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Co-operation between tipper operators
Page 76
Page 77
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THE NEED THE WILL THE METHOD
By N. R. Wynn, vice-chairman, Road Haulage Association IT is the policy of the Road Haulage Association to encourage and foster the formation of co-operative units among its members because it is appreciated that co-operation is necessary in all parts of the road transport industry. This is particularly true among tipper operators.
The concept of co-operation between road hauliers is not, of course, new. The organization of the RHA in functional groups can be cited as an example of co-operation between members who carry on similar functions in the industry. It can be said that the formation of the RHA in its present form in 1945 was a major stepping stone in co-operation in that it brought under one "umbrella" a number of former associations organized either on a national or regional basis. Even the existence of these former associations is evidence not only of the willingness but also of the need of hauliers to co-operate for their mutual benefit and protection.
But this type of co-operation fell short of commercial co-operation except on a limited scale; the concept of co-operation now advanced is commercial co-operation between members of the RBA without the Association entering into the commercial aspect of the co-operation.
It is significant that by far the greater proportion of the co-operative units operating at present are units composed of tipper operators. Possibly the greatest scope for co-operation is to be found among tipper operators. It is quite apparent that their need to co-operate is the greatest.
Why? In order of importance, I would put first the greater utilization of vehicles. Most tipper operators operate only a few vehicles. They depend on quarries, builders and contractors and local authorities to keep their vehicles gainfully employed.
In time of recession and in winter when weather is inclement, vehicles have little work. By combining, other types of work can be undertaken. For example, imports of mineral ores can be and, indeed, are being successfully handled by co-operative units from docks. to factories.
Secondly—and I do not think that tipper operators should be bashful about this or treat it as a subject not to be mentioned in public—co-operative units are able to secure for their members traffic at economic rates: there is ample evidence that the rates paid for tippers have been not only too low but suicidal.
Tipper operators are entitled to a reasonable profit on the capital which they invest in their businesses. By this I do not mean that co-operatives hold the public to ransom. They cannot afford to do so; otherwise customers would soon find it more economical to operate their own vehicles on C licence or support newcomers in the traffic courts.
Thirdly, it is envisaged that the co-operative units will go into the market place to secure for members the benefit of bulk buying available normally only to the larger operators.
Fourthly, a reason which has become important in this present time of economic recession—mutual protection against financial instability of many firms engaged in public works contracts.
Bad debts It is unfortunate, but seems inevitable, that a great many public works contractors enter into large contracts with little or no regard paid either by central government or local government to their ability financially or otherwise to complete the contract with the result that local traders—and, in particular, haulage contractors— are left with bad debts.
By co-operation between tipper hauliers, information can be exchanged which will obviate bad debts being incurred, or if they are incurred, the liability can be shared over a greater number.
I now turn to what may be termed the will to co-operate. Hauliers are essentially individualists and accordingly there is a reluctance to lose some of the freedom of individual operation. This is a barrier to successful co-operation among operators.
If one accepts that there is a need to co-operate, one must be prepared to accept the limitations that co-operation places on one's individuality. For example, certain tipper operators have made a practice of taking on more work than their fleet can perform and sub-contracting the surplus to their fellows in the neighbourhood. They must be prepared to offer this surplus traffic to the unit.
Equally, members of the unit must be prepared to offer not only their availability but also to agree that they will make vehicles available to the unit. In this sense, therefore, it is necessary for operators to accept some limitation on their freedom in order to gain the advantage of co-operation.
Above all, if co-operation is to be successful there must be complete trust both between members and the group and between members themselves. This point needs to be emphasized— there must be complete trust and confidence.
If members are to gain the full advantage of co-operation, they must not be mistrustful either that the group is undercutting rates or that they are not getting a fair share of the work involved. Members must be prepared to accept that the people who run the group will deal with all members fairly.
There are several methods by which existing units are cooperating. Some are merely loose associations formed for a specific purpose—for example, to provide sufficient vehicles to service a short-term public work contract in the immediate locality of the group.
With respect, I do not consider that such loose associations are sufficient to meet the need of the present day.
The RHA considers that the unit should be established as a legal entity separate from the Association and the members forming the unit. This should be in the form of a limited liability company with sufficient working capital to enable it to be a viable business entity separate from that of its members.
The amount of that capital depends on a variety of factors and what the unit hopes to achieve. The RHA hopes that the units will be able to provide services for members in the form of communal maintenance facilities and the bulk buying of supplies.
Obviously the purchase or building of premises requires a large amount of capital. As a guide, it is thought that £20,000 per 100 members is the amount of capital required but this, of course, depends on each unit's individual circumstances.
In practice, it is suggested that the company should be formed with perhaps a quarter or a half of the capital mentioned above with the directors having the right to call up additional capital from the members as the business develops and capital projects are embarked upon.
When deciding the amount of capital to be subscribed by members there is, however, one other important point which must be borne in mind. It is a frailty of human nature that if there is little at stake, interest in the venture is likely to decline. It is therefore suggested that the amount should be sufficiently large to retain the members' interest in what is happening to their capital and, accordingly, the working of the group.
Obviously, care should be taken in the formation of the company and it is strongly recommended that advice be taken both from a solicitor and an accountant. The articles of association of the company have to be carefully drawn and, in this regard, it is hoped that the RHA will soon have prepared a model set of articles.
Number of members
The number of members again depends on a variety of circumstances. To be a viable entity, however, I would think that the ideal number lies between 50 and 100 controlling collectively perhaps between them 200 to 300 vehicles.
Members should be drawn from a fairly compact locality, otherwise, if members are scattered over a wide area, those at a distance from the main centre of activity may find it uneconomical to undertake work for the group.
Once the company is formed, comes the important aspect of the conduct of its affairs. Clearly it has to be controlled by a board of directors. It appears that the ideal number to compose such a board is not less than nine and no more than 12. Even so, it should be agreed that two or three can act in the name of all in the event of an emergency. For example, the manager may wish to consult the directors on a rate for a large or long-term contract. It is often difficult to get hold of nine people.
Subject to policy directions of the board, the day-to-day running of the business should be left to a competent manager without interference from the directors. If they enter into day-to-day management, there is a danger that they may—or may appear to— influence the working of the unit to their own commercial advantage —for example, keeping their own vehicles working instead of sharing work among members generally. Nothing could be more harmful to the mutual trust and confidence which is so essential to the well being of the unit.
Accordingly the manager must be left to run the day-to-day affairs of the unit and to allocate work among the members fairly, bearing in mind only the availability and suitability of each member's vehicles.
Operational efficiency
It is to be hoped that the group will not only undertake surplus work passed on to it by its members, but will also seek large-scale work for which only the group itself can offer facilities.
For this purpose the manager will need to leave his office. Thus he will need some assistance. Initially, it is suggested that this assistance can be in the form of a competent clerk able to undertake the book-keeping and to deal with routine operational matters. As, however, the business grows, additional operational and administrative staff will be needed.
Operational efficiency can be gained if members can be persuaded—or cajoled—into reporting daily what availability of vehicles they have. Nothing can be more frustrating or timeand money-consuming than for the manager to have to telephone members each evening to seek vehicles for the morrow. Where large-scale contracts are involved, it is often necessary to require members to guarantee to provide a stated number of vehicles each day for the duration of the contract.
A further useful rule is to provide that once a member has started work for the unit he should—whether it be good or bad—continue on that work until its completion. With care, the good and bad can be shared out among the members to everyone's satisfaction.
In connection with the formation of the unit there must, of necessity, be many meetings among members or potential members to decide the many issues which are bound to arise. It is also, I think, useful immediately after the formation of the group to have fairly frequent general meetings of its members.
This serves two purposes. Firstly, difficulties are bound to arise and the meetings afford members an opportunity of ventilating their feelings and grievances being satisfied. Secondly, the meetings enable the members to get to know each other and—all important— the manager to get to know the members. And these meetings can play a significant part in building up that all-important mutual trust and confidence.
The RHA is now actively encouraging the formation of these co-operative units and there is no reason why these units should not become members of the Association. Accordingly, it appears reasonable to require that all members of the unit should themselves be members of the Association. The Association can and does give tremendous assistance to the industry. It can do a great deal more if it can be demonstrated that it speaks for all hauliers.
It is hoped that the formation of these units with the encouragement of RHA will now proceed apace. If the numbers become sufficient, there will be a need, which I am sure the RHA will fill, for joint consultation between the various units. This could well be in the form of a functional group for co-operative units.
There can be no doubt that there is a great need for co-operation between tipper operators. Accepting this, and given the will, the method of co-operation, on proper professional advice, can be found.