More About Maintenance and Establishment Costs
Page 34
Page 35
If you've noticed an error in this article please click here to report it so we can fix it.
Solving the Problems of the Carrier
Answering a Criticism of the Analysis of Maintenance Costs Published in Recent Article : Discussingthe Problem of Allocation-. of Maintenance Costs in a
Mixed Fleet' •
IMUST revert' tci the article on. ''' Maintenance Costs " which was published in " The'Cornmercial Motor" dated . April 13. In particular. I would like operators to refer to Table I, headed ' AnalYsis of Cost of .Maintenance (d):"
Lasked for criticism and I have received it in connection with one of the figures in that table. Unfortunately, this is the wrong 5(44 of criticism—however correct it may be in actual facts–and it comes froin the wrong sort of critic.
The writer says:—" ' S.T.R.' does not appear to be very tyre -coriselouS, for, in his. analysis of jobs on a time basis, attention. to tyres costs merely: 12s. per annum (checking
pressures and removing stones). •
" Tyre Control's instructions skate that tyres should be changed on .the wheels at regular intervals and that, f. where possible, periodical removal of tyres from wheels wank/ provide frequent opportunities for rim cleaning.' " Doubtless, ' s.T.R.. know, ' like every other practical person, that ' armchair ' directions regularly to remove giantl tyres for rim cleaning and changing around are just ' rnoonShine.' to 95 pee cent. of the-country's hard-worked operators hence his omission of the job."
The letter is signed T. R. Parry, and he is a director of T, R. Parry and Co., Ltd., maker S of .Tyreprim, which, I understand, is a dressing for wheel rims, the purpose of which is to, prevent tyres'from sticking to rims. It also prevents rust, • . The Wrong Sort of Criticism
I say this is the .wrong sort of criticism, because I wanted someone to show me that rny maintenance costs were too high,. not too. low: It is. the wrong sort of critic, too, because I ,wanted to hear from practical hauliers. The article .Was_written for a specific purpose, . It was, in itself, an anver to Criticism, widespread and general, from hauliers wee consider that the •figures in -" The •Comrnercial Motor" Tables of Operating Costs are too high, at least, asregards maintenance. The detailed analysis .given in Table I 'in the article, demonstrated that, if anything, thy figures in the Tables were leev rather than high; they indicated that thosehauliers who criticized them were not in the 'habit of 'keeping accurate records of their expenditure in maintenance. ' • . . I .hoped that some of my haulier. critics would respond e by producing their -own costs records to refute mine, so that I could 'argue the point with them, most probably; to the extent of showing -them what they had omitted. None of Ahem has done so, but Mr. Parry,. who is not a haulier, in a sense, takes my side, protesting .that; so far as tyre maintenance is concerned, I have not •allowed sufficient– . The point is well taken and worthy of further discussion. .. Expenditure On tyre maintenance Can be as..bigh a factor in econornical running ai any I know,
1, well remember, some Tears ago, a friend of mine, operating some half a drizen •vehicles, whose experience of tyre wear was appalling. The average mileage was giveu as being from 8,000 to 11,000. We had a long chat about the problem at the time, and I recommended him to pay inure attention to the subject of tyke care, especially in reference to inflation pressures, . regular inspection and inflation, wheel adjustment, and so forth.
Some time elapsed before I met him again. He had taken my advice and was delighted. His tyre mileage was from 20,000 to 25.000, and.he was having next to no trouble on the road, whereas, previously, never a day passed but that
• one or other a his vehicles waslate because of tyre trouble Now, let is reduce this to a matter of pourids, shillings and pence. His vehicles were averaging 40,000 miles per . annum each, a total of 240,000 miles for the fleet. His original cost was, approximately id. per mile: his more recent (prewar) figure was id. per mile; id'. per mile for 240,000 miles is X.500 per annum: What is 12s., 12.0s., or even 1,200s per minutia coMpared with that--and there is no allowance in the foregoing figures for saving of time of vehicles on the road.
The moral vs that, for every penny spent on maintenance of tyres, 410 may easily. be saved.
Following Tyre-rnaintenance Instructions
With his letter Mr:Parry enclosed a booklet of -yre-main-• tenance instructions. It is of interest to see what might be the cost of following these so far as is 'reasonably practical, ,
The first essential point, so far as we are concerned, is the recommendation that tyre pressures be checked daily, have ptovided, for that in my schedule, but made no allowance for its cost. My reason is that, in most well-run • organizations operating up to a dozen vehicles or so, thisoperation is performed by the driver of the vehicle who checks his tyre pressures when be is refuelling.
I should repeat, for-the benefit of Mr. Parry in particular, that, in these articles, I am mainly copeerned.with the problems of the small to niedium-sized undertakings. -Thete. are two reasons for this: (a) The big organizations are assumed to be able to do without my advice and assistance; (b} it is my business to work for the good of the greatest number and; as the average number of vehicles owned by hauliers in this country is 2-1-", it follows that the small Mari, in the aggregate, predominates.
The next operation is alSo one for which I made provision, namely, inspection for stones, cuts, chafing, and so on. I recommended that this be done weekly' and charged an aNerage figure of 3d„ or 12s. per annum, That • is the figure to which Mr. Parry objects.
According to this little hook the driver, on a journey, should stop every two hours and make this inspection. This is the job. I had in mind when 1 said that one would comply with these instructions so far as reasonably practicable. I,do.not•Consider this a practicable recommendation, and I should be surprised if there were more than half a dozen drivers who would follow it, I will go as far as this: As those in authority regard the operation as being so very important, I' will alter my _ analysis to .send " once per day " instead of " once per • week." That multiplies my 12s: by six, and adds £3 pr • annum to my total Of maintenance (d) costs. . Next comes rve.ference to tyre wear e-aused by the chassis being out of condition. Uneven tread wear is brought. -_about by such things as misalignment, brake grab, oval brake drums, worn axle bearings and stubs, and broken ,.-springs, if the full seliedule.,of maintenance be carriedout . according :to Table's I and II accompanying the article in " The Conimercial Motor "dated April 13, these defeets
will automatically be"lemoved or corrected, Although, directly, I allowed only 12s. in the first instance and now 23 12s. against maintenance qf tyres, in actual fact there is
• a good deal mom, indirectly provided for, which goesto reduce tyre wear. •
Now let me see how this addition to the total affects the maintenance cost per mile. The grand, total per annum now becomes £43 185. In the-case of:a vehicle running 200 miles Per week, or 10,000 miles , per annum, the cost per mile 4s-1,05d., instead of .1d.; the figure we had previously..
It is hardly worth 'bothering about, especially having in mind that the extra expenditure may quite easily result in a saving of -Id. per mile in tyre costs.
To raise a point about establishment costs: In the 'article in " The Commercial Motor " dated April 20, in which I -dealt with that sabject, I painted -out that the average total, £783 5s., for a fleet of yehieles, having a total pay-load capacity of 39 tons, was equivalent to 10s. 6d, per ton of pay-load. That, as I •mentioned,' was for vehicles engaged in local work only and was a fair average.. From what has been said -to me since the , article ail:speared, 1 have come to the conclusion that it would be helpful if I enlarged upon tlle
First of all as to how I arrive at_the figure of 105. 6d per tonSimply by dividing
£783 Sc. by 30, for the 30 tans of pay-load, and then by 50, for the 50 working weeks per annum. The actual result is 10s. 5,28ch, but -as it would be absurd to use decimals, I take the round figiire of 10s. 6d.
The fleet comprised two 5"-tormers, one 8-tonner and one 124oniier. The -establishment costs, presuming that the vehicles be all engaged in the same kind of work, which is so in this case, is five times 10s. 6d, for each of the 5-tormers, or £2 12s. 6d, per week; for the 8-tonner, eight times 10s, 6d., or £4 4s. per week; and, similarly, for the 12ktonner, £6 Os. per week. These are the amounts to be 'added to the vehicle-operating cost in each, case in order to find'the total cost. Profit must be added to that.
For example, supposing the average weekly mileage of the p-tonner to be 400. The total vehicle-operating cost • will be about £18. -Add £2 12s. ed. for establishment costs as previously mentioned and we 'get the total working cost: • -,220 12s. 6c1, On ordinary jobbing local work a fair profit is 20 per cent, on the Working cost, i.e., 24 2s. 6d. per liveek. The earnings of that vehicle should, therefore, be £24 '15s. per week, say £25. (I see in The Commercial Motor " Tables of OperatingCosts the figure quoted is 025 Os. The difference is due to the fact that average establishment costs for all ordinary types of operation exceed 10s. 6d. per week.) Weekly Revenue of the 8-tonner In the case of the 84-c:inner, assuming the same weekly mileage, the vehicle-operating cost would approximate to
£24 per week. The establishment costs are £4 4s., and the total. £28 4s. The: profit, at 20 per cent., should be £5 13s., and the weekly revenue £33.17s., or, near enough, £34. I OM that the figure in the Tables is'£34 18a,
or the 12 tonner the t.oiresponding figures are vehicle operating coSts, £28.16, establishment Costs, :26 6s. ; total working cost, £34 13s. ;, "profit, £6 19s.; and revenue, 241 12s. The amount quoted in the•Tables is £43.
Now, here is a point of great importance. In the article on establishment costa 1. gave three sets of figures; the lowest possible, the probable maximum and the probable average. On the basis of per-ton pay-load per week they worked out'at 5s. 6d., 14s. 6d. and 10s, 6d. respectively.
Taking the' 5-tonner again, the weekly establishment costs per vehicle would be 21 7s. 60., £3 12s. 6d., and
£2 12s. 6d. respectively, so that the total working Costs would. be, in the same order, 219 7s. 60., £21. 12s. 60, and gap 12s. 6d. , The revenues, calculated by the method described, should be £25 5s., £25 19s., and £24 ills.
The question which -arises here is: What should he the rate? If it be fixed at £25 19s., the man with the lowest establishment costs can cut the rate by £2 14s. per week and, in my opinion, cut. it legitimately.
If the rate be fixed at 223 Sc., the lowest, the others are not going to be able to make.a profit.
I shall have some more to -say about this difficult and
intricate, yet interesting subject, next week. S.T.R.