A Rational Method of Ass e ssing Wages
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Solving the Problems of the Carrier
Concluding Article Dealing With the Question of Ensuring that Wages Paid Shall be Proportionate to the Merits of the Driver and His Earning Capacity.
A Sand and Ballast Problem IT would be quite easy to draw erroneous conclusions from the figures presented in Tables I and II, which are reproduced herewith from my last week's article. It is, therefore, necessary to be circumspect in dealing with them.
First of all, it should be noted that the percentage increases in operating costs are not necessarily the proportional increases in total costs, which must include provision for establishment expenses not included in the data given. In some cases, it might be that establishment expenses, or overheads as they are sometimes called, have increased in greater proportion than the vehicle operating costs: in others the proportional increase may not be so great.
It is probably fair, thinking in terms of averages, to assunie that the increase is approximately the same. In that event the percentage increase in total cost will be the same as in vehicle operating costs: it will lie between 10 and 12i per cent.
If, now, the haulier's charges are based on cost plus profit, and if, the rates to-day and in October, 1940, are assessed on the basis of, say, cost plus 15 per cent., then' the employers' earnings have increased by only 10 to 12i per cent: as against the increase of 17 per cent, in the case of employees.
Answering the Driver's Argument The driver who is inclined to be argumentative may say: "That is all very well, but what are the actual amounts of the increased earnings? " I will try' to answer that question, not in all the cases enumerated in the two tables, but in three of them.
First, the second example in Table I, the 5-tonner covering 150 miles in a week of 60 hours. The establishment expenses in local haulage, such as that suggested by the low weekly mileage, will not be high. They will be less than the average and I imagine that 22 6s. per week Would COVCP them.' ,In that event, the total expenditure per week, operating costs plus establishment expenses, will amount to £13 10s. The revenue on the -basis of cost plus 15 per cent, should be £15 10s. 6d., so that the employer's net profit from that vehicle is 22. Os. 6d. That is in October, 1940.
To-day, assuming establishment expenses to have increased in the same proportion as vehicle operating costs, i.e., by 11 per cent., the total expenditure per week will be £15, the total revenue £17 5s., and the net profit £2 557
The employer's net profit has thus risen from 22 Os. 6d. to £2 5s., whereas the driver's wages have increased from , £4 14s. to ES 10s. 6c1. . .
Next take the first example in Table IT, the 7-8-tonner running 1,000 miles per week of 70 hours. This is clearly trunk-service work, in connection with which the establishment expenditure is usually greater than on local haulage. In October, 1940, it is probable that it would amount to £5 10s., bringing the weekly total of outgoings to 239. At 15 per cent, on that, the haulier's profit would be 25 17s. per week, the revenue being £44'17s.
To-day, the total weekly expenditure will amount to. £43 6s., assuming, as before, that establishment costs, like vehicle operating costs, have risen by 11 per cent. The revenue must be £19 16s., so that the net profit is £6 10s. The owner's earnings have, therePre, increased from 25 17a, in October, 1940, to £6' 10s. to-day. The driver received £5 14s. in 1940, as against 26 13s. to-day.
As another case I will take the third example in Table II,: the eight-wheeler running .600 miles per week of 70 hours. This vehicle, like that in the previews example,Nis clearly on trunk services, a fact which must be taken into consideration when assessing the establishment costs. In this case, so far as the average for October, 1940, is concerned, they -are likely to be not less than 28 per week.
The total expenditure per 'week can, therefore, be set down at £46 14s. The revenue should be not less than 253 14s.—that is allowing for 15 per cent. net profit— thus showing a net profit of £7 per week. To-day, with vehicle operating costs at £42 3s., the total expenditure is probably £51, allowing £8 17s. for establishment charges. The revenue, calculated on the same basis as before, should not be less than 258 14s., so that the haulier's 'profit is now £7 14s.The driver and mate of this vehicle took, between th'em, 411 9s. in wages in October, 1940, and are paid £13 4s. to-day.
That answers the question, and immediately invites the comment: " Yes, but he may have a number of vehicles. at work, so that his total profit may be much greater than is suggested by the figures." True, but only so long as conditions are such as to enable the operator to charge, and obtain, the rates which are implied in the net profit of 15 per cent. True only, again, if it be assumed that the vehicles work 52 weeks per annum, year in year out.
What Competition May Involve Neither of those conditions prevails in actual practice. Stress of competition, with the, railways as well as with other hauliers, reduces the rates which the haulier can obtain. HiS customers purchase their own .vehicles, and operate them under C licences, or, alternatively, reduce the amounts they are willing to pay him because they have calculated that, in the absence of such reductions, they could profitably operate their own machines. Hard times come, and there is insufficieh traffic to keep all the vehicles continuously employed. Moreover, the latter situation is rarely countered by standing-off the drivers.
In effect, therefore, the drivers' positions are safe: they are paid the standard wages, with appropriate rates for overtime, for 52 weeks in the year, including 12 days of statutory holidays. The haulier may, by reasons quite outside hiscontrol, be unable to earn half the profits indicated by the above figures. The point that I am really making is that there should be some different basis for the assessment of wages. By all means let us have Grade. I, Grade II and Grade HI, but change the application and meaning of the terms. They should not relate to areas but to driver's ability. There is, in my view, no real justification for paying a man in an industrial area higher wages than are paid to one located in a rural area. • If two men are doing similar work they should be paid the same wages, unless one be a better driver than the other, in which case his remuneration should be higher. The fact that a man chooses to take a job in London should not entitle him to a rate of wages exceeding that paid to a man who works in Nether Wallop or Little Hadham, Fix wages on a reasonable scale: I do not think, notwithstanding anything that I have written in this or the preceding articles, that the present scale is unreasonable. Have three grades, according to driver ability, and let every man be paid a bonus calculated (a) on the grade of wages scales he has reached and (b) according to the tonnage carried arid mileage run per week.
It would not be easy to work out such a scheme in detail so that it ensured satisfaction to all concerned. There are sure to be some sqaabbles and a certain amount of disagreement here and there. The difficulties, however, are not insurmountable: they can be overcome by mutual good will.
It is true that one fault would still remainLethe driver would be sure of good wages, whereas the employer has no certainty of a profit on his turnover. There is, hOwever, a certain amount of rough justice there. ,The employer stakes his money and his skill and if the latter be good enough, he is sure of a good return. If it be not, his driver, interested in his business, may quite well be able. to supplement his efforts andlurn the balance in his favour.
That concludes what I have to say, for the time being, on the question of wages. _ Rates for Sand and Ballast
I now propose to turn to a subject which is equallytopical, namely, rates for the haulage of sand and ballast. As readers will have seen" in the news columns 'of ".The Commercial Motor," a new Association has been formed for the distributors and hauliers of sand and ballast in the Metropolitan Area. I was invited to be present at the inaugural meeting. there being an idea abroad that the question of rates for this ,class of haulage might crop op, in which case my advice and assistance were to be sought. Actually, that did not happen. Rates were, it is true, mentioned, as well as certain peculiarities of sand and ballast haulage, but beyond saying a few words on the general subject of rates I was not called upon to make any important contribution to the debate.
I had; however, in preparation for the event, got together a considerable bulk of information on the subject, and in the 'Course of so doing I have unearthed some rather surprising discrepancies and anomalies. It seemed to me that these should be made more phblic than has been the 'case so that they can be discussed and the question of rates, perhaps, put on a more satisfactory basis.
I had, in any event, intended to deal with the subject of sand and ballast rates following a letter which appeared on page 324 of " The Commercial Motor" dated December 3, in which it was stated that 5s. 6d. per yd. for an eight-mile haul of sand and .ballast, averaging 4 yds. to the load, was quite insufficient; that amount for an eightmile haul is, as a matter of fact, above 'the usual rate.
I have half-a-dozen rates schedules before me and for that distance the quotations are as follow:-4s. 8c1„ 4s. 7d., 5s.. 4d., 5s., 4s. 3d., and 4s. 2d. Saud and ballast are being hauled at those rates and have been so ha-uled for some time. As there is no reason, just now, why rates for these materials should. he cut, it is presumed that there are hundreds of operators making profits at those rates.
It seems reasonable, therefore, to draw one of two conclusions—either theconditions under which this particular operator is working are bad, or there is something wrong with his accountancy. As the letter came from a firm of chartered accountants, it seems unlikely that the latter is the case and the probabilities are that the conditions are unusually severe. This view of the matter, moreover, is borne out by statements made in the letter, which seemed to indicate that the conditions are not merely bad but outrageous.
It is stated that the operator has a fleet of 20 4-yd. tippers. Of these, it is usual for eight to be laid up for minor repairs each day. Furthermore, each lorry on the route has an average of at least one' puncture per, day. 'ornething is also said about the condition of the ballast .which is wet and, thus, actually weighs 61 tons for the 4' yds., iiastead of 5i tons. That is something which, as we all know, 'frequently happens and one would have expected that an experienced operator would already 'have made some provision for it.
1943 com_pared with 1940
Now, in the course of the letter from this accountant he stated that he had made certain recommendations to the haulier, namely; that he should: (1). Study the conditions at the pit, particularly the roads in and out. (2) Decide what wait there would be at the pit: (a) Are _there enough loading facilities? (b) Are the loading or digging machines in good condition, so that there will be no delay through breakdown? (3) Decide what delays are likely to occur at the discharging end. (4) Find out if the ballast will be dry or wet. (5) Estimate the percentage of his fleet he is likely to have under repair, due to bad roads, etc. (6) When he has done all this, calculate the number of trips per day he will be able to make with his running lorries, and the pay-load they
• will carry. '
Obviously, Nos. 1 to 5 are the preliminary investigations, on the basis of which the answer to No. 6 is to be assessed. With the answer to No. 6 in our possession it should be reasonably easy to assess the haulage rate, always bearing in mind, however, the effect on costs of the answer to No. 5.
If I were assessing rates in that way, and taking into consideration the special conditions described in the letter and enumerated above, I should proceed as follows:—First, I should note that this operator finds it possible to make an average of six trips per day. It is not clear whether by this he means that he averages six trips per day with each of the 20 vehicles, or whether the minor repairs to be effected are such that at no time has .he more than 12 lorries at work, thus reducing his traffic capacity to six loads per day for each of 12 vehicles. There is ample margin for error in that lack of clear statement.
Total Yardage Figures'
If the facts be that the average is six loads per day per six-day week for 20 vehicles, the weekly total is 2,880 yds. If the. averag number of vehicles at work be only 12, the total is reduced to 1,728 yds. It seems reasonable, as well as 'logical, to conclude that the latter statement more correctly describes the conditions.
That being so, the daily mileage is 96 per vehicle (576 miles per week), or 6,912 miles per week for the fleet. .
The standing charges per week per vehicle amount to £8 10s. net, to which must be added 6s. for overtime, making £6 16s. This applies to the fleet as a whole, as, presumably, the drivers do -not go home for a week, when their vehicles come temporarily off the road. -The total for the 20 vehicles is thus £136, to which must be added, say, £44 for establishment costs, making £180 in all.
' The running costs, making due provision for the excessive maintenance, repair and tyre costs implied in the statement caacerning conditions, should not exceed 8d. per mile. Indeed, that amount' I should assume to be an outside figure. The approximate total of running costs is, thus, £230 per. week and the overall expenditure £410. The yardage conveyed is 24 per vehicle per day, 144 per week, and 1,728 per week for the fleet. The revenue, at 5s. 6d, pet yd., is £470—to the nearest pound—so that the
' weekly profit should be £60. That is almost 15 per cent. It is a moderate profit, admittedly, on the operation of 20 vehicles, but still a profit, not a loss. On the operation of 12 vehicles this can be reckoned, as a very fair profit.
Actually, I am inclined to take the statement that it is usual for eight out of 20 vehicles to be off the ,road as rather exaggerated. I do not mean to be carping, but I am thinking that the statement is probably one of the kind we are all prone to make in the heat of the moment, when we are exasperated as the result of adverse conditions beyond our control. It was probably made at a time when eight vehicles had been off the road for a ,couple of clays. Probably an average of four disabled vehicles per day i3 a 'more accurate figure.
In that event the figures can be revised as io1lolk Standing charges, plus overtime, plus establishment expenses, as before, £180. Running costs for 9,216 miles (16 vehicles, 96 miles•per day, six days per week), £307. Total weekly cost, £487. The yardage per week is 2,304 and the revenue from that, at 5s. 6d. per yd., is £633 12s., which does show a handsome profit.
It would be kind of this operator to criticize my figures, and kinder still if he would let me go along, early in the New Year, to see him and note—possibly report upon—the actual conditions of operation.