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The second of a series of three articles describing take-over procedure in a large haulage group. BY S. BUCKLEY, ASSOC.INST.T.

30th November 1962
Page 48
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Page 48, 30th November 1962 — The second of a series of three articles describing take-over procedure in a large haulage group. BY S. BUCKLEY, ASSOC.INST.T.
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Which of the following most accurately describes the problem?

"As From Tomorrow"

BRISTOL INDUSTRIES LTD., explained Mr. Russell, managing director of Western Transport Ltd., was taken over by the Transport Development Group in July, 1959. It had been founded in 1921 as a holding

company with several subsidiary companies covering a variety of industries including, in addition to haulage, mineral water manufacture (with the initiation of the direct delivery service), cold storage, foundry and machine works. In 1938, Bristol Industries embarked on a policy of , expanding its road transport interests and acquired 10 companies, giving a vehicle strength of 275. Further com panies were bought from 1938 to 1941, so increasing the fleet to 360, and roughly this number was maintained until 1949, when the company was taken over voluntarily by the British Transport Commission.

A further development in the immediate post-war years was the setting up by B.I. of a sales and service subsidiary and also Contract Hire (Car and Commercial) Ltd., although the existing Bristol Haulage Company had always undertaken this type of work.

The development of the warehousing side of the business was, to some extent, affected by wartime activities.

Premises previously used by the Ministry of Supply were

acquired and these formed the nucleus of this section, augmented by rebuilding following substantial war damage

to property in the Bristol area. It was significant, Mr. Russett added, that warehousing had continued to expand with the growth of the road transport fleet.

With denationalization, Western Transport Ltd. was incorporated in 1953 with the acquisition of about 70 special A licence vehicles in Bristol, Berkeley, Birmiegham and London.

Although this number was substantially below the number of vehicles originally operated, the high cost of special A licensed vehicles deterred more rapid redevelopment. Moreover, the contract hire fleet was continuing to expand and now numbered around 110.

Before take-over it was the practice of Bristol Industries to hold weekly executive board meetings at which would be received reports from all the operating companies.

These, in turn, were controlled by a manager responsible to his own executive director, who sat on the Group board.

There were three functional groups within this organization, namely road transport and warehouses, cold storage (which had expanded to several areas), and the machinery company. The several operating companies each had monthly board meetings.

The senior directors of Bristol Industries, when negotiating the take-over, had indicated their wish to retire, and once the acquisition was complete, T.D.G. appointed managing directors to all the operating companies who thereafter reported in respect of those companies to T.D.G.

The boards of the several operating companies were also reconstituted, the number of subsidiary companies within the B.I. group being reduced in due course from 10 to six. There was a reappraisal of administrative -duties and T.D.G. procedure was introduced. Budgetary control, which had not previously been practised, was inaugurated on a six-monthly basis throughout the newly constituted B.I. group in the first few days. An accountant was appointed

to each of the operating companies and in several cases this appointment meant promotion for a member of the existing staff.

B30 The road transport companies were introduced, for tilt first time, to weekly vehicle costings. Prior to take-over the monthly reports on the profit or loss as a whole of thc several operating companies were the only indication ol profitability.

The advantages of weekly costing becarrie manifest to all members of the staff, particularly as a result of individual vehicle costing. It engendered a positive approach tc efficiency, and this atmosphere replaced within a few weeks any feeling of apprehension which some members of the staff might have felt at the time of take-over. Moreover, because the newly introduced T.D.G. systems were not only demonstratively efficient but also simple, these-new arrangements quickly fell into place.

Immediacy is inherent in the T.D.G. system. The chief executives of the road transport operating companies have available results of each vehicle operation for the previous week within four days of its completion. The key figure is the profit earned.per ton of carrying capacity per vehicle.

The accountants of the operating companies also furnish to T.D.G. headquarters various accounting information, such as weekly bank balances and monthly profit and loss accounts. In addition to the six-monthly budget control there is an interim two-monthly budget in which the amount of capital to be expended and expected sales have to be forecast.

Strict Financial Control

In addition to the specific requirements devolving from a strict financial control, Western Transport and Contract Hire also have access to advice on insurance, estate and property matters. In all other respects the chief executives of the transport companies have entire responsibility for the control of all aspects of operation, including approved capital expenditure, licensing, staff matters and customer relationship, in addition, of course, to daily control of vehicles. Regarding approved capital expenditure, Mr. Russett stated that he would normally submit a budget for the follo.wing year in November.

The necessity to obtain T.D.G. approval did not restrict choice of vehicle, he said, and there was no set policy of vehicle standardization within the Group. Nevertheless, within the operating companies some measure of standardization either existed or was being achieved. Western Transport was predominantly involved in long-distance operation and consequently had a large number of vehicles in the quality class.

Because of increasing delays which were restricting the useful employment of rigid vehicles, his company was increasingly turning to articulation as a solution, or partial solution, to this problem. As a similar policy was being adopted. in several of the other T.D.G. road transport companies, interchangeability of trailers was being ensured by standardization of couplings.

Discussing some of the benefits which Mr. Russett claimed had been derived from being a member of a large group such as Transport Development, he instanced the freedom to confer with their opposite numbers on such matters as traffic movement and potentialities, depot working and reciprocal trunking arrangements. Day-to-day long-distance operation of vehicles was facilitated by the wide geographical range of depots of associated companies at which fuelling and maintenance facilities were readily available, moreover at relatively low cost.

Despite these reciprocal and beneficial arrangements, road transport companies within the TD. Group could nevertheless find themselves in direct competition on occasions, and Mr. Russett considers that even this could have a salutary effect on the efficiency of the staffs_

Staff Relationships

Staff relationships have undoubtedly improved since take-over, Mr. Russett said. Because of the new administrative measures introduced, staff knew more precisely the duties they had to perform and each department had its recognized head who, in turn, was accepted as a key member in the organization.

Chief executives of the operating companies are shown due consideration by T.D.G. management and, despite the undoubted strict financial control demanded by,the London headquarters, this attitude is not allowed to prejudice staff relations. Such executives are now permitted to participate in a profit-sharing scheme, whilst the depot manager and depot staff are included in a bonus scheme based on the amount of traffic handled.

Members of the staff are encouraged to participate individually in the success of Transport Development by the purchase of shares, payment for which may be spread over two years. Also, since take-over, an improved pension scheme_ including a life insurance policy, has been introduced and this has given further reassurance to the staff. Longer holidays have also been granted.

Ultimately, however, along with the success of maintaining or improving staff relations, the proof of the benefits of take-over are shown in the upsurge in the financial results.

Commenting on the fact that on the occasion of another take-over by T.D.G., a policy of sub-division and creation of new operating companies had been adopted, whereas at Bristol the reverse had Occurred, Mr. Russett said t h e reason was simple. The prime objective was to increase the profitability of any concern taken over and, although the methods chosen to achieve this end were • carefully selected appropriate to the individual circumstances, the methods ultimately employed still remained secondary to the objective. As an example, Cox's Machinery Ltd., of Bristol, whilst having little or no functional connection with other companies in the group, was nevertheless retained because of its earning capacity.

When showing me round the new offices, maintenance facilities and warehouse depot at the new site at Brislington, on the outskirts of Bristol, Mr. Russett said that this property development was another example of the benefits of access to such financial resources as were available to T.D.G. Previously, Bristol Industries had been renting some of the warehousing accommodation for several years and T.D.G. had now acquired the site outright, along with considerable spare space for expansion as required.


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