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Andy Milne talks to Moir Lockhead, chief executive of First Group

April 11th 2006

Andy Milne talks to Moir Lockhead, chief executive of First Group

Aged 15 Moir Lockhead went to work as an apprentice fitter for Darlington corporation buses in County Durham.

One day a new girl started work in the office. ‘There were 300 blokes working there,’ says Moir. Unperturbed he asked the girl, Audrey, quite a stunner by all accounts, for a date. The pair were married a year later. Such boldness and good fortune continues to inform Mr. Lockhead’s career at the top of the transport industry.

The first weekend in April saw Aberdeen-based First Group becoming the largest train operator in the UK. The Scottish transport colossus now employs 70,000 people across Great Britain and North America with an annual turnover of three and a half billion pounds. However, the impact on Britain’s burgeoning rail industry is more far reaching.

Taken with Chris Garnett and the Bransonians, Iain Coucher of Network Rail, Brian Burdsall at Northern Rail and Ian Brown at TfL, we now have an industry run by people who are actively passionate about railways rather than simply running rail businesses for share value.

oreover, these are people who can reconcile the alarming arithmetic of railway costs with popular aspiration for better, faster, transport. An expanded railway with new lines, more stations and trains can only benefit railway staff investing their careers in the industry.

‘People ask, what drives me?
In the early days I had no option. I had a wife and family to look after and I was earning apprentice wages. I just had to work all the hours I could and go to college on day release and night school.’ The Lockheads started a family quite soon after getting married and three sons and a daughter later are now enjoying the calmer benefits of grandparent-hood.
‘Of course our families were very supportive, but I think it taught us, me and my wife, that you’re on your own.’ County Durham in the sixties sported a landscape of moribund shipyards and failing coal mines. There was precious little money about.

‘My father always used to say; you make your bed, you lie in it. He was a painter and decorator at the local hospital in Sedgefield. My mother worked at the hospital as a seamstress. They worked hard and never lost a day, not an hour.’ Hard work is a recurring theme.

Moir Lockhead eventually landed a job as a trainee manager for the Tarmac group
‘This was very important because that experience gave me a commercial edge. Coming out of an apprenticeship in a nationalised industry, then going into Tarmac was good but hard work.’ Later he worked as an engineer at Tyne and Wear buses in Byker, Newcastle and then in Sunderland. His big break came in 1979.

‘I moved to Glasgow as Chief Engineer of the city buses and the underground - the clockwork orange. I came into contact with the railway industry. When I got there they’d just rebuilt the thing. My job was to make sure it opened.’

It was in Glasgow that he first met Chris Green, then general manager of ScotRail. Green made quite an impression and, shrewdly, Moir incorporated aspects of Green-thinking into his own portfolio. ‘He was good at getting things done. He was the guy who upgraded stations - all these lovely clean stations, including Stonehaven..’ Green had realised running railways wasn’t simply about time tabling but making trains and stations clean, accessible places, opening them up to new passengers.

‘I was in Glasgow for six years. Then Mrs. Thatcher decided she was going to privatise the whole lot (the bus industry).’ Just ahead of privatisation in 1985 Lockhead moved to Grampian Transport, which was responsible for Aberdeen city buses, as general manager.

Privatisation back then seemed more of a threat than an opportunity
‘At first I was terrified at the thought of suddenly being thrust into the private sector.’ The ultimate fate of the new bus company in the private sector concerned Moir and his friends a great deal. Would they be snapped up by a rival and asset stripped or absorbed into something else?

‘In the end I said, look we should be driving this not fall victim to it. We don’t want to be a victim of privatisation. We wanted to be successful. I remember meeting with the trade unions in Aberdeen and saying, look, we have these options. We can go and look for someone to buy us, someone that we like. We can do nothing and go on as we are or we can buy it ourselves.
This Trade Union guy said, ‘We’re against it.’ I said I’m not asking you about your political views I’m asking you which of these is the best option for the company and for yourselves. He said, well, I certainly don’t want to be bought out and lose my pension and all that stuff and the ‘do nothing’ option wasn’t an option because it was happening. So he said, right, well, let’s prepare.

We prepared and we organised a buy out and much against the odds we did it. People said to us, openly, you won’t survive. People who knew better than we did about our business said we must be mad. I mortgaged my house and other guys did. Staff got their shares for nothing. But I didn’t see any alternative. I thought we’ve just got to give it a go.”

Give it a go Moir and the Aberdonians did, taking a company of 500 staff with 200 buses to a multi national publicly listed company running trains as well as buses on two continents.
With staff commitment and hard work the company performed well. ‘We did a few acquisitions, we bought companies in Scotland and then in the midlands, for example Leicester City Bus, Northampton Buses. We merged with a company called Badgerline which gave us greater scale. We became FirstBus and we listed on the London Stock Exchange. Then in 1995 we bid for the Great Eastern franchise.’

Was this as nerve wracking as the buy out. Apparently so, ‘It scared me! The structure of the railways was so different to what we’d been used to. We had to rely on the quality of the people we’d inherited. We met a fantastic team at Great Eastern lead by Bob Breakwell, who really made sure that we didn’t do anything stupid.’

Many times during this interview Moir Lockhead pays tribute to the managers and staff at all First Group operations. He is a very visible hands-on leader, encouraging and supportive.
Surely taking on railway staff must have come as a bit of a shock? He remains steadfastly loyal. ‘I’ve said many times that I found in the railways some very commercial people, people who you wouldn’t normally associate with British Rail and its reputation. These people were only held back by the structure of British Rail.’

First Group won Great Western and then North West Trains, building a substantial rail business, helped by the acquisition of GB railways. As in most big corporations the question was: Where do we go next? ‘We bought an airport - Bristol - we’ve since sold it. We got involved in bus transport in Hong Kong. Then we realised the most attractive market in the world for what we do is north America.

In 1999 we made probably our biggest acquisition when we acquired a company called Ryder. In fact we acquired the bus operation out of Ryder which was a truck leasing company. They had about 9,500 buses and now we’ve got over 20,000 after six years. Everyday in north America nearly 500,000 school buses operate. We’re the second largest provider of school buses.’

First also manages bus services in Houston, Texas and Denver, Colorado as well as maintaining police cruisers in Washington DC and running a call centre for disabled travellers in New York.

Have the convulsions over Railtrack and the SRA shaken First’s commitment to railways? Not a bit of it
‘I think there’s so much good news on railways in the UK that’s unsung. We don’t talk about it. We have a media which dwells on all the difficulties we’ve had. We’ve been through a very torrid time.

But if you look now at performance on the railway, it compares very favourably with the rest of Europe in terms of passenger growth. We’re growing passengers numbers at 4% to 5% per annum. There’s nothing like that anywhere in Europe.’ Moir pulls no punches when talking about Railtrack, calling it a disaster.

‘Railtrack was a nightmare. It was the focus of everyone’s horror stories. Network Rail is now putting that right and spending an enormous amount of cash to catch up with years of neglect.
Railtrack was a mistake, it was badly managed. Railtrack would have been all right if we’d have had a good team in there. A team that didn’t dwell on their own importance. A team that got on and managed and maintained the railway. What we ended up with was a monopoly landlord who didn’t think the customers had any rights.

You can’t have a tenant landlord relationship all biased towards the landlord. That’s what happened. We paid them an enormous amount of money and we hadn’t a clue how much they were spending.’

Lockhead remains irked that Railtrack could not account for how the access charges were spent. ‘We paid a massive amount of cash and we still don’t know what they did with it. The tragedy is the Great Western railway, which is the classic railway, one of the most important in the country, and was left in a worse condition than the West Coast had ever got into.’

He remains fervently supportive of the Armitt-Coucher axis at Network Rail
‘What we see now is people like Coucher and Armitt getting to grips with massive neglect.’ The industry, he affirms, is poised for greater success. ‘I can see tremendous opportunities to grow this railway even more than we’ve done.

Let’s take First ScotRail. 90% punctuality; this has not happened in five years. The good news stories outweigh the bad news. Investment is improving, punctuality is up, performance is better. What we should be doing is creating national pride in the railway not arrogance but pride.’

Change is always difficult but Moir Lockhead sees morale improving. Haymarket depot at Edinburgh, for instance, once concerned about its future, is now flourishing and is to be expanded. ‘Haymarket depot had just lost faith, they’d lost all hope; I spent a bit of time there.
Are we going to be shut down? No, we’re not and we are now planning a new depot extension with new management and a whole change in the atmosphere. The pace feels more positive and train performance has come back dramatically improving by 20% year-on-year. The result is we are not short of trains, we’re running to time and they’re a lot cleaner. That’s down to Mary Dickson and her team and everyone’s attention to detail.’

First Group is building up a formidable knowledge of railways. It runs every sort of service. Both remaining sleeper services are run by First Group as is Hull Trains, ScotRail, GB Railfreight, Transpennine Express and now Greater Western.

‘There are different needs for different groups of passengers. I think we’re very good at recognising this. A team with people like Dean Finch, in charge of finance and Andy Haines, managing director, UK Rail, has real strength and means we can look outside the box. Let’s not forget the routine daily, hourly, minute by minute running of the trains.’

The parental mantra again: never lost a day, not an hour. ‘But let’s do the clever stuff filling empty seats off peak, looking at how we might price these to give families an opportunity to travel they currently don’t have.

That’s really what the low cost airlines did. They recognised that there was a market here, that was out with the big boys that they could really get into and generate new travel. They didn’t abstract very much at all from the main airlines. They created a new market - and that’s what we want to do.

Moir Lockhead is well aware of the challenge of expanding revenue to meet the mounting payments to Marsham Street over the life of the Greater Western franchise.
‘It’s substantial, no one’s going to argue with that. It’s particularly substantial over the last three years, when we get the new trains. At that point we need to decide if that is a do-able proposition. We think it is.’ Moir points out the last three years are optional and largely dependent on new trains. But he points to a knowledge of the railway itself and where the constraints are on growth and how to grow despite that.

‘Over the time we’ve had the (Great Western) contract we’ve grown it by 50% so we know people will travel with us if we create the capacity. And the greatest strain on growth is capacity. So our attention during the bid was to make sure we could create extra capacity. On the peak we have created 4,500 extra seats and on the evening peak, which is longer, 8,000 to 9,000 extra seats. We have done that by looking at how we schedule trains, putting on HSTs, longer trains, just being clever about how we maximise the infrastructure capacity. We have to use the track effectively.

The same applies to Capital Connect - longer trains, better scheduling, creating thousands of new seats in the peaks.’ Trains will be refurbished, kitted out with more airline style seating - taking out a few tables increases capacity. HSTs are to be re-engined. ‘On some journeys from Bristol we’ll take out the buffet cars. That means the trains can do the journey in eight minutes less.’

Ultimately Britain will need new railways to expand capacity. Lockhead has backed the idea of a new high speed north-south rail link
‘First let’s not get distracted from running what we’ve got and getting better at what we do. That’s what I think Alistair Darling is saying. Let’s not be fanciful. He wants the railway put right. He wants it put right at a price we can afford and he wants performance to be sustainable over the medium to long term.

Secondly the capacity of the railway is limited. We have a mixed railway; everything runs on the same network. In Europe and Japan they have said, we can’t do that effectively. What we’ll do is overlay a high speed railway. What we want to do here is develop the land infrastructure so that we get more capacity without doing what we did on the west coast.’ That is disrupting railway services and spending a great deal of money.

Lockhead is actually enthusiastic about Britain’s lack of progress on high speed rail ‘The unique thing about the UK now is that we don’t have a high speed rail link apart from CTRL. So we have a choice. We can look at the rest of the world and consider going for old technology - conventional railways or look at China and maglev.

How should we connect our major economic centres and what is the impact of doing it using either of those technologies? We’ve got a chance to do it because we haven’t committed to high speed rail yet.’

He goes on to cite the German experience where the heavy rail lobby have made sure high speed rail links will be along conventional lines. ‘I see they’re extending maglev in China. I’ve been on it at 431 kilometres an hour from the airport into Shanghai. I was there last January. It’s fantastic. I was sat there and it was my daughter’s birthday. I rang her in the north of Scotland. A little Chinese guy said, your phone won’t work but then I was saying, ‘How you doing, Claire,’ and she was really chuffed because she thought I’d forgotten!’

Family is important to Moir Lockhead. His children all live in Scotland and his daughter, Claire, works the family farm with Audrey Lockhead. Hardly drawing breath, Moir switches from high speed rail in China to beef cattle in the Grampians. ‘We breed Highland cattle and Aberdeen Angus - we’re in the middle of calving,’ he says proudly announcing the birth of a new calf that morning.

‘I live in a fantastic part of the country. I usually get home on a Friday. I take the weekend off and relax. I’ll say to our team look, you have to have time off. You can’t work seven days a week all year. You don’t get the best out of yourself. I’m very fortunate. I’ve got a great job, the best job in the world. And I’ve got a great family and home life is very important.’

The farm is a haven for wildlife with trout and salmon and otters in the stream. ‘We’re building up to being organic. We produce our own feed, silage and straw. I want the place to be better than we found it.’

It’s a philosophy that underpins his role in railways. Moir Lockhead has gone beyond being in it just for the money. He can and does make a difference. Is there a secret ground plan?

‘No, you just keep going and you meet it every day and you deliver every day what you think is best for the company and staff. If you get that right it’s best for the customers as well.’
Odds on a new high speed rail link between Scotland and London might once have been a thousand to one. Now they’re coming down. 300-1 will be good enough for Moir Lockhead.


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