How pay affects costs
Page 25
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The National Freight Corporation's splendidly produced and informative report for 1978 shows how difficult it is to generalise on the effect of a wage increase on total operating costs.
Labour cost represented only 9 per cent of working expenses of Cotrali-Pickfords last year. Next lowest was the "front-line" unit, Lawther and Harvey Ltd, of Belfast, with 17 per cent. The highest percentage — 64 — was in Roadline, with National Carriers not far behind with 58 and Pickfords Removals and Travel at 50. The proportion in the BRS group was 41 per cent. It will be interesting to see how this year's generous wage settlement will influence the relationship between labour cost and overall cost.
It will certainly exacerbate one of the NFC's greatest worries — its inability to generate enough cash to replace vehicles, equipment and depots in full or provide essential reserves. This is impossible with the current 5 per cent profit margin on revenue.
• The corporation would need to increase depreciation from £21.8 million to about £37 million if this were calculated on replacement costs instead of historic costs. It is a problem that greatly exercises John Silbermann, chairman of the Road Haulage Association, who has done more than anyone to expose the effect of pathetic profit margins on the replacement of assets.