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THE article in narrowboatworld (Thursday 9th February) has set me thinking about this apparent millstone around the neck of British Waterways, which does not generate income but as an edifice on the books, keeps growing.
Why does British Waterways Marinas Ltd (BWML) not show a profit? Perhaps, with an insight into this business, I can indicate possible reasons. I must add that this is purely speculation, as I do not have any direct knowledge of the workings of BWML.
Keep moving forward
Firstly, any successful business, to keep moving forward, must find a niche that sets it apart from others. This is called a USP (Unique Selling Point)—often spoke of on the television programme Dragons Den. Having tried, I cannot see how BWML sets itself apart from other marinas. I cannot see why any moorer would move from a non-BWML marina or on-line mooring to BWML other than convenience of location.
Facilities in marinas do vary, and generally I see that those marinas that are run for large corporations by salaried staff on a 9 to 5 basis often fail to have a full complement of staff on at weekends and public holidays. Strange, when this is the time when most private craft are in need of the service! To have staff available at these times requires extra cost and hence higher prices. This is where owner/operators and family run businesses do have a small advantage.
Red diesel
With large organisations the prices of goods sold tend to be fixed across the whole network and while corporate buying power can lead to lower wholesale costs, it does prevent localised pricing flexibility. An example of this is Red Diesel (that old chestnut!) Marinas tend to be in pleasant rural areas—nice to be in, but hell for traders out of season! Being tied predominantly to selling fuel to boaters the turnover tends to be very slow and seasonal in rural marinas.
Compare this to such as ourselves who are just on the edge of an urban area with builders, farmers and engineering workshops around us who all require Red Diesel (seven days a week). This accounts for over 70% of all our diesel sales across the year and tends to be nearly 100% in the winter. This steady and non-seasonal turnover allows for a guaranteed cash-flow and lower prices.
The profit from diesel is very small on a per litre basis and the office work, insurance costs and storage costs excessive but with a turnover of between 2,000 and 3,000 litres per week, which we have, allows the high outlay on bulk purchase to be recovered in a short timescale. It is worth pointing out here that bulk purchases carry 20% VAT but resale recovers 5% VAT so for a period of up to three months in our case, HMRC, owes us the 15% difference! This is partly why there is such a price variance on diesel prices across the system.
Coal
It is the same for other necessary items such as coal. Residential estates surround us and also being open on winter weekends and early evenings, means that residential boaters from across the area and householders can get supplied. This leads to a turnover of between 15 and 20 25kg bags per week. This enables us to keep our profit margin per bag lower and hence cheaper prices. Rural marinas have only one group of customers.
Engineering services in BWML operated marinas are provided by a third party and are outside the control (other than drawing rent) of marina management. A poor quality engineering service will reflect on the marina as a whole, although a good one is a huge bonus but is outside the remit of BWML management.
Reduction in boats
The last and not insignificant point is that there has been a significant reduction in boats across the system and a steep fall in new boats. Couple this with several large new marinas coming 'on-line', then the density of boat mooring is reduced thus less berths rented per marina. The benefit to moorers is that there can be some good deals available, but the marinas will have reduced profit and in order to meet their cash-flow requirements they must reduce overheads (cut staff and services). This leads to poorer service and poor reputation!
The points I have covered here only touch on the whole subject but hopefully will indicate why I think BWML cannot possibly show a high return to British Waterways in the present financial climate and to invest any further from a very limited budget is far from sensible!
Orph Mable |
