when the plc made an operating profit, & that was back in 2011.



    * what proportion of the £1.6m turnover in 2019 was from Engineering?
    If it was 50%, then you've only just covered the average staffing costs for that department (£624k)
    If it was 80% (proportion of employees) , then the railway side only had a turnover of £320k, with a staff cost of £156k.
     
  15. M59137

    M59137 Well-Known Member

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    Due to our social media policy, I'm sure you understand I am unable to provide a specific list....however there is something in the region of around ten (external) boilers currently here at NNR being worked on, without fuss, by the engineering side. These range in size from standard gauge Pacifics down to traction engines.

    This aspect is still very much active and has been even more important than normal during Covid - I can't comment on the financial aspect as I'm not involved at that level.

    Sent from my moto g(8) power using Tapatalk
     
  16. Alan Kebby

    Alan Kebby Member

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    30053’s boiler from Swanage is currently there I believe. I might be wrong but I think at least one of SLLs Bulleid boilers has gone there before or is there now.
     
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  17. Steve

    Steve Resident of Nat Pres Friend

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    That's good and I'm pleased to be told I'm wrong. I've obviously not picked up on these.
     
  18. daveb

    daveb Member

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    The boiler from 34010 is currently at the NNR. I understand it's being overhauled for use on 34053, and the boiler currently on 34053 will be overhauled for use on 34010.
     
  19. johnofwessex

    johnofwessex Part of the furniture

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    Running Boats and buses?
     
  20. City of truro fan

    City of truro fan New Member

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    This is a disaster I hope they sort it out soon. Hopefully the volunteer will be allowed to do some breakvan rides to raise money while they are banned.
     

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