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An Asian First?

Douglas Fraser | 07:11 UK time, Monday, 25 October 2010

The train now departing Aberdeen is bound for... Shanghai, Singapore or Simla?

It may be some way down the track, but the chairman of FirstGroup, Martin Gilbert, has been thinking out loud about the next stage of expansion for the Aberdeen-based transport giant.

And just as he has taken Aberdeen Asset Management into Asia in a big way as its chief executive, Gilbert sees the east as having potential for Britain's transport companies to expand.

He was talking on BBC Radio Scotland's programme The Business, as it marked the imminent departure of Sir Moir Lockhead from the chief executive's office.

In 21 years since Lockhead led a management buy-out of Grampian's transport operation, it has become a £6bn business, with more than 130,000 employees, and two and a half billion passengers each year.

Derailed

Having expanded through the de-regulation of Britain's buses, it saw an opportunity with rail de-regulation as well. That's been a bumpy track, with a derailment or two, literally and metaphorically.

But on the programme, we heard that the safety lessons learned by FirstGroup from the challenge of modernising Britain's rail network have been useful in building confidence and winning business in the USA.

The company now has 60,000 yellow school buses in the States and Canada, and maintains transport fleets for the US federal and state governments. It also has the iconic Greyhound fleet - a brand it has begun to use in the south of England.

Determined entrepreneurs

Given Scotland's problems with growing companies of scale and global ambition, why is it that it has two such large transport companies in FirstGroup and Stagecoach?

The answer, according to the Financial Times' transport correspondent, Robert Wright, is that this is one sector in which London didn't develop with the rest of Britain. Its buses and the Tube were not de-regulated in the way other British transport was.

In Perth and Aberdeen, two determined entrepreneurs saw the opportunity. So too in England's north-east, where Arriva and Go-Ahead have their roots, as does Sir Moir.

Will FirstGroup remain based in Aberdeen? Sir Moir thinks so. But its new chief executive, Tim O'Toole is based in Philadelphia, and there aren't easy transport links with Dyce Airport. So its roots may not be quite so strong in the north-east under the new management.

While the US remains an area for public transport potential, the idea of Asia is a daunting prospect. Don't bank on a takeover of state-owned Indian Railways any time soon.

But as Stagecoach used to run the bus service in Malawi, back in the 1980s and 1990s, don't be surprised if the transatlantic profile begins to span other continents.

You can hear more about FirstGroup and Scotland's transport sector on The Business.


11.39 update:

As if on cue while looking at the transport sector, Brian Souter has just issued his first Souter Investments report. He seems to have planted his money wisely through the downturn, getting out of property in plenty time, and he's seen a 41% increase on valuation over the past three years, leaving the fund worth £400m.

The idea is to increase his exposure to new investment ideas, so there's a new website to go with this: www.souterinvestments.com.

Half of his investment fund is in Stagecoach, and the only international investments are in transport, with a small footprint in New Zealand. The smaller investments range across online search, bio-medical and mudflap technology.

It's ethical, however. If you've got alcohol, gambling, tobacco or armaments in mind, look elsewhere.

Comments

  • Comment number 1.

    Why successful? The words of alleged exploitation at home & abroad and some creative accounting simply don't apply, aye richt! There might be a few former ripped off employees of one of these successful indigenous companies might differ whit an otherwise rosy picture!

  • Comment number 2.

    Successful?

    Sounds like you're using the criteria for success that the dear darling bankers used to steer us into the economic crisis and very nearly run the financial sector completely off the rails. It's something along the lines of: I'm happy 'cos I'm being paid loads of bucks and the shareholders (which include me, again) are happy because they're getting big dividend payments and !@%$£ everyone else.

    Oh, and the company is getting bigger and we all know bigger is better. (Wasn't that Fred the Shred's view about RBS, too?)

    That old protest song comes to mind ... when will they ever learn? ... when will they ever learn?

  • Comment number 3.

    Douglas Fraser.

    "..Shanghai, Singapore or Simla ... the States and Canada ... Asia ... Malawi.."

    sure, but try to get to anywhere in Europe (or even England!!) for a reasonable fare.

    delusions of grandeur.

  • Comment number 4.

    Might not be as easy to rip off the punters in Asia and the far East as it is in this country where fares are over priced and the punter has no option but to pay up. Also I can't see local government in Asia subsidising fares as happens here so that the companies can stay in business. There will be no concessionary fares paid for from public funds there either.

  • Comment number 5.

    Personally, I'd rather see some political initiative that led to local transport systems being run by community-owned cooperatives rather than large multi-national corporations.

    (And let's not pretend that this, or that, concern is "Scottish" when the truth is it's multi-national. Once thus they are at best Scottish in name only and in this case not even that.)

    If the state of their bus services around my part of the country is anything to judge by, Stagecoach will have go through one hell of a learning curve in terms of listening to their customers and delivering customer-focussed outcomes, if they plan to make any inroads into the Asian markets. It is, after all, the Brits who form nice orderly queues and tell themselves "mustn't grumble, I suppose".

  • Comment number 6.

    I recall that the founders of the Metropolitan Line also intended to offer a direct service to the continent - before they collapsed and had to be nationalised with the rest of the Underground. Vaulting ambition generally precedes a fall!

    PS can anyone remember which London terminus has a list of foreign destinations carved in stone around its entrance?

    Rather like Will Rogers International Airport (also called World Airport) in Oklahoma City nice enough airport but - no international flights and the World bit must be akin to the American usage of 'World Series' (at least when I was last there!)

 

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