Yet another CalMac boss quits as Transport Scotland wouldn’t let him do his job

PRESS RELEASE – DAVID MACBRAYNE LTD
29 August 2012

ARCHIE ROBERTSON STEPS DOWN

The following statement is from David MacBrayne Ltd chairman Peter Timms:

Archie Robertson has decided to step down from his role of Chief Executive and has left the Company with effect from Friday 24 August 2012. On behalf of the Board, I would like to thank Archie for his contribution to the business and wish him well for the future.

ENDS

So there you have it. But why? This well-researched article from the For Argyll website from yesterday (Tuesday) may help readers to understand the reasons for the sorry state CalMac is now in. 

Official: David MacBrayne Group’s CEO ‘has not resigned’?

Posted on August 28, 2012 by newsroom, For Argyll

by Lynda Henderson with Julian Penney

Towards the end of last week For Argyll made several attempts to talk to Archie Robertson, Group Chief Executive for David MacBrayne Limited, or DML.

DML is the parent company for subsidiaries CalMac Ferries Limited (CFL), Argyll Ferries Limited and David MacBrayne HR (UK) Ltd, a human resource subsidiary.

We were looking for clarification of some corporate issues from Mr Robertson.

On each attempt to reach him, we were not asked who we were or what we wanted to discuss but were told that he was not in the office that day. When we asked when he was due back, we were told that they were not sure.

This all seemed rather odd.

We then asked, through official channels, if Mr Robertson had actually left the company.

The answer was: ‘As of 24th August Mr Robertson is on annual leave and he has nor resigned’.

Further questions on whether or not a resignation was expected could not be answered.

This would seem to indicate that a possible resignation cannot be discounted.

Before the fools’ chorus starts chanting, this can be nothing to do with the Gourock-Dunoon ferries kerfuffle.

Whatever the distasteful and gratuitous political bullying that has gone on over this matter, it has never been more than noises off from the political equivalent of the peasants Shakespeare described as ‘the rude mechanicals’ in the wings of the big stage.

The Clyde and Hebridean Ferry Services

The real issue that confronts the David MacBrayne group is what the government plans to do with the Clyde and Hebridean Ferry Services which Calmac Ferries Limited is currently contracted to deliver.

The signal of Scottish Government intent was obvious to everyone when it awarded the ferry service contract for the Northern Isles, not to NorthLink, its own in-house company but to the major UK and international public sector supplier, Serco.

Serco quickly announced its ambitions to get involved in the Scottish west coast ferry services.

As a ferry operator Serco has experience of running only the little cross-Thames ferry at Woolwich – but expertise and local knowledge is of no account to a Scottish Government that does not understand what ‘best value’ should encompass.

The RMT Union, led by Bob Crow, is still in discussion with Serco, seeking guarantees on no redundancies and on pension rights.

Archie Robertson handcuffed and in the stocks

Archie Robertson has been in an impossible position.

He is effectively a government employee.

The corporate group for which he is Chief Executive is state owned and can be used and abused at will.

An example of this in action is the quite bizarre situation with the Gourock-Dunoon passenger service.

The Scottish Government:

• having written the tender specification
• having managed the timing of the contract to limit the political damage to themselves;
• having dictated the nature and cost of that contract;
• and having approved the means of its delivery, including the boats used
• have themselves now become cheerleaders of the attack on Argyll Ferries, the service delivery company they created, own, control and of which they are sole shareholders.

Transport Scotland is known to have become the most politicised department of government, with weak civil service leadership, an obsession with media stories and therefore experiencing a constantly distracted internal performance that would make a headless chicken look as if its control tower was still in place.

But what can Archie Robertson do except take the wet sponges fired by a rabble led by his own single shareholder and employer who have locked him in the stocks?

Moreover, Archie Robertson has his hands bound in all sorts of ways through the government network of less than hands-off state owned ferry related companies.

At the rowdy wild west of a public meeting in Dunoon in November 2011, on the Gourock Dunoon ferries situation, Archie Robertson told the audience that they would get a ‘world class’ passenger service.

His intention was to see first class shore-based facilities at each destination to support the service.

Unfortunately this is not within his control.

The way EU law forced the separation of the service provision from the infrastructure – the boats, piers and harbours and shore facilities – means that Mr Robertson has to negotiate and pay for for the provision of shore facilities for ferry routes with the asset holding and leasing company, Caledonian MacBrayne Assets Limited [CMAL]

The October 2011 minutes of the Board of that company – also state owned, also with Scottish Ministers its only shareholder – record a rather sneering reference to Mr Robertson’s ‘world class’ ambitions for the service on this route and an abrupt refusal to do anything to develop the shore based facilities beyond their current agricultural level.

It’s the west coast ferries, stupid

From the public information available, it has been clear since the publication of the Ferries Review, reinforced by the award to Serco of the northern isles services, where the Scottish Government was going with the west coast routes – and therefore what Archie Robertson is facing.

David MacBrayne Limited currently contains three subsidiary companies, as noted above: CalMac Ferries Limited (CFL); Argyll Ferries Limited; and the human resource facility, David MacBrayne HR (UK) Ltd.

Of these, only CalMac matters. It is THE operator of Scottish west coast lifeline ferry services.

Argyll Ferries runs a single passenger service and David MacBrayne HR (UK) Ltd is only an internal facilitation outfit. CalMac itself has one wholly owned subsidiary – Caledonian MacBrayne Crewing (Guernsey) Limited, which employs and supplies all sea going staff (around 770) to CalMac Ferries Limited.

If CalMac either loses its service contract – or most of it – it becomes a desolate rump and the David MacBrayne Group becomes – what exactly? A low rent bottom feeder. It would be no more than an envelope with a single sheet of paper – Argyll Ferries – until 2017. Why not dispense with the envelope?

This is not where any experienced and capable CEO sees their future.

CalMac and the Scottish Government policy on the west coast ferry routes

The Scottish Government, since it published the Ferries Review document, has been promising a policy statement on the west coast ferry services. This has still not materialised.

It cannot be long now.

CalMac’s contract to deliver these services runs out in September next year, 2013.

Between now and then, the Scottish Government must produce tender specifications, put them out to tender and award the contract or contracts – presumably in good time before the start of the new contract term. Best practice, were it observed, would dictate this.

The choice the Government has is binary:

• to do as it did in 2006, and offer the entire west coast services as a single bundle
• to unbundle the routes and offer route clusters and/or single routes for tender.
• The first scenario would see CalMac either win or lose, with the fate of NorthLink something of an omen here.

The second scenario would see CalMac as a rump operator of a rag bag of small and wholly uneconomic routes scattered across the west coast, with high overheads to match.

The overall west coast service is a ragbag of different types and sixes of boats, with different berthing requirements and different berthing facilities.

If the government were going to unbundle and rebundle the routes, it might:

• offer some routes singly – like Arran, Mull and Stornoway.
• offer some in clusters – like the Small Isles and the Clyde services to Bute and the Cumbraes
• But does it form tendered route clusters by geographical area or by boat and berthing affinity?

The former approach would leave a bidder looking at a fleet of internally incompatible boats that could not cover each other’s routes were that to be needed; but it would simplify their shore-based and crewing operations.

The second approach would see it more feasible for a successful bidder to swop boats on routes – but would see the costs of their shore bases and crewing arrangements increased by being stretched over a wide territory.

The greatest risk of unbundling to the communities dependent upon the internationally recognised and approved ‘lifeline services’ is the loss of CalMac’s ability, as sole service provider, to juggle appropriate ships between routes to cover service, refit and emergency absences.

All successful bidders would, as a contractual obligation, lease the boats for their routes from CMAL.

Say an Islay boat goes out of service. Can CMAL instruct the operator of, say ferries to the Uists, to lend a boat to the Islay operator at the cost of loss of service to their own business?

Would CMAL retain a core ‘one of each’ fleet of unleased boats, available to charter out for short term emergencies to any route operator? Such boats would have to be maintained in a permanent state of readiness.

How much would it cost to maintain unused boats at fighting fit level? How would that stack up with any savings made in another set of tenders issued on an 80% cost 20% value basis? Remember all the money for this – costs and revenue – ultimately goes in and out of a single pocket, the Scottish Government’s – ours.

The Ferries Review Evidence

Ideally, the government would prefer to hive off all of the west coast routes to the private sector. But several will not be attractive because they are endemic loss makers.

We believe that it will offer all of the routes for tender, with the fall back position that CalMac can be deployed to pick up the leftovers.

Won’t it be interesting if, in such circumstances, CalMac are sufficiently independent to decide not to bid for some routes, as they did in 2006 with the unsubsidised tender for Gourock-Dunoon?

It was striking that the Ferries Review was keen to lose some small services where the cultural and utility links are crucial – like, for example, Claonaig (north Kintyre) -Lochranza (Arran).

Look at the picture arising from shooting the Claonaig-Lochranza (Arran) service and the Review’s touting of the possibility of making the Ardrossan-Brodick (Arran) service a tripartite one to include Campbeltown.

This looks like the scenario for tendering the Arran service as a single operation. The loss of the Lochranzs service with the addition of a link to Campbeltown would see Kintyre-Arran traffic catered for – but all driven to a single service, extending the revenue earning potential of the Arran route.

Proof of how complex an issue is the unbundling of the routes can be seen in looking at Oban.

Oban is a base for ‘big boat’ ferries – to Mull, Islay once a week, the Atlantic Isles of Colonsay, Coll and Tiree, and the southern Outer Hebrides.

Superficially simple. Shoot the little ferry to Lismore and leave Oban a big boat harbour, with its routes clustered for tender.

Clustering the entire Islay service with these routes would make boat flexibility possible but would leave a bidder with two sets of shore facilities to pay for – Kennacraig and Oban.

Not so simple.

The CMAL evidence

Another piece of interesting evidence of intent is that since early Autumn 2011, CMAL has been engaged in replacing its previous single contract – used for CalMac’s operations, with a fleet of separate contracts, each covering one of the service elements it provides.

CMAL Board minutes for October 2011 show item 5.2 as:

‘CHFS 2 Contract. GP reported that Biggart Baillie has forwarded draft Contracts for further consideration by the CMAL team which had then been returned with comments. GP explained that it was the intention to have separate contracts covering Harbour Operations, Access, Property and Equipment, Fleet Charter, Branding and use of the Heraldic Device. Once the contracts were in a more mature state they would be circulated to the Board for consideration and further comment. The Board discussed the paper proposing the methodology for charging vessel charter fees and harbour dues from the next contract period. The Board were satisfied with the methodology proposed and it was requested that an updated paper was provided showing the proposed charter rates for each individual ship.’

If a single bundle containing all of the routes was envisaged, why would CMAL go to the trouble of moving to the complex and expensive issuing of a plethora of contracts instead of a single one? Unless, of course, it was envisaging a major preferred bidder that might negotiate not to avail itself of all of its services?

This has all the signs of preparing for a ‘pick n’ mix’ outcome to what they refer to as CHFS 2 – the second tendering of the west coast, or Clyde and Hebridean, Ferry Services – the first having been in 2006.

Since that October 2011 Board, the draft separate contracts have been produced, approved and passed to the Scottish Government for its approval – an action demonstrating the short distance of hands-off in this operation.

The RMT evidence

The RMT Union told us this morning that there is a meeting on 6th September between Transport Minister Keith Brown and the RMT – which will be represent4ed by leader, Bob Crow and another senior figure.

This meeting’s purpose is to discuss bargaining on pay, conditions and pensions in the event of the CalMac routes being broken up.

It has also emerged that, since 20th August, with a closure date of 12th September, RMT is balloting its CalMac members on possible strike action.

RMT’s posiiton is that once a lifeline service like calMac;s is taken out of public ownership and handed to a private sector operation with shareholder dividends to pay, safety and jobs are inevitably at risk.

They see the continuation of CalMac as a single provider of west coast ferry services as beiog the best overall option for all interests. Logic is on their side.

The Archie Robertson evidence

There can be no doubt that Archie Robertson will have internally fought with passion for the retention of the single bundle of west coast routes that is the only responsible way to run these subsidised lifeline services.

The question over his continuation with the company suggests that he has lost the argument.

Before the constant grumblers on anything and everything raise a muted cheer and before those who have been making Mr Robertson’s professional life more difficult join in – be careful what you wish for.,

It is not Archie Robertson and CalMac that are the ultimate losers in what can only be a major error of government judgement in a situation rife with ministerial interference – and indeed, this government’s disgraceful modus operandi – the energetic smearing of the reputation of those who oppose.

It is us, the users, those who need the lifeline services, who will suffer, whether CalMac loses the lot in a single move or becomes a minor league rump operator.

We will not, we cannot, see better services for all of us arising from what the government clearly intends to try – but we can thank Archie Robertson who has clearly done his best to argue in our interests.

The future is looking very like a Serco shoe-in.