While one company prospers from tenders, another has to sell buses, business editor Chris Gardner writes.
Hamilton-based Go Bus will double its North Island depots in January when it puts 130 new buses into operation.
Managing director Calum Haslop, who joined Go Bus three months ago, told a business audience at PricewaterhouseCoopers' Clever Companies function in Hamilton this week that the secret to winning a sizeable Education Ministry contract was nearly five years of planning to match the ministry's tendering cycle, which comes in rounds of six to 12 years. The contract, being formalised this month, means the operator, formed from several small family-run businesses about four years ago, will double its depots from 12 to 24, with significant expansion in charter, school and urban operations in Hawke's Bay.
Construction is under way on 130 new buses, which will increase the fleet by between 30 and 40 per cent in January. The number of drivers will increase from about 200 to 300.
"There's a lot of work to do, but we are quite confident in our ability to deliver this," Mr Haslop said.
Go Bus, and Ritchies Transport Holdings in Christchurch, are two of the clear winners in the tendering process. Go Bus drivers are on the road for 60,000 man hours a year. They drive 10 million kilometres a year and burn 2.5 million litres of diesel. Mr Haslop said the company handled 3000 customer complaints a year, mostly related to buses not running on time.
Nationwide, more than 100 operators have lost their contracts for 2400 school bus routes servicing 65,000 pupils, which is reducing the number of operators from 205 to 92.
Waipawa Buses, which has operated in Central Hawke's Bay since 1970, is among the biggest losers, with all but four of its 70 routes going to Go Bus. It will sell 120 buses and lay off 100 staff.
Neil Dobson, who runs Dobson Motors in Te Kuiti, said his bus company was losing eight school routes but retained five. "I have already told eight of my 22 drivers that I will not be able to keep them on. While they don't like it, they understand it is not my doing," Mr Dobson said.
The company was told by the ministry that to have a chance of renewing its contract it would have to upgrade its fleet, so it ordered two new buses. The first, which cost $245,000, arrived two weeks ago.
"It is going to be hard to absorb the cost when we have effectively lost more than half of our business," Mr Dobson said.
"One guy, Clarrie Hanson, who does the Otewa School bus run, has been with us for 28 years. He was part of the community, he knew the kids, their parents and the community. It is the personal touch they are going to lose with these big companies."
Mr Dobson said his company gave donations to school galas and prize-givings every year, because it was rooted in the company, but couldn't imagine Go Bus doing the same.
Dobson Motors had not heard why it missed out from the ministry. "We were in the top two per cent back in April. We have done everything the ministry asked, and we still missed out."
Allan Turley, who runs Turley Motors in Te Aroha, said his business would lose two out of seven routes and two drivers. One would retire at the end of the school year, and the other had found work with a Morrinsville bus company. Karyn Coxhead, who operated Bus With Us, in Thames, with her husband Chris, said the business would not be affected by Go Bus's expansion.
Mr Haslop said during his presentation: "We knew this (process) was going to happen and we have been planning for that for four or five years." His favourite saying, quoted by Harrison Ford in the latest Indiana Jones movie earlier this year, was "you don't take a knife to a gunfight". "We don't do that," he said.
"We have taken a systematic approach. We don't pick our growth targets by throwing a dart at them." Another secret, Mr Haslop said, was hiring "high octane" staff with "fire in the belly".
He could have been talking about himself, captivating the audience with joke after joke at the presentation, explaining that he had left his pin-striped suit at home because the last time he had worn it was at a funeral. "I'm hoping for a better outcome tonight," he joked.
"There's a lot of irony in having a bus operator talk at a seminar on clever companies. I am not sure that people relate to bus companies as being clever, and I am not sure that we would see ourselves as being clever. The main driver is on the need to lift the game in passenger transport. "Passengers are needing more in quality and service and the Ministry of Education has demanded a higher quality of vehicle."
Mr Haslop said Go Bus would not have been able to attract equity partners, as it did last year, had it not had a guaranteed cash flow from contracts or a strong, clear, definitive business plan.
"We do put a lot of stock in the detail of our planning. Without that plan there would not be Go Bus."
Mr Haslop would not be drawn on the split between ministry and regional council contracts across the North Island, nor would he say how many services Go Bus would operate from January. He said the company had won the contracts because it was competitive and capable.
But Garry Hetherington, regional transport organiser for the National Distribution Union, said the company was paying drivers between the $12 an hour minimum wage and $13.51, and the union was about to start negotiations seeking more than $17. "We are talking about drivers who have been with the company a long time and who are expert drivers," Mr Hetherington said. "You are not going to keep them if you are paying them a minimum wage."
Mr Hetherington, who represents about 70 per cent of about 200 Go Bus drivers, said the coverage clause in the collective agreement would need to be updated to include depots outside of Hamilton.
"What it means for our drivers is more opportunity," he said.
CAPTION: GOING PLACES: Go Bus drivers are on the road for 60,000 man hours a year. They drive 10 million kilometres a year.
Picture: Iain McGregor