Dublin Bus plan stresses need for cost reductions to stay viable

A DOCUMENT circulated to unions by Dublin Bus management on proposed changes at the stresses the necessity substantial cost reductions if it is to remain viable.

"The situation now facing the company is serious and urgent," it reads. "Management is currently preparing a strategy to meet this challenge. The strategy will shortly be presented to all staff and will affect us all."

The document is signed by Mr Donal Mangan, chief executive of the company.

Titled Profit, Investment and Competition, the Challenges Ahead it begins by outlining the present situation in Dublin Bus. In 1995 it lost £10.8 million, reduced to £7 million after a Government subvention. The subvention will be down to £2.5 million for 1996, and will be eliminated entirely next year.

Accumulated losses for the company stood at £20 million at the end of 1995, while borrowings for CIE as a whole now stand at £200 million. A reduction of £8 million in Dublin Bus's cost base, therefore, "is needed urgently to restore order to our finances".

From January 1st the company must agree a public service contract with the Government for the provision of "socially necessary loss making services".

In future this contract may be awarded to another company, if it can beat Dublin Bus on value for money and standards grounds. In future, also, the company must generate the money needed to improve services and replace the fleet, the latter put at £14 million a year.

As well as ending the company's status as a state supported monopoly, EU legislation means that, from now on, there will be more pressure to open up the public transport market to competition.

Mr Mangan outlined why Dublin Bus could not compete: profits were not high enough to meet investment demands; payroll costs were "too high"; absenteeism was at "unacceptable levels"; delays and costs associated with achieving changes were "unacceptable"; the accident rate was "too high" while claims costs were "exorbitant"; management and administrative staff numbers were "too high"; 100 per cent one person operations "have not been achieved"; while the quality of the service delivered to the public "is not good enough".

His solutions were general: more profits "to renew our vehicles"; the examination of "all costs" with a view to reduction; and "higher standards" of service.