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Reducing costs while preserving safety - can it be done?

Discussion in 'Heritage Railways & Centres in the UK' started by geekfindergeneral, Sep 23, 2013.

  1. Merlin

    Merlin New Member

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    Maximum profit however you express is should be the objective and that requires attention to both income and costs. The simplistic chase for turnover is folly giving an illusion of success.

    For example the Embsay & Bolton Abbey railway had the second highest income in the UK from Thomas events. But the costs rose to the point where the profit was miniscule. So they dropped out this year and ran a normal service. They have made more profit this year on income only 10% of that when running the event plus having a hidden gain in reduced wear and tear on the equipment and a significant gain in time not needed to organise and staff the event. Of course each decision has to be taken on its merits. It also needs some courage to change a 20+ year pattern of events and appear to be doing less well. I think they made the right call.

    On my little railway we review each event on the criteria of how much the net financial benefit will be, how much call there will be on staff & volunteer input and any special risks that the event raises. In reality the call on our human resources is sometimes more important than the financial return. The railway being privately owned means that these decisions can be made in an objective way and I think that gives us a significant advantage.
     
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  2. simon

    simon Resident of Nat Pres

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    But isn't that the elephant in the room for most preserved lines. Engines are restored using donations and loans and the subsequent steaming fees are rarely if ever adequate to pay for the next overhaul. In a large number of cases, therefore, there is a further appeal for funds for the next overhaul.
     
  3. Neil_Scott

    Neil_Scott Part of the furniture

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    Indeed. Some of the opinions being expressed here are a little detached from the reality of the preserved world. Enthusiasts, for good or bad, will put their own money into restoration projects that they are interested in from a personal, historical and/or emotional level. It would be great if engines could earn enough money for their next overhaul but this has never been the case. People can bang on about 'ticking timebombs' and predict the end of the industry because railways can't, won't and never will earn enough money to renew their assets but as long as people are willing to stump up £200k per overhaul, for example, then steam engines will keep getting restored.
     
  4. Corbs

    Corbs Well-Known Member

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    Do some railways have a constant 'overhaul fund' asking for contributions for any/all of its locos rather than a specific loco's appeal when it has run out of ticket?
     
  5. Neil_Scott

    Neil_Scott Part of the furniture

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    I haven't seen one yet. Most seem to be for specific locomotives which makes it easier to focus the fundraising rather than a general approach. Some organisations are better than others but it's been happening since the dawn of preservation and is unlikely to change in the future.
     
  6. Jamessquared

    Jamessquared Nat Pres stalwart

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    That's what the Bluebell's "Keep up the pressure" appeal is about - it's a fundraising initiative to raise money to restore engines in general, not a specific appeal for a specific loco. It is also (before anyone comments about fragmentation of ownership!) aimed at particular locos deemed to be operationally useful, regardless of whether they are owned by the railway or individual owning groups or owners. I assume that there are agreements in place with each loco owning group to ensure that the railway gets value out of the money it puts in, but I guess that has always been the case. What is slowly changing is a recognition that it is better to raise all the money needed to restore one loco, rather than a third of the money needed to restore each of three locos...

    Tom
     
  7. Bean-counter

    Bean-counter Part of the furniture

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    "Nobody pretends running a heritage railway will be easy" - not my words but those of one of the senior and most widely respected members of our movement, who I won't name publicly as it was a private meeting at which they were said. We are taking lines and equipment which the world of "business" railways have decided some years ago were uneconomic, stripped the "meat" we inherited and are now left with bare bones.

    GFG is very correct to include Civil Engineering in his opening sentence. I suspect the problem with locomotive costs is much more widely accepted and understood than what I actually believe will be the issue that decides which Railways are here in 10, 20 or 30 years time - the infrastructure. You only have to look to Europe to see the number of lines that have been unable to keep up with costs to keep their track and structures in usable condition of which are unable to deal with major infrastructure failures. The preservation movement may seem to have the advantage on one hand that, being branch lines and secondary routes we tend to own (with one or two obvious exceptions), the builders may have been expected not to go mad on grand structures, but at the same time, cheaper solutions to build the line will have been sought and long term problems with bank stability etc. perhaps accepted by the lines' builders and even BR. Look around the heritage railways of the UK, and there are some frighteningly large civil engineering liabilities, often metal bridges, sat there, waiting to catch out their owners. It doesn't matter if a line is 5 miles or 15 (or 25) - if a bridge gets beyond use in the middle, that line is no longer a complete Railway. In many cases, limits on available land will mean that one half may have a MPD and the other half a Carriage Shed but neither is a "complete railway". Such a problem can be worked round for a while - as G & WSR demonstrated very credibly, but only when removing the problem and rebuilding the failed or life expired structure is expected and in progress.

    This underlines the basic problem with Railway economics - and this doesn't just apply to the heritage sector. There is a massive level of fixed costs, regardless of the number miles operated. In order to work on the basis of many European operations - Sundays and maybe a weekday in July and August - a line still needs to have its full length infrastructure in adequate condition for use, facilities to handle steam locomotives and means of storage and a place to repair both locomotives and other rolling stock. It also needs to have an administration infrastructure as any business does, but also with the added requirements of a Safety Management System and associated systems to record and maintain necessary competences and convince the regulator is a safe operation.

    Our financial modelling on the NYMR shows around 1/3 of the costs of the "train operation" as varying with days/miles operated, and around 2/3 as "fixed". (There is, as you can imagine, as constant debate as to how accurate the cost model is, particularly if people forget it is a model and only claims to represent average costs, not a precise record of how much that wet Friday in early April actually cost to run!) Undoubtedly, that 2/3 could be reduced for a Railway running 100 days instead of over 250 for example but it doesn't take long to question by how much - could infrastructure manpower and spend be reduced? How much is cost in these areas driven by usage and how much by age and factors such as weather damage that don't depend on whether trains are running? The same is, as already noted on the SVR thread, very true of elements of locomotive costs. Mechanical wear, both on mechanical parts and on the boiler, is usage dependent but the general age and passage of time is a major factor behind the present massive boiler repair costs.

    Hence, the idea that seems to be gaining some ground that the answer is to do less and make life easier is fundamentally flawed. Simply running lots of trains is not, in itself, a guarantee of filling them, and running empty trains should always be avoided if possible (some are unavoidable positioning moves, although how unavoidable depends on how "out of the box" thinking there is!). The key is to "chase available income" but to do so without excessive or avoidable cost. It isn't easy! Even the busiest days may have lulls. Some lines put lunch breaks into the timetable - even part way through the journey of a train (usually alongside the line's buffet - IoWSR again is very good at this!) but convincing people that even an August Wednesday can afford a gap in the middle of the day has, in my experience, proved almost impossible, and every reason from "there may not be many on that train but the next one is always full, so they couldn't get on it" to "the crews will be bored with that gap" is regularly rehearsed. Sparse timetables also produce fears of staff boredom and concerns for commercial appeal. Passengers will apparently switch from a day when a service is no longer run to one when trains are running much easier than from the 13:10 to the 13:50!
    The scale of infrastructure spend required (For example, the NYMR has spent over £1.1 million on just 2 bridge projects in the last 5 years, and will be spending over £ 1/2 million more on Bridges in the next 5. That is without taking into account other trackwork and structure repairs) means that external help will need to be sought and the generosity of the local community and even local authorities (although their funding squeeze makes financial assistance very difficult for them) will end up needing to be relied upon. Railways following the usual British business approach of contraction at every opportunity, running just a small number of days and a sparse service will be seen as far less use and benefit to the local community and will find attracting such funding much harder. As the local community found after the dreadful SVR floods, a busy heritage is truly indispensable for those businesses around it and that can be a key attribute when times are hard.

    Challenges are many and we are in uncharted waters in terms of the need to repair and replace life expired infrastructure and equipment. The approach must be to spread those fixed costs across the maximum possible business, achieved as cost effectively as possible and with no fear or embarrassment of asking for external financial help with keeping alive a way of travel which became economically unviable around 50 years ago - the traditional steam railway.

    Steven
     
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  8. simon

    simon Resident of Nat Pres

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    I've been on a number of lines in mainland Europe that operate on that basis. They tend not to have staffed stations, or signalling and often only 1 engine in steam - but it would be very interesting to understand how they make ends meet.
     
  9. Sidmouth

    Sidmouth Resident of Nat Pres Staff Member Moderator

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    Profit is an illusion created by accounting entries . What matters is cold hard cash generated from operating activities (and i'll exclude donations etc) Whilst there is a place for what I'll call charitable giving and i'm always a little uncomfortable with the extreme of chasing legacies in peoples final will's as a fund raising avenue, it is not a substitute for running a business that generates a sustainable future cash flow.

    We touched on Crewe, Bury, Tyseley and Carnforth becoming central works , they are still realtively (and I mean no disrespect to their fine engineering operations) small in volume operations . How many engines are in preservation being overhauled at present, and how many do these establishments overhaul in a year ? None of them as yet could potentially cope with the scale , with the volume and turnaround time that preservation could require . They are also reliant on (again) niche subcontractors .

    We have lost the ability in the UK to roll tyres , I think we have no large drop forging business, How many can retyre wheels , What about Castings and pattern making . Do we have a central repository of locomotive patterns . Arsenical Copper and its availability is becoming an issue and yet the potential market in the UK is large and experiments with steel fireboxes so far seems not 100% successful. we have seen stay material imported from Poland and we now add the complexity of validating the quality and metallurgy of the supplied material. Preservation needs to be thinking of protecting and nurturing its supplier base .
     
  10. southdowner

    southdowner New Member

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    Recalling that most of the UK preserved lines were founded and run mainly by volunteers, and have grown into significant employers, with trains running on as many days as possible from Valentine's day to early January, is the key to better overall performance less running and less paid staff & more volunteers?
    For me what matters is the railway and the collection will still be running in 100 years time, with a product range that is both sustainable and successful.

    Reduce to a minimum paid staffing levels in general areas, concentrate and enhance staffing in those specialist areas where volunteers are not available. Enhance volunteer input and consider outsourcing with care telephone bookings and reservations, but only if volunteers cannot cover.

    Close the railway to the public 2 days a week midweek : Why?

    Regular possession of the track and structures for the civils, remove relief staff costs. Concentrate traffic into remaining days, a weekly opportunity to freshen up the public areas, deal and prepare for the next 5 operating days. Be rested and ready for the next burst of activity.

    A seemingly endless cycle of operating days broken down into 5 day blocks with 2 day breaks is suddenly less daunting and more manageable.

    Loco mileage reduction, carriage mileage reduction, maybe the locos will last the length of their certificate.

    With helpful volunteers to lift the visitors day, I'd like the visitors to have more to see and do, to remark how clean, how happy, how interested, how great rather than "bland", boring", "glad to leave". . The range of products is all to do with generating all the money you can, the reduced number of trains run per week could lead to more pre-booking to be sure of being seated as they wish. If demand increases it may be possible to increase the prices, so the cost of cutting those 2 midweek days might be a significant benefit. when taken in the round with the maintenance, presentaion gains, and move the regular passenger traffic from turn up and go to pre-book with all the advantages that brings.

    Nothing in preservation shocked me more than current boiler and firebox renewal and replacement costs, yet steam is essential for these lines now and in future, got to do things differently to do that.
     
  11. geekfindergeneral

    geekfindergeneral Member

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    I am sitting and quietly learning, rather than shooting from the lip as per usual, but I cannot let this one go. It is not "a little detached from reality" to make an informed stab at what the future business model will be and the scale of the cash call the movement will be making even in this generation. If you want to build a future based on an unending supply of wealthy nutcases we are firmly through the looking glass. Wealthy cranks are a dying breed; look at the gang of very flush men who coalesced around the late great Peter Beet in the 1960s, and were able to find enough cash, painlessly, to impress the LMR Stores Controller, Major (Ret'd) Bill Kirby, ex of Longmoor and a hard ,man to impress. You could not today find anything like that degree of personal wealth within the hobby. Name me even a handful of people who can afford to indulge the steamy whimsy these days. Viscount Garnock called engine ownership a rich man's hobby, and he was not joking but back then the steam engines were vanishing. Half a century on, we have perhaps three multi-millionaires. In his day we were awash with them.

    So, can we "bang on about our ticking timebombs" please? I am hugely enjoying the contributions we are seeing here, all very valid, even if we have drifted a bit from cutting costs...
     
  12. threelinkdave

    threelinkdave Well-Known Member

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    I would like to query Geekfindergeneral's assertion that having the Dutchess for the Gala will have caused expensive damage to the track. It is heavy loco at 105t but SKP weighs 92t.

    The question of dropped joints can be resolved. CWR - no joints to drop. The SVR relay through Bewdley tunnel is CWR and PW say it is cheaper to maintain. You loose the dum de dum which in some quarters is controvertial. The SVR is not the only railway to look at reducing joints. 20 years ago KESR welded every other joint on the section north of Northiam creating 120ft rails. It is initiaves like this which will save money whilst maintaining safety.
     
  13. Neil_Scott

    Neil_Scott Part of the furniture

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    You may think that the future of heritage railways is to divorce itself from the chequebook of the enthusiast. This is a worthy and noble idea but I doubt, and I do not foresee, any railway attempting to get by without hard cash injections from those who wish to see their favourite engine restored, a bridge rebuilt so a line can remain open, a station overhauled, carriages refurbished etc etc. Your view of wealthy individuals is slightly out-of-touch. You are right that not many of them exist but it is wrong to assume that the heritage movement cannot generate cash from other individuals such as small donations made regularly. Engines are being built from these types of donations rather than from one wealthy backer.
     
  14. paulhitch

    paulhitch Guest

    If they get completed. Just two standard gauge (apart from "primitives") to date. Meanwhile existing stuff is wearing quicker.

    PH
     
  15. geekfindergeneral

    geekfindergeneral Member

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    Threelinkdave... No Class 8 Pacific is track-friendly, even on a piddly eight caoach train. And no bridge or viaduct on the SVR (or any other heritage line) is exactly Class 8 friendly either. Big engines generate big costs whatever they do and wherever they do it.
     
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  16. b.oldford

    b.oldford Member

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    I'm happy to answer that one.
    To my knowledge there is no real world central repository of locomotive patterns and there should never be one. (It's probably best that way after the tragic event that occurred with the Std 5 cylinder pattern at MHR). However, I maintain a regularly updated list of patterns for BRSLOG which cross references drawing number against owner etc. thus providing a virtual repository whereby members and others may contact the pattern owners to negotiate usage of an existing pattern or obtain a casting from one.
    The SVR publishes its locomotive pattern holding on the SVR Engineering web site. http://www.svr-engineering.co.uk/index.html

    As a result of the BR Standard locomotives encompassing a range of pre-nationalisation components the list has appeal to owners of some earlier engines.
    I'll leave users of the list to comment on its usefulness or not.
    Via HRA I have attempted with very limited success to widen the coverage to include those pre-nationalisation companies starting with what is probably the largest representative group. Those from the GWR and its constituents. The intention being to add others of the big four as time progressed.
    Any such virtual repository can only be as good as its contributors and unfortunately I find locomotive/pattern owners to be a quite variable group.
     
  17. Spamcan81

    Spamcan81 Nat Pres stalwart

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    You make a good point. A friend of mine who is a paid employee on a heritage railway has oft put forward the opinion that some lines could well do what you have suggested, get rid of the salaried staff, scale back operations to a level sustainable by volunteers and probably be financially better off as a result. An interesting hypothesis.
     
  18. threelinkdave

    threelinkdave Well-Known Member

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    I am not disputing that a class 7 or 8 loco wont do more damage than a class 2 or 3. What I was disputing was that having a class 8 loco for one weekend will have caused damage significantly over and above that normally experienced.

    SKP is a bit lighter than the Dutchess but not much. There may be an argument we should not run SKP due to its weight. That discussion, big v small locos, was surely done to death in the Bluebell thread. However we do need to run SKP. Surely the incremental damage of a class 8 against a 7, a difference of 13t would not suddenly cause lots of dropped joints which was your original assertion.
     
  19. 1472

    1472 Well-Known Member

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    I think that this thread should become immediate compulsory reading for:
    a. Those advocating new heritage railways
    b. Those who think that the way forward is to build HR size locos at >£1.5m a piece
    c. Those who moan about things like boxes on the back of one off railtours

    NP would be a better place if the sort of debate on this thread became the norm
     
  20. paulhitch

    paulhitch Guest

     

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