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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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    Catering can be a very difficult one to staff. Catering is a skilled occupation and there is a lot of competition for good chefs/staff especially in areas with a lot of tourism - ie you are competing with hotels, restaurants, other cafes etc. Retaining staff is critical if you want to maintain a consistently high quality product, even if all you are doing is buying stuff in from Brakes or 3663.

    If people are paying £55+ a head for a dining train, you don't want them going on trip advisor and declaring it to be a rip off, poor quality, cold etc. The more people are paying the more likely they are to have higher expectations.

    Likewise, wedding events are not something that can be done by anyone, and if people are paying anything from 4 to 5 figures for an event as the line you had better get it right.

    Catering is also somewhere where good management is critical in terms of maintaining staffing and stock levels and minimising waste. (Every bit as important as not wasting coal or water needlessly).

    But again, the question should be, is it (premium dining train/ cafe/ wedding venue/ engineering arm) as profitable as it should be, if it isn't then why not, and should we cut the losses.
     
  2. lostlogin

    lostlogin Member

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    I appreciate that, my post was basically in reply to others which appeared that suggest that the plc just needed to find £350k and this could be done by selling carriages. Apologies is this is a misrepresentation or a misunderstanding of previous posts.

    The financial position of the plc must have worsened very considerably since 01/01/2020 as at the start of the year it had £20k in the bank and bank loans of overdraft of £98k. Of those only £53k was secured. As a secured creditor you would feel pretty comfortable with that level of debt considering the trust owed the plc 85k and you would have first call on the assets.

    I wonder if it will turn out that their some sort of pre-pack sale involved in this which effectively enables the "business" to continue at the expense of the creditors i.e. the assets of the plc are sold to the trust, the trust place the assets in a newco which starts trading roughly as the plc did before. Meanwhilele, the plc is liquidated and the creditors get very little back as any sale proceeds go to the secured creditors or in fees.
     
  3. Bikermike

    Bikermike Well-Known Member

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    Well, in one sense, that's "all" they need to do *if* they can persuade the rest of their creditors to allow them to keep going.

    Tbh, shareholder will lose all their cash, unsecured creditors will lose [some/a lot] of their cash, but in one sense, that's already happened; the decisions have been made, the risk has played out, and it's gone wrong. The purpose of insolvency is not to make creditors whole, but to draw a line in the sand and allow everyone to move on in some way shape or form.

    Note that the trust cannot do anything with the assets unless it has enough votes at the creditors comittee (ie most debt) or can persuade the other creditors to agree.
     
  4. Bikermike

    Bikermike Well-Known Member

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    No, if the kit you have can't fix your problem, it's costing money standing idle. Using it for another job is mitigation, not dissipation
     
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  5. 5914

    5914 New Member

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    The situation at Swanage was that the extension to Harmans Cross had been planned as an intermediate point to getting to Corfe. At that point some people were quite content with staying at that stage (there was enough of a train-set for them to play on!), there was some pressure to use the trackbed for a bypass at Corfe, and others wanted to press on.
    Troubles with gaining permission (requiring a public enquiry), together with some influence from the above factors made the extension to Corfe stall - at which point the railway entered financial difficulties. The only thing that saved the railway was a huge fund-raising campaign which financed the extension (both in terms of time and materials/manpower), and then reaching Norden and making the commercial side work.

    If, for which ever reason, the railway had stuck at Harmans Cross, it would not be there now, and it was only the commercial reality of extending to Norden - and the operating surplus that dependent on it - that means the railways survived. All told it was an extension that was make and break in terms of the viability of the railway - so it rally was built on the need for a surplus!
     
  6. Herald

    Herald Member

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    Not wishing to denigrate catering staff but how many qualified chefs are available in the UK and how many agencies exist willing and able to supply such staff quickly? How does that availability compare with skilled heritage engineering staff? What is the maximum compensation for a messed up wedding package? How big are the claims on the engineering business for single overhauls? All business needs good management but heritage asset overhaul losses can quickly dwarf any disaster the catering operation is likely to make as we're comparing small numbers of very high value transactions with much larger numbers of quite modest ones. At worst a poor chef throws away food whilst the engineering worker may wreck items costing many thousands to replace.

    I'll leave it to those with experience of actual insurance claims to comment on whether engineering blunders may cost more than food hygiene ones and how policy costs for their mitigation (if insurable) compare.
     
  7. Paulthehitch

    Paulthehitch Member

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    Once again Oh Dear! If your contracting business loses more each year than it generates in revenue then it is dissipating resources.

    It is not an attitude confined to engineering contracting. Several years ago there was one line which then made a thumping annual loss on catering. On being taxed about this, the reply given was ''It's a service to passengers ''. Hang that! It meant the railway's supporters in effect meeting the cost of their passengers' refreshments out of their own pockets. Much the same as re-tubing someone else's boiler at your expense .
     
  8. The Dainton Banker

    The Dainton Banker Well-Known Member

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    Is there something missing from this description ?
    You say the bank overdraft was £98k but only £53k was secured. As the bank would not be providing an O/D without security, do you mean that the bank had lent £53k on a secured overdraft and that the balance of £45k was to unsecured creditors (i.e.Trade suppliers) ? Or have you missed out some other secured creditors ?
     
  9. The Dainton Banker

    The Dainton Banker Well-Known Member

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    This comes back to making sensible decisions based on proper costings. In the case you quoted it might be acceptable to make a loss on the catering if it can be demonstrated that the catering attracts more punters to the line whose fares more than make up for the loss.
    In one business I ran the sale of one large line of produce hardly split even but it created a considerable customer flow which then purchased other much more profitable items.
    Swings and roundabouts !:)
     
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  10. Monkey Magic

    Monkey Magic Part of the furniture

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    Skilled staff are skilled staff no matter what the field. They are always in short supply in every field.

    My recollection is that the agency mark up was 3-5 x the hourly wage for catering staff. If you have to hire in agency staff for your catering operation you are not going to make much money.

    Then of course you have food hygiene standards (no one wants to be rated below a 5), and of course trained staff - good luck when an EVH inspector makes a call. Risks: fines, closure and bad publicity. The press love those kinds of stories.

    What is the cost - maybe it is bad reviews on trip advisor, maybe it is a story in the Daily Mail (photo of sad looking bride) 'Railway ruined bride's dream day: incompetent steam buffs trash wedding'. So custom suffers, Or maybe if you mess up you give everyone food poisoning, and if you maybe kill some people. Ecoli, listeria etc can have very serious consequences (especially for the over 65s and considering the make up of railway users the target market).

    So I really don't want railways to i) ruin someone's big day ii) kill someone because they cut corners and did stuff on the cheap.

    http://www.cs-compliance.co.uk/food-poisoning-fatalities-fines/ Sample fines £43,000 and £30,000 - comparable with the fine the SDR had to pay.

    If you are doing catering and events you either take them as seriously as you do your engineering or you don't do them at all.
     
    Last edited: Mar 22, 2021
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  11. lostlogin

    lostlogin Member

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    No, those are the figures from the 2019 relating to the bank which appears to be the only secured creditor. Note 15 give the break down of loans and overdrafts which is £68,113 due within 1 year, £14,585 due between 1 & 2 years, £15,728 due between 2 & 5. Note 17 gives the secured debts figure re the overdraft of £53,528. There are also HP contracts detailed in secured debts but they outside the banks position.

    Since the amount due to the plc at 31.12.19 from the trust was £85,897 and the trust had the funds to cover this then something appears to have gone south fairly quickly for the railway to be in the position it is now in as it was only on 25 Sept the accounts were signed off on a going concern basis.

    Finally, it is probably worth noting and I am sure that this ahs been mentioned previously that per the reports at the time it was the plc who approached the bank asking it to appoint a receiver. It was not the bank suddenly pulling in the loan/overdraft. Several of the five directors of the plc appear to be trustees of the trust which does make me wonder whether, as mentioned previously, if there is sum planning behind the scenes to basically ensure the railway continues in a new form but with less debt
     
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  12. Bikermike

    Bikermike Well-Known Member

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    Once again: wrong.
    You miss the points.
    1) if you the have the kit and capacity and it's standing idle, you are not making best use of your assets. Having it idle is dissipating capital. Maybe you shouldn't have bought it in the first place, but that doesn't change anything at that point.
    2) if the thing that is broken isn't something you have the kit to fix, you will be paying someone else to do it. Using or not using your own kit to do something else doesn't change that. Not only that, but doing the other work keeps your staff skilled and busy.
    3) any job is a cost/risk benefit, but if you need to fix something of your own, which cannot be done in-house then it's daft not to use your kit for other jobs (for the right price).

    If you had the best signwriter in the business, is it better to have him shovelling out the ashpit or doing paid work? Even if you have to pay someone else to do the ashpit but make more with him doing something more profitable, then I'd say hire the labourer.

    Your catering example is not on point as it is (1)a known loss-maker being carried on, (2) a stock-heavy business where perishable stock is a much higher level of operating expense (so you do make less of a loss stopping)
     
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  13. 35B

    35B Nat Pres stalwart

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    Taking the sign writer example, I’d be concerned about having that person on my books if I only had work for them 25% of the time. While the numbers stack up to sell the other 75% of the time, the costs of the business also build by having to hire labour for the ash pit, and needing to sustain the income from selling signwriting services.

    That puts strain on management, who now have to focus not just on the core business of running a preserved railway, but also selling, marketing and managing the sign writing business, and engaging labour for the ashpit.

    There are fine lines here, and it’s impossible to have hard and fast rules. But diversification has a cost, and it’s not necessarily just financial.


    Sent from my iPad using Tapatalk
     
  14. Paulthehitch

    Paulthehitch Member

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    Once again wishful thinking is getting the better of you I am afraid .
     
  15. Paulthehitch

    Paulthehitch Member

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    Oddly enough I do know of a trained steam fitter who has learned sign writing skills which get used gratefully from time to time .

    Your basic point is absolutely correct .
     
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  16. gwalkeriow

    gwalkeriow Well-Known Member

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    I bet that their are very few engineering staff members who only have one skill, most will be able to tackle most tasks. I am think of a present staff member at Havenstreet who can coach paint, sign write, fitter, driver and does boiler work amongst other things. Where did he get his training? as an apprentice in the Loco department. I might add that he is not the only multi skilled member of staff or volunteer.
     
    Last edited: Mar 22, 2021
  17. Bikermike

    Bikermike Well-Known Member

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    Once again your argument is unconvincing.
     
  18. Bikermike

    Bikermike Well-Known Member

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    I was more thinking about a volunteer issue.
    If you have a sign-writer about the premises, you'd be better off asking him to do a bit of external work for which the railway could make more on, than him doing "the railway job" that needs doing. It's a development on the point about the engine that needs fixing and people tutting that the railway works are doing other things. If that signwriter is happy to do signwriting in a way that generates the railway revenue, he is doing more to help the railway than doing simple labouring work in the shed. (equally, if he's a volunteer, he may say no, but that's the joys of railways). The "all hands to the pump" approach is necessary at times, but isn't always the right answer.

    Not making best use of your available resources also has an opportunity cost (sign-writer chosen as (1)it's not a capital-intensive operation, (2)AIUI it is niche and getting niche-r so a good sign-writer is a rare thing to have about (3) it's not an operation hedged about with too much safety/insurance matters).

    "From each according to his abilities" (is this the first time Marx has been quoted on the NP?)
     
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  19. Bikermike

    Bikermike Well-Known Member

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    and such a person is a rare thing. However, if, for example, you need a wheel pressing on or off an axle, I doubt he'd able able to do that without the necessary kit. At which point he can fill in one of the other skills, but the railway still has to pay for the wheel-pressing. If he could do a cash job signwriting (or a favour for a railway with the press to cut down the cost) he is helping the railway more than by chopping wood, playing piano in the Haven Street refreshment room etc.
     
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  20. Jamessquared

    Jamessquared Nat Pres stalwart

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    I doubt it!

    I was thinking more, from the other end of the political spectrum, about the Adam Smith point of pin manufacturing and the sub-division of labour. But railway workshops are quite hard to run in that manner.

    A workshop is an expensive capital resource; and staff are an expensive revenue resource. So in the absence of anything else, it is probably better to employ them even to do loss-making, but cash-generating, work for another organisation, than the workforce standing idle in an empty workshop. But that can only be a temporary expedient: it might make sense to tide over a short lull, but not a long-term strategy. (Private loco manufacturers in days of old sometimes built locos "on spec" during downturns rather than lay off their skilled staff).

    Tom
     
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