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Llangollen Railway

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

  1. Monkey Magic

    Monkey Magic Part of the furniture

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    To me that would set off alarm bells, my reading would be - is the line so desperate for income that it will take a contract machining job ahead of sorting out the motive power shortage.

    Core business = railway
    additional business = catering, engineering, media.

    Most workshop blogs normally carry at some point in the year 'work on nice to have project has been delayed due to the team working on main loco fleet after a failure'.
     
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  2. pmh_74

    pmh_74 Member

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    Is that a fact? I haven’t followed this as closely as some clearly have but my understanding was that the trust was interested in bidding for PLC assets (carriages etc.), not the whole shebang with all its debts. I can’t see why they would want the latter.


    Sent from my iPhone using Tapatalk
     
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  3. I. Cooper

    I. Cooper Member

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    It being reported on over multiple issues of a magazine might raise an eyebrow - isn't there anything else for them to write about? But doing the contract job in the first place isn't necessarily an issue. A contract machining job is a contract machining job, does it matter if it's refacing a slide valve on a steam loco or skimming the head on a car engine? It shouldn't be a particularly long or drawn out task and should bring in money immediately without significantly impacting on longer term projects that will take months or years to complete.

    A friend is self employed doing road-steam based work, largely boiler related, but will tackle pretty much anything road steam and on occasion has done a bit ending up on NG railway as well. He'll usually have a couple of jobs on the go at once such that if one stalls waiting for supplies from elsewhere then he can move to the other. Alongside this he'll also often do quick turn around engineering jobs as well which has varied from fabrication and machining of parts for a veteran car through to repairs on local agricultural machinery for nearby farmers. From his point of view he has the tools available and they're pretty quick and easy jobs that bring in instant money without really impacting on the longer term projects that take months to complete. Spending some time welding a bit of tractor back together or making a bush for something non-steam related isn't going to delay the core business, keeps cash flowing and results in happy customers who might otherwise struggle to find someone prepared to take on their small jobs.

    Perhaps of more concern would be if a steam restoration business is spending more time repairing lorries than steam, but an occasional foray into short turn-around contract machining shouldn't necessarily set off alarm bells that there's a fundamental problem in the contract engineering business - machining is machining, and if it brings in money does it matter if the studs go on a railway loco or hold together the cylinders on a stationary engine at a pumping station?
     
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  4. MellishR

    MellishR Part of the furniture Friend

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    I can't see that anyone other than a millionaire could possibly take on the PLC with its liabilities or contemplate doing so. Unless such a millionaire appears, it is surely in the best interests of the Railway for the company to be liquidated and such of its debts paid as can be covered by selling its assets, preferably to the Trust insofar as it can afford them or to a benefactor who will lend or lease them to the Trust. Given the value of an operating railway to the local economy, the local Council could conceivably fill the latter role but it seems unlikely that they could spare the cash.
     
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  5. 30854

    30854 Resident of Nat Pres

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    If events at Llangollen have highlighted one key factor, it's that competent oversight is an absolute prerequisite. In this case, clearly such management as existed was ineffective. Add to this a board which equally obviously failed to keep a grip on a situation which wasn't some overnight development. Under what contract conditions was work being carried out? Surely, some alarm bells must've been ringing, long before the point at which locos began to e removed?

    Enquiry: how many AGMs occurred between the rot setting in and handing the reigns - too late - to a new board?

    I suspect other lines may benefit from a study of the systemic failings which led the LR to this sorry state.
     
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  6. 61624

    61624 Well-Known Member

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    There are many benefits to carrying out contract work beyond the extra income - the opportunity to become increasingly self sufficient in a world where heavy engineering is becoming less and less prevalent being one. The larger the workforce the easier it is to train apprentices and provide training with a range of people who may have subtly different knowledge. So I for one think that the LR had it partially right but they crucially failed to get their management and accountancy correct. I think that they perhaps realised that quite soon and tried to compensate by taking on more (and too much) work.

    I see parallels with loco groups restoring or building new locos who have main line operation in their sights, as well as railways wanting to emulate the NYMR and NNR by extending their operations onto NR tracks. Both are highly specialised operations with high associated costs and present an open opportunity or further disasters.

    Even other railways need to be cautious - we all know that the WSR came close to the brink and although it has been less publicised I believe at least one other line further north was also very much on the edge, with grant money being used to refund unusable pre-paid ticket sales where the income had already been spent.
     
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  7. Monkey Magic

    Monkey Magic Part of the furniture

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    Oh I agree, I have no issue with contract work or with working on whatever, what concerns me is that the contract work seems (in this story) to be taking precedence over the core fleet. If you have a loco shortage on a railway then you should be filling the magazine columns with news as to what it was and how the problems are being fixed. If you are talking about the contract work as an outsider and supporter I would be wondering what the workshop's management's priorities were.
     
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  8. Daddsie71b

    Daddsie71b Member Friend

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    Swanage to Park and Ride at Norden, passing through Corfe Castle. 6 miles. I could go on....
     
  9. D1039

    D1039 Well-Known Member

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    (Leaving aside the car engine example)
    You can have a series of unwonted failures and the railway's management has to balance whether to drop everything to get the home fleet operating quickly against potentially stopping work on a contract and so delay getting a stage payment and/or lose future contract work, either of which might in turn create a cashflow problem down the line. Once that contract work's tap is turned off, it's more difficult to turn on again. Counterintuitive though it might be, it could be a better business decision to manage workflow with continued contract work even if a short term loco hire is necessary (if one is economically available, see other threads!).

    I've been musing on this thread (not just Richard's post). For all the problems LR has got, it's not a gimme that railways should stick to running trains or that in comparison with other railways LR PLC directors were at fault for having diversified income. The Severn Valley Railway was mentioned above and for comparison through the one PLC company it:
    • Has shops, pubs and catering at both ends of the line that are open when trains aren't running
    • Sells parts (firebars, stays)
    • Contract overhauls locos (Dunrobin)
    • Assembles and overhauls boilers (currently 2 IoM new, IoM existing, Hollycombe's Caledonia, 82045's new, 4150 existing)
    • It offers weddings (two locations)
    Whether what's happened at LR gives other lines pause to think about whether to hive off engineering services into separate companies is another matter. It's at times like these I'm very glad it's others' decisions to sort out.

    Patrick
     
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  10. Paulthehitch

    Paulthehitch Member

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    "Up to a point Lord Copper ". More significant in terms of profit and loss are (a) did you get your estimate correct or (b) do the work itself correctly ?

    In the case of (b) above a disgruntled customer may be pacified either by re-doing the work or with a financial settlement and the customer finishing the job elsewhere . None of these will be profitable to the contractor .
     
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  11. RichardBrum

    RichardBrum Member

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    But they are still a business.

    If you don't have on-train catering open, or the cafe gets overrun so people don't go in, or there's a queue in the shop so people don't wait, then you are turning away the very money that pays for the steam engine to run, for the materials to maintain/fix it, for the running costs of the engine shed, etc.



    I notice a few people have said that contract engineering could produce extra income.
    Income is revenue, not profit. So that extra income could be making you a loss.

    It's also an area where the railway has less opportunities to increase revenue & profit.
    You can put on extra running days, gala/special events, open the cafe more, etc, & those are all in the control of the railway. They require volunteers & marketing to encourage customers.
    Contract engineering is 100% reliant on there being work available, & someone else giving you work, & there's a lot less of them than there are consumers. It's also much more difficult, & expensive, to increase capacity.

    If you don't win an engineering job, you could be empty for a month.
    If you have a bad weekend for passengers, that doesn't mean next weekend will be the same.


    Get the core right first
     
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  12. 61624

    61624 Well-Known Member

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    I think you are splitting hairs over terminology here. I think that for most of us (non accountants) income is synonymous with profit. Even when we are running trains at off-peak times we are aiming to do better than cover our costs and turn a profit, although it is admittedly a guessing game and bad weather can lay waste to plans - but we hope that such eventualities even out over the course of a year. There is undoubtedly a demand for contract work and money to be made from it. The failure of the LR operation, but not perhaps the scale of it, began to be revealed some time ago when the Patriot engineering reports started reporting issues but that has not deterred other operations from stepping into their shoes (e.g. PRCLT, Leaky Finders, Northern Steam Engineering). Keeping the contracting and operating businesses separate should be an obvious first move as separate accounting should reveal issues with the one side being clouded by the results of the other. It doesn't mean that a contracting business should never be considered, or even that profit should be an essential criterion. A good, but perhaps uncommon, example is the NYMR's Armstrong Oilers business. It is low key, doesn't make a load of difference either way money wise, but it does preserve the equipment and expertise to produce these essential components.
     
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  13. RichardBrum

    RichardBrum Member

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    As long as the contracts side doesn't impact running your core service, then it's less of an issue. If your contracts prevent you from fixing a loco, leading to cancelling days that you've advertised as being open, then it must be a very good profit margin to make it worthwhile!


    As for the SVR;

    Has shops, pubs and catering at both ends of the line that are open when trains aren't running
    It offers weddings (two locations)

    these are pretty obvious uses of core assets, & are extremely unlikely to have any negative impact.
    Having things open even when services aren't running is also a good marketing opportunity.
     
  14. ghost

    ghost Part of the furniture

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    Yes they are still a business, but as I said they are not an 'ordinary' business and cannot be managed as such.
     
    Last edited: Mar 21, 2021
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  15. Sidmouth

    Sidmouth Part of the furniture Staff Member Moderator

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    I’d noticed that too
     
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  16. Monkey Magic

    Monkey Magic Part of the furniture

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    And that is why management is paid at management rates :)

    However, I'd suggest that this in part goes back to the issue of the railway heritage sector being a cottage industry, where it is very small scale but somewhat precarious so there are often delays.

    Financial liminality forces lines to either go out and search for more work - ie we don't know what the post-Covid landscape will look like so we need to take on as much work as possible, or alternatively, becoming very very conservative and not taking on anything perceived to be a risk (which an engineering arm could be considered to be).

    [
    I have a question, a few years back the SVR had a loco crisis, as I recall they had to hire in a 57xx from Didcot. What happened with the outside contract work during that period when they had no operational steam locos? (I recall reading the article in the GWS magazine so I am guessing it was a few years back).

    I would suggest that the risks of diversification should be considered in two directions - firstly, financial ie does it make money, but secondly skills wise - for example, if you are doing boilerwork, does this take away from your boildersmith working on your boilers, or you are doing events does this take away from your main events. That said, there is a counter argument that only by doing external work can you afford to pay for the boilersmith, doing weddings pays for catering staff etc who the rest of the time do x,y,z.
     
  17. Paulthehitch

    Paulthehitch Member

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    I fear there is a little bit too much wishful thought creeping in here . They have to be treated as commercial businesses, even if they do enjoy things such as gifts of specialist labour, gifts of rare railway silverware or even gifts of complete locomotives . The place I volunteer at has benefited from all of these. However , it is not something which ought to be regarded as some sort of right, particularly if you are engaging in a (hopefully) profitable fund producing activity such as contract engineering.

    It seems as if "get real" time is back .
     
  18. Gladiator 5076

    Gladiator 5076 Well-Known Member

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    I think the trouble is though in any industry, let alone Heritage Railways organisations will go in different strategic directions for a variety of reasons. Some will succeed and some will fail, the skill being getting out of the failing ones before they drag everything else down.
    I only have to look at where I worked (BA) we had two attempts to become "the worlds leading aircraft engineering company". The first failed when the airline found out the reason their aircraft were always late off maintenance was because resource was being used for third parties as their work was "not allowed" to be late. The second time we saw Lufthansa beginning to get large in the maintenance world and thought if they can we can. They have since become (Lufthansa Technik) one, of if not the, largest aircraft maintenance company in the world.
    We had management who luckily could see were were going down a hole and pulled the plug, if you do not have those with vision or who have a path set in their minds suddenly it all goes wrong. The of course chuck in Covid.
    I have no insight in to why Llangollen may be where they are, only that it an industry there is no one size fits all.
     
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  19. D1039

    D1039 Well-Known Member

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    Rather than go O/T I've posted an answer on the SVR thread

    Cheers

    Patrick
     
    Last edited: Mar 21, 2021
  20. Herald

    Herald Member

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    Cafes and souvenir shops are relatively low overhead and skill activities with usually not too much trouble recruiting suitable staff.

    The engineering side of a heritage line is, however, a significantly different challenge with overheads which may be difficult to cover without taking on contract work to ensure efficient utilisation of specialist skills and equipment. There is also a core volume of activity below which it is probably impractical to maintain the full range of competence and equipment and huge risks in offering contract overhauls where the underlying condition of what are basically life expired assets is hard to assess.

    Any line entirely dependent on hiring in assets and skills may, however, find difficulty in running regular services or worse be tempted to cut corners on safety as the train must run but the skills needed to fix it may not be readily to hand, so there is an inevitable pressure to grow an in house capability. In order to maintain jobs within a competitive market place there may also be pressures to under price simply to keep work coming in.

    Llangollen has demonstrated the potential consequences of these pressures one can only hope that lessons are learnt and rather than our learned friends, bankers and administrators profiting from misfortune and dispute the movement as a whole can develop pricing, quality assurance and risk sharing methodologies appropriate for its needs.
     

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