Is the NFC novi doing a better job':
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David Wilcox has been talking to some c the staff of the National Freight Consortiu about having a stake in their own compar
WHEN the Government agreed to sell the National Freight Company to a consortium of NFC employees, history was in the making. This was to be the biggest ever staff buy-out in Britain.
Within 18 months, the largest road freight transport business had passed from a nationalised concern to an organisation almost totally owned by its employees. The transition went remarkabley smoothly and relatively quickly, thus: June 1980: The Transport Act 1980 gave the Minister of Transport Norman Fowler the power to implement the Government's policy of denationalising the National Freight Corporation. Two months later, the Labour Party warned that if it was returned to power it would renationalise the NFC without paying compensation.
October 11980: The National Freight Corporation's assets, liabilities and business were transferred to the National Freight Company, the shares of which were to be held by the Government until Transport Minister Norman Fowler considered it was the right time to sell the shares on the Stock Exchange.
June 18 1981: Before Norman Fowler had the chance to put the shares up for sale, senior management of the National Freight Company got together and proposed on June 18 1981 to buy the company from the Government and to offer shares to every employee. A consortium of over 100 senior managers had given overwhelming support to the project. The consortium was lead by NFC deputy chairman and chief executive Peter Thompson and the offer proposed was said to be worth in excess of £50m — a carefully pitched figure because it was speculated that the going price would be £50 — £75m. (The assets were later valued at £96m.) Norman Fowler welcomed the offer and encouraged the consortium to press ahead.
19 October 1981: New Transport Secretary David Howell reached agreement with the consortium to sell the NFC for £53.5m. He said: "With this sale, a major road haulage company is being transferred in good run ning order to the private sector where it belongs. The managers and employees acquire a business which they are confident they can run successfully and competitively, entirely free from Government control and no longer dependent in any way on public finance."
A syndicate of six banks was to provide around £50m in loans and equity, leaving £4.125m to be raised by the sale of shares to the 26,000 NFC employees plus the 18,000 ex-employee pensioners. Consortium leader Peter Thomson was confident that this could be done within the time limit set (by 31 March 1982): "Managers, staff and pensioners will jump at this unique opportunity to buy their own company and share in the wealth they are helping to create."
January 19 1982: The share prospectus was launched and the shares went on sale on Monday January 25. Shares were £1 each, minimum of 100. Employees were offered an interest free loan of £200 to help them buy shares. Setting an example, Peter Thompson announced that he would be buying 40,000 shares himself and 12 other senior managers were said to be taking 300,000 between them.
February 22 1982: It took less than a month for the employees to buy the shares. In fact, the offer was over-subscribed and 7 million shares were bought. NFC now stands for the National Freight Consortium.
The final allocation of shares looks like this: Total number of shareholders: 10,233 Number of employees with shares: 8,937 (from a total of 26,000) Average holding by employee share-holders: 719 shares Bank syndicate holds 17.5 per cent of the shares.
July 11982: Shareholders get their first NEC dividend after just three months' trading in the NFC's new guise. The dividend is worth 4.5p per share — that's £4.50 for the minimum 100 shareholding or £32.35 for the average employee shareholding of 719 shares. This exceeds the expectations set out in the prospectus which forecast a dividend of 7.5p per share after eight months trading.
• More importantly, the shares were revalued at £1.65 each.
In the interim results announced at the beginning of this month, Peter Thompson said the first few months of the Consortium 's life showed a "much higher level of interest among staff".
And at the launch of the prospectus in January, group managing director of BRS, David White spoke of a hoped-for "higher level of commitment and an improvement in industrial relations".
Were these sentiments just wishful thinking or is there really a wind of change blowing through the National Freight Consortium? To find out the truth, CM visited an NFC company depot and spoke to the staff.
The depot we went to was a BRS one in Bury St Edmunds, Suffolk. Despite being right in the middle of East Anglia the Bury St Edmunds depot is part of Southern BRS rather than Eastern BRS. Opened in 1978, it is a fairly typical BRS depot — 40 vehicles and a total of 62 staff — and its work is also representative of the company. No less than 23 of the vehicles are running on contract to the British Sugar Corporation and these are all bulk tankers (mainly Leyla Buffalo artics) delivering sul to bulk industrial users such food manufacturers through( the south-east.
A further five small rigids running on contract for Jo Players for local distribution a six vehicles are working smaller contracts. There another six units on gene haulage, The maintenance facilities BRS Bury St Edmunds are at an important money-earner t ing in outside work in addition maintaining BRS vehicles.
We first spoke to a group drivers in the rest room and I c the ball rolling by asking h( they reacted when they wt offered the chance to buy shar in the NFC. "Suspicious" sr Don Leggett, a Buffalo driver the BSC contract. "Sceptici said another driver on the sar contract, Peter Smith.
Both saw the video film th was shown at the depots to plain the share buy-out and th thought it was fairly good a objective.
When the sale of the shar was announced, the large union in the NFC, the Transpl I General Workers Union, had ne out against it. I wondered le union had put any pressure the drivers at Bury St Ednds who are TGWU mems. The answer was No; the mrs had been allowed to ke up their own minds and union at local level did not 3mpt to influence them.
lomething else that may have erred some employees from ping shares in the NFC was Labour Party's one-time aim renationalise without cornlsation if a Labour governfit was returned at the next ction. This posed no threat atsoever, although the drivsaid they were quite aware of Peter Smith summed up their itude: "I might be worried if I )ught the Labour Party was 'thing like a viable party with ;hence of being re-elected." )on Leggett thought that the Dour Party would not dare to nationalise without some sort compensation since it is the irkforce and not a private enrprise company that has ught out the NFC.
Both Don and Peter had ught shares in the end, taking vantage of the interest free in. Don was surprised that ily one-third of NFC em)yees had decided to buy ares: "But I think people's finces are a little tight right The drivers suspected that far ore BRS employees would Are invested if the shares had len in BRS alone, not the hole of the NFC (BRS is among e best of the NFC performers) and Don Leggett went so far to say that if shares were failable for just that particular loot virtually everyone there ould have bought them. None of the drivers said they It any differently since becom g a shareholder; nor did they )tice anyone else acting any fferently.
Interestingly, Peter Smith and a number of other people I spoke to bought shares largely as a job security measure. He was afraid that if the employees did not buy the shares then another large transport company (mentioning no names) might buy out the NFC and rationalise depots, therefore threatening his and others' jobs. So it was not just a financial move or the attraction of be,ng a shareholder in their own company that influenced employees to invest.
There are to be four "dealing days" each year when employees can buy or sell their shares. Don Leggett ssid he would probably be buying some more; the £9 dividend he had got the previous week from his 200 shares was a pleasant surprise and helped make up his mind.
Nick Moss, another Buffalo driver on the BSC contract had not bought shares. He wanted to but his finances would not allow it, even with the £200 interestfree loan. But if his personal position improved, then he said he would consider buying shares at the first dealing day.
Next it was into the workshops to seek the views of the fitters. Malcolm Hines is workshop supervisor and has bought some shares. "But I don't think I work any differently now," he said. Would he be buying any more? "It's too soon to say. Ask me again in a year's time," Fitter John Cone had taken the advice of a knowledgeable relation and bought 200 shares on the grounds that they are a good financial proposition. He intends buying some more when the dealing days come round. His only criticism was that the video information film was a little too slick.
Brian Eves also took advantage of the interest-free loan to buy 200 shares. "But why didn't they make the loan up to £500? If they had I would have bought 500." Brian took Labour's renationalisation plan with a pinch of salt. He had noticed a slight difference in attitudes recently: "People do seem more interested to know what's going on."
A practical suggestion from Brian Eves was supported by the other fitters I spoke to. Why are the share-holders' bulletins (there have been three so far) sent individually to each person's home address? Surely they could be sent in a batch to each depot on a Roadline vehicle, thus saving the postage.
Newest member of the fitting staff at Bury St Edmunds is Jim Batstone who has been with BRS for just three months. He has not bought shares and does not intend to in the near future at least. Jim told me that he likes the idea of employees being share-holders but does not think the financial prospect is good enough at the moment; he's adopting a wait and see attitude.
Douglas Daffern has been a fitter a good deal longer than Jim and said that he had no hesitation in buying 200 shares in the NFC — he would have invested more if he could afford it.
Douglas liked the principle of becoming a share-holder in the company for which he works and is also convinced that the shares are a good financial risk: "We've got in at the beginning; we can't lose".
Douglas had detected a change since the staff buy-out: "Management seem more willing to listen to you these days."
Another fitter, Mark Bloom, had also invested in 200 shares but was rather more impatient for some changes as a result of the buy-out. The main target for his criticism was the Southern BRS head office at Potters Bar which he suspected was remote and top-heavy. But he had still bought the shares so he must have a certain amount of faith in the NFC.
Workshop manager at BRS Bury St Edmunds is Tony McFegan. He has been with the company for 18 months and had previously assumed the NFC to be "struggling like everybody else". He went to London to see a separate presentation for managers explaining all about the staff buy-out.
This sold him on the idea, and his father, who is a member of a share syndicate, advised him that it was a good investment. Tony eventually bought 1,700 shares — about the number it was indicated that somebody of his managerial level should be considering.
As workshop manager, Tony McFegan said he had recently noticed a slight difference in the attitude of his fitters: "There is more interest in the day to day running. It may be only small things like switching off light or pointing out that our heating system in the workshops is rather expensive to run and asking if anything can be done about it."
The NFC share prospectus said that the shares may be offered to the public at large after five years. Tony McFegan would welcome this move on the grounds that it would put the NFC on a more realistic footing and that external investment in the Consortium would help in crease the value of the shares.
Other people at the depot disagreed; they wanted the shares to remain within the NFC employees and pensioners so that they still kept an 82.5 per cent controlling interest, with the bank syndicate holding the remaining 17.5 per cent.
Moving into the offices, I spoke to John Moore, a traffic operator with over 25 years' service with BRS. His initial reaction to the share offer was positive: "Buying the shares is investing in our future. It means we are safeguarding the company by stopping the possibility of the NFC being broken up by another outside purchaser who could have stepped in." So his purchase of shares was primarily a defensive move.
Paula Paske is clerk/typist at the depot and has been there for 18 months. "I thought about buying some shares and discussed it with my husband. I liked the idea of being an employee shareholder but in the end decided not to buy any. I think shares are a long term idea really aren't they? Although I'm not thinking of leaving just yet I won't be here for that long. But I would seriously consider buying shares if I was more careerminded."
Engineer's clerk and computer operator Maureen Wood also decided against investing in the NFC shares. Once again, she liked the principle but her per
sone' finances would not allow it: "I am buying a .house and a car and I just can't take on anything else at the moment, otherwise I probably would have used the £200 interest free loan."
Judging from the staff I spoke to at BRS Bury St Edmunds it would seem that about threequarters of them have taken shares — well above the NFC average of about one-third.
This is probably explained by the fact that BRS is one of the stronger NFC companies and that morale at that particular depot was reckoned to be fairly high.
The main grouse we heard was about the ageing Leyland Buffalo units in the fleet which are due for replacement. (The fleet will be changing quite extensively next year anyway because the British Sugar contract will be demanding the use of curtainsided trailers ii stead of bulkers — the Bury Edmunds sugar plant i switching from bulk to bagge sugar.)
Peter Thompson's claim of "much higher level of interesi was not echoed by everyone 41 spoke to; only a few detected small change in attitudes. But 1 be fair it is still early days an maybe it is unrealistic to expel changes so soon.
Several people reasoned thi the average NFC employee car not be expected to change hi attitude when he becomes shareholder. Many employee have just 200 or so shares and $ any dividend income from ther or increase in their value will a ways be very small in compar son to their wages.
Commented one employee "If I had 40,000 shares like Pete Thompson I would certainl have a higher level of interest i what goes on. But he can't e) pect my 200 shares to have th same effect on me."
The fact that Peter Thompsol and the other senior manager in the NFC bought so ma shares did not go unnoticed la the employees at BRS Bury S Edmunds. It was taken as an in dication that the financial pros pect was good — if Pete Thompson didn't know, wh( did?
Overall, the NFC staff buy-ou seems to have been well-receive at Bury St Edmunds. I found no body who was dead set agains the idea and it was mostly per sonal financial reasons tha stopped those who did not bin shares. A substantial proportior of employees planned to bin more shares when the opportu nity arose.
And last but not least, severa employees said that the public ity gained by the staff buy-ou meant that they were finally los. ing the critical tag — rightly oi wrongly — of working for C nationalised company.