Franchisees for Red Star
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by Karen Miles • Carriers working for Red Star are to become franchised operators taking on ex-British Rail staff, say the new owners of the soon-to-be privatised parcels operator.
Around 80 franchisees based around rail stations will be created by the management buy-out and about 400 of Red Star's 670 staff will be gradually transferred to the new collection and delivery enterprises in the next three years.
The MBO will retain control over the remaining employees in at least a dozen major stations.
The MBO believes the franchise system, with increased commercialisation, will bring the company to profit in two years. Red Star lost £9 million on £46m sales in 1992/93 but has since been rationalised to reduce losses in prepa ration for privatisation.
Most of the 60 private operators now collecting and delivering parcels for Red Star's trunking will be able to apply for the new franchises. The mechanics of the system will be worked out by franchising consultants, but Red Star is aiming to win more sameday and next-day traffic.
Brian Smith, a director of BZW Private Equity, which is backing the MBO, says: "The collection and delivery agents will be able to go into the local market place and generate business."
Transport union RMT wants to meet the new management as soon as possible. A spokesman says: "We're keen to maintain relations with the new owners but it's difficult to see how they can get much more productivity out of the staff unless they all work 24 hours a day—the number of staff has been halved over the past two years."
The MBO deal has been agreed in principle with the BR Board, although Transport Secretary Sir George Young has to approve it in September.