The other day, a colleague asked me whether I’d buy First Group shares. For all he knew, I already had some. I’m not prepared to reveal my answer lest someone makes an investment decision either way on what I’ve said but I would comment that the strength of changes at First UK Bus (rather than UK Rail) are extraordinary. How so? Outwardly, we see them in:
A huge recent vehicle order on top of placing former Olympics vehicles in the provinces
But it’s what’s happening behind the scenes that gives real cause for optimism. It’s a change of management emphasis that allows managers to, well, manage. Those who’ve been impatient for change are beginning to see the fruits of it. First is learning from its peers, particularly Stagecoach but also Go Ahead—though the latter’s going into reverse.
And there appeared last week another First UK Bus local managing director, this time for West Yorkshire. If ever there was a need for a local MD, here it is, with pressure for quality contracts and all. Three years ago, I wonder who would’ve been brave enough to touch this sort of new First job. Now, I’ll bet they’ll queue longer than for a bus to Bradford.
What Giles Fearnley is doing is wrenching operations away from accountants & head office and giving more back to local managers. This is pure Stagecoach. Stagecoach re-adopted the idea of local MDs over 10 years ago. It’s also Fearnley’s Blazefield, though even there, Fearnley was able to benefit from the Stagecoach process at the transfer of some of Stagecoach’s Lancashire businesses. Arguably, Fearnley isn’t going far enough, as there’s still far more rigmarole attached to First’s reporting procedures than at Stagecoach. Stagecoach gives almost absolute power to local managers (if they turn a penny) with a very light touch from Perth.
But First local managements are learning the lost art of ensuring presentation’s right, tackling lost mileage, even breaking down the age-old antagonisms between Traffic and Engineering that, let’s face it, are inherent to some degree in all operations.
Getting the basics right isn’t rocket science. Stagecoach’s been doing that for years. Stagecoach has been growing revenue while First has been cutting costs. There’s evidence of a *significant* increased ridership at parts of First (albeit from a low base) and that has to be good, even if margins are lagging but things seem in place now for margins to improve and we will surely see this during the next six months of reports.