Modernising McGill’s

 

 

 

 

 

 

 

 

 

 

Jonathan Welch speaks to McGill’s CEO Ralph Roberts about electrification and the state of the industry post-pandemic.

Electrification is the name of the game at the minute across the country, with operators in the race to fund and introduce the latest, greenest, quietest new buses. What was a very niche technology until relatively recently is rapidly becoming the norm, as big groups look to stop purchasing diesel buses, and smaller operators seek to find ways to keep up.
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One of the largest operators still in private hands is McGill’s, which serves a wide swathe of the area to the west of Glasgow, with operations now covering large parts of North Ayrshire, Lanarkshire, Inverclyde, and Renfrewshire, along with the city of Glasgow itself plus the recently-acquired operations of Xplore Dundee, and which has recently announced two orders for Yutong electric plus one Enviro200EV and 12 Enviro400s from Alexander Dennis. The west of Scotland operation has consolidated its operations to four depots in Greenock, where it is headquartered, Inchinnan, Coatbridge and Johnstone, and has its origins in the family firm McGill’s Bus Services, founded in 1933 and based in Barrhead. Greenock and Johnstone are the largest of those, followed by Dundee with its fleet of around 100, Inchinnan with around 70 and the satellite depot at Coatbridge.

The strong competition between operators in the area post-deregulation is well documented, and following periods of expansion and competition, the firm ultimately found itself being subsumed into Arriva Scotland West in the 1990s. 2001 saw Arriva pull out of its loss-making Inverclyde operations, with current owners the Easdale family initially taking a 50% stake in the revived McGill’s Bus Services as sleeping partners. Brothers Sandy and James Easdale also have interests in property and recycling, with a family history of running businesses.

The 2000s and 2010s saw a lot of change for the company, which grew quickly through acquisitions of a long list of local companies, and although a significant increase in the number of vehicles was authorised in 2010, the year also saw an appearance before the Traffic Commissioners. 2012 would be the year that Arriva decided to quit Scotland, McGill’s taking on its remaining operations a decade after the Inverclyde network. The mid to late 2010s saw the company progress towards the Easdales’ stated aims of ‘doubling’ the size of the company, buying up a number of smaller local businesses on the way. That huge push for expansion means the company now lays claim to the title of the UK’s largest independent operator.

Fleet

Having re-started its life post-Arriva with a fleet of minibuses, the firm built up a mixed fleet of modern low-floor buses, mainly single-deck and including orders for the Mercedes-Benz Citaro for longer inter-urban routes. Earlier buses such as Dart SLFs and DAF SB120s which replaced the step-entrance Mercedes-Benz minibuses have in turn been ousted by staples such as Enviro200s, Enviro300s, Scania L94UBs and Volvo B7RLEs, although minibus operation has returned in to form of modern, low-floor minibuses used on some local and evening services.

The fleet strength is currently around the 600 mark, although in total the firm has authorisation for some 774.

The initial minibus fleet was not all that came from Arriva, with current CEO Ralph Roberts joining McGill’s from the former in 2010. I spoke to Ralph to find out more about how the company has weathered the covid storm, and its plans for electrification as the area edges closer to the COP26 climate summit which will take place in Glasgow in November.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recovery

Ralph explained that in line with the wider industry, McGill’s has seen a significant reduction in passenger numbers, with commuter traffic down around 30% and shoppers by around 30-45%. As numbers rise, he said that it was important to try to stimulate growth and increase passenger numbers. “Once we get back to 80% of pre-covid levels, we need to backfill the capacity,” he said. “If you try and take out 20% of your mileage, you take footfall with it. If you take that route, it’s like pulling a strand of wool, it takes everything down with it. It doesn’t take a lot for a network to unravel. We don’t want to dismantle our business.”

Bus networks do not exist in isolation, he continued, pointing to some of the drastic measures the hospitality industry has taken to survive. Looking at the issue of footfall, he asked: “Will it be too late, if the shops have already closed? Like bus companies, they only have to lose their profit margin. The average is only around 5%. That’s barely enough to feed investment. We’ve had five years of declining footfall, even with chasing efficiency measures. The big groups have all taken different approaches, and they have much higher expectations for their profit margins. We’re a private company, and the owners don’t take anything out. As a private company we don’t have the same shackles that PLCs have. Our owners have a long-term view of the business. They let the management teams get on with it, and give us a good deal more latitude than the PLCs.

Electrification

“There are a number of things going on nationally around electrification. COP 26 was supposed to be held in 2020, but travel restrictions and isolation prevented that,” continued Ralph. The first of McGill’s Yutong E12 buses was on display at the recent ITT Hub event at Farnborough, with the remainder due later this year once they have been delivered to Pelican Yutong in Castleford for fitting out and finishing. “We are keen to reduce the carbon footprint of what we do. Our current average fleet age is 6.8 years, excluding Dundee where it is a little older. We took an investment holiday last year. We had 22 diesels on order, but that was postponed and then cancelled. I don’t think anyone thought the pandemic would last this long. We could have taken an investment holiday again this year, but when buses become too old it has an impact on the business; on engineering, passengers and reliability. We had over-invested compared to some of our peers anyway.

“When the Government announced the first round of the SULEB (Scottish Ultra-Low Emission Bus) scheme we saw the opportunity. We had already evaluated ADL and Yutong products. We chose the Yutong for the range element. That’s not an issue now, but was at the time of the evaluation. We also took into account the layout and the build quality. Lots of people have the attitude that Chinese equals cheap, but those days are long gone. The quality of the product is fabulous. The mindset of the company and its workers is nothing short of fantastic. They seem to take everything really personally. We got feedback from other operators abroad about the downtime, back-up and so on. That really convinced me we’d made a good choice. I’m looking forward to getting them in service.”

Funding

“The first SULEB funding round was in January 2020 and offered 40% of the funding but it wasn’t viable, even over a 15 year life, but we decided we would trial one ADL and one Yutong bus. When the revised offer came through, we were able to apply for funding for 22 vehicles. SULEBS 2 followed quickly, and we decided to just go for it, especially as we will be operating right past the front door of COP26. We decided on another 33, plus we had another 12 for Dundee under SULEBS 1. The key thing is that the infrastructure is included. We will have more electric buses by the time of the COP26 summit than all other operators in Scotland combined. We decided we could either sit and wait for the next opportunity, or have faith in the business. We decided to grit our teeth and do what we thought was right. It will let us transition, and it will let our customers see the future, including those who still drive but worry about air quality as well. It will let us start to upskill our staff to work in a new way, and it gives us experience of managing our fleet in a different way. There will be less downtime and it will completely change how we allocate buses.”

 

 

 

 

 

 

 

 

 

 

Step change

“It will all be done via Zenobe software which will manage the charging rate to maximise battery life, managing the infrastructure and allocation in tandem. There’s lots of new things to get our heads around. This is real modernisation.” Ralph contrasted the progression from pre-Euro emissions levels to Euro VI, which has done much to improve air quality but comparatively little to change the perception of diesel, with the switch from diesel to electric which will be immediately obvious to passengers as well as other road users. The basic shape of the bus and interior might look the same, he said, but the switch to electric will give a much calmer, quieter travelling environment, and a represent a step change for passengers.

The change is not just about the visible or audible one for passengers. “I used to work for Arriva’s rail division,” Ralph continued, “and you could tell blindfolded if you walked into a diesel or electric train workshop. Electrics need fewer man hours and less workshop space for any given fleet size. The new electric buses will be going on three routes. They will carry an updated version of our fleet colours, designed by Ray Stenning. It will be an evolution of the brand, we wanted to build on it, not be too different.”

Fleet presentation in general is also important, said Ralph. “We repaint our buses every three years, and we don’t carry advertising. We have a zero damage policy, buses are not allowed out with any body damage. Every three to six months, the seats are wet-Vaxed which keeps them fresh and prolongs the life of the moquette – although that brings the problem of whether we want to re-trim at 10 years if we’re only planning to keep the bus for 12-13 years. Crucially though it makes them smell clean. You cannot Febreeze your way to cleanliness. You need to clean your way to success.” Floors are properly cleaned too, continued Ralph: “Mops are for wiping away excess water, not for cleaning. It should smell, look and feel clean. I’m passionate about cleanliness. Running buses is a very basic business,” Ralph continued. “there is lots of tech involved but when it comes down to it if you have a decent product with a professional and friendly driver, and it arrives at the bus stop on time, that’s 75% of the battle won. If you’re using branding, it has to be good and on the right route, and has to be backed up.”

 

 

 

 

 

 

 

 

 

 

 

Expansion

Turning to the subject of the firm’s expansion, Ralph said that the acquisition of Xplore Dundee had been a part of this strategy. “We looked at Xplore Dundee in 2018 but it didn’t come to anything. The opportunity presented itself again, and it came as a surprise to most because of the speed. Dundee is geographically a perfect city for bus services given its air quality problems and inward investment. We felt it had a good future. Our plan is to grow the business and make it sustainable, but it has to be sustainable before it can grow.

“We worked with the staff and unions to modernise and implement changes. We carried out a network review. The network was almost unchanged in 30 years, and the city had changed. It was the right thing to do and went hand in hand with the need to modernise working practices. We’re looking at every aspect, including vehicle allocation and specification, the basics, the suitability of the uniform, and the local staff have a lot of good ideas. And you can’t modernise working practises without looking at the fleet. There had been some investment, but there were also a lot of older vehicles left. We have 12 BYD ADL Enviro400EV double-deckers arriving in October, and then hydrogen buses as part of the JIVE2 project due in 2022. Over the two years we will have renewed around a quarter of the fleet.”

Considering the split of electric and hydrogen buses heading for Dundee, Ralph described himself as ‘agnostic’ in terms of energy source, so long as it is clean. “The stumbling block for hydrogen is the lack of fuelling infrastructure and a green hydrogen supplier,” he said, adding that he could foresee the situation changing within three to five years.

“We’ve also brought in newer coaches for the X90 service to Edinburgh airport to replace coaches which were approaching the end of their life. We wanted a new brand for the airport service and brought in Ray Stenning to create it. The coaches are three years old, and we expect to keep them on the route for around three years. When we were building McGill’s we made a conscious decision not just to buy new, it’s not sustainable.”

Exploring more

“We’re looking at two more acquisitions right now,” Ralph revealed. “Both should go through this year if they come to fruition.” He added that geography plays a big part of the decision when looking at expansion. A relatively small operation that was not within a short distance of an existing depot would be too difficult to manage, he said, noting that if it were to be a stand-alone business it would need a minimum of 60-70 buses, with no upper limit. Ralph remained tight-lipped about what those acquisitions would be though – could it be further expansion in Renfrewshire, or is McGill’s looking to start building up its stake in the Tayside bus market? Time will tell.

Looking back at the company’s history, Ralph said that although the Easdales didn’t know buses, they knew business and how to invest: “If you don’t give people what they want, you won’t retain custom, so they started to invest. They bought 32 buses soon after they took over, and things grew from there. By the time I arrived, there were 68 here in Greenock and more at Barrhead, about 85 in total.”

Ralph’s own background saw him spend a decade at Arriva prior to taking up the role at McGill’s, having previously worked for SBG and Cotters Tours, as well as others outside the transport industry. “I started as a management trainee at Eastern Scottish in 1979,” he recalled. “My father was District Transport Superintendent at Eastern Scottish. I always liked engineering, problem solving and managing projects. I had the option of Eastern Scottish or a large haulier. My father’s advice held sway. He thought that they were trying to get freight off the road and onto rail, but people would always need moving. He showed me that it’s important to react not just to plan. If I’ve learned anything in those 42 years, it’s to make a decision with the best information available, make it quick and act on it.”

 

 

 

 

 

 

 

 

 

 

Ambition

Looking at the wider network, Ralph said that he foresaw electric buses such as the Yutong or BYD ADL products as being suitable for around 80% of it in terms of mileage. “Evolution will take care of battery energy density,” he continued, “along with opportunity charging. If we could convert 80% of routes, we would be doing well.” He questioned the SNP’s target of having 50% of Scotland’s bus fleet zero-carbon by 2023 however, and suggested that it would be almost impossible to persuade operators to buy in to that level of investment in such a short timeframe, even if sufficient electric buses were available. Nonetheless, he said that the ambition to move to zero-carbon was exciting. “If we could manage it as a country, that would be exceptional. We have to remember though that bus represents less than 5% of the emissions problem. Cars make up 60%. It won’t make a huge difference but it sets the scene and makes public transport virtuous.”

Looking at the wider political landscape, Ralph criticised the BEAR (Bus Exhaust Abatement Retrofit) programme, which saw funding made available to upgrade older diesel buses to Euro VI standards. “The political aspiration was good, I level zero criticism at politicians for wanting to do it,” he said, “but the results are not meeting expectations,” referring to recent revelations that as a result of spending much time in stationary and slow-moving traffic, many of the buses retrofitted have not benefited as the system does not reach the high temperatures required to function effectively, partly also as a result of older vehicles having larger, unstressed engines which work less hard than newer ones with smaller engines. “The cure is to get traffic speeds up – but politicians are terrified of things like bus priorities. Perversely, when not in the worst-affected areas, where speeds are higher, the system works fine.

“We were the first company in Scotland to operate Euro VI buses in 2014,” he continued. “They were Mercedes-Benz Citaros, the only type available at the time. I love the Citaro product. They’re very reliable, and never in the workshop unless maintenance is due. The uptime is great, the seats are comfortable and ergonomic. The staff love them too.”

 

 

 

 

 

 

 

 

 

Citaros

“We found that it is cheaper to operate a seven-year-old Citaro than a two-year-old Enviro200 if you stick to the maintenance schedule. If you try and treat them like a Dart they will come back and bite you. The general bus industry philosophy in maintenance seems to be ‘fix at the point of failure.’ Compare that with rail, aviation or shipping, where it is ‘fix on mileage.’ Major bus components are usually replaced at the point of need. If you do that with a Citaro it will cost you, but if you maintain it as Daimler says, the cost per kilometre is lower than an Enviro.”

The majority of mileage operated is commercial, with just 2% representing tendered work. And while the Citaros on the longer interurban runs might be the flagships of the fleet, McGills also operates 26 Mellor Strata low-floor minibuses on local services. “We work the minibuses hard,” said Ralph. “We bought them to keep smaller routes alive that wouldn’t support an Enviro200. We use them on smaller routes during the day and at night on routes where capacity is not needed. They are double-shifted. The Mercedes-Benz Sprinters are durable and reliable, and there’s no shortage of parts. We’re starting to replace the engines on some of them, but they’ve covered huge mileages for small buses.

The future

Looking towards the future of the industry, Ralph said the industry is at a crossroads. “It’s a really interesting time. Decisions we make today will make or break how the business fares. There’s a great desire for regulatory change. We don’t believe the only way forward is a deregulated market and can see sense in having a controlling mind. But municipal ownership or franchising is not the only way. People pushing for one method often have a vested interest. My personal hope is that change is borne from a need rather than a dogmatic position.

“There’s a large demand for a London-style model for services and ticketing, but when I hear that I ask why not everything else that comes with it – you can’t just have that. You need all the ingredients for a pie, not just some. London works because circumstances are in its favour, such as the ability to control the number of cars. You can’t have low fares with low footfall. There’s a limit to how low fares can be. Most pressure groups and politicians have no experience of pre-deregulation. They think the money will be there and that somehow the public sector will behave differently to the private one. Roads are maintained to a cost not a standard. Why would buses be different? There is a fear that Covid-19 plus a decline in footfall will push people to a knee-jerk reaction.

“How companies steer their way out of Covid-19 will be critical. There are lots of partnerships with good results. Birmingham is a great example. Others are just a partnership in name, and the results are poor.”

Local conditions are also a factor, Ralph said: “Ask yourself, why is Lothian so good? It has no suburban rail network, and consequently a high footfall and is well-funded. Compare that to Glasgow, which also has a motorway right through it. Electric cars will not solve traffic jams, and we have to remember the social inclusion aspect. Many people simply can’t afford an electric car. Effective public transport is the only way forward.”
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