Red Star goes for black
Page 17
If you've noticed an error in this article please click here to report it so we can fix it.
• Red Star will be back in profit "well within five years" — despite a £9m loss announced last week. The company plans to achieve the turn-round in profit through a series of tough measures designed to make the operation leaner and fitter.
The British Rail parcels carrier lost £9.2m on a turnover of £70m, contributing to BR's operating losses of £42m.
Managing director Ivan Couchman has outlined a series of radical measures designed to bring about a "cultural revolution" within the 500-vehicle fleet operation. These could include profit sharing and franchising.
Four regional profit centres were created in the spring (CM 2-8 May). Couchman says: "We will be a leaner, fitter machine by the end of this year, with lower unit costs. But overall we will not lower our prices to customers.
"I will be making cost savings in all areas of the business," he says, "but we will invest in training at the expense of advertising campaigns."
Couchman, who joined Red Star in October, has a five-year business plan but aims to bring the business into profit "long before then".
Red Star has introduced weekly invoicing for many customers and claims this has been accepted.
If jobs are cut staff will be "included in those decisions", says Couchman. "I have one brief in Red Star — to put it into profit.
"But we will get the profit motive imbedded in people once the cultural revolution takes place, moving them from a social railway focus to a private railway focus," he adds.
Couchman is a former manag ing director of franchise operation ANC, and says the franchise concept proved "very successful in this country". Franchising has not been ruled out for the Red Star operation, which already sub-contracts to many hauliers.
Profit sharing is under consideration and Couchman says he has discussed the idea with BR and the unions. "People respond better to things they believe they are part of," he says.
Within each regional profit centre up to six business managers will be appointed to serve local business. New products will be developed, but Red Star intends to major on its "uniqueness" in same-day delivery.
Couchman describes the company before he joined as "commercially naive" and lacking the killer instinct. "We were the nice guys that everyone took advantage of — now we want to be winners, because it's tough out there in the parcels world."
Securicor's half-year profits have been more than halved by the effects of the recession.
The group cites the "worst economic recession of recent years" as the cause of a fall in its profits from £30.9m to £13.4m during the first half of 1990.
The Security and Parcels division, which includes Securicor Omega Express, made profits of £4.9m compared with £10.5m in the half year to March 1990.
The group says "profit margins in the parcels industry remain extremely tight", although it claims to have increased market share, aided by October's launch of Securicor Omega Express.