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Corporate CalMac

Board Meeting Minutes November 2014

CalMac Ferries Limited

Minutes of Board Meeting held at The Tontine Hotel, Greenock, at 9am on Monday 10 November 2014

___________________________________________________________________________

Present:                         Mr D C McGibbon, Chairman

                                      Mr M Easton

                                      Ms P J D Stark

                                      Mr J Stirling

                                      Mr A V Tait

                                      Mr M Dorchester

                                      Mr R L Drummond

                                      Mr S A Ure     

                                     

In attendance:               Mr R Hadfield, Scottish Government (Assessor)

                                      Mr B Fulton, Operations Director       

                                      Mrs C Craig, Commercial Director

                                      Mr A Collier, Chief Risk Officer

                                      Ms C Roberts, HR Director, David MacBrayne HR (UK) Ltd

                                      Mr C P Paterson, Board Administrator

 ___________________________________________________________________________________

 

1.         PRELIMINARIES

 

Mr McGibbon noted apologies for absence from Mr S Hagan. He welcomed Mr Hadfield, Mr Fulton, Mrs Craig, Mr Collier and Ms Roberts to the meeting.

           

1.1       Declarations of interest

 

There were no further declarations of interest, other than those previously made and known to all Directors.

 

 

2.         MINUTES/MATTERS ARISING

 

2.1       Minutes of previous meeting

 

Operational Performance update.

1.1.12 Mr Stirling noted that it would be preferred if reference to him compiling a paper was deleted as the topic was being addressed in another manner.

 

Subject to the foregoing amendment the Minutes of the Board Meeting held on 20 August 2014 were approved.

 

2.2       Matters arising

 

There were no matters to record.

 

 

3.         CHAIRMAN'S REMARKS

Mr McGibbon was pleased to note that the Company had now taken delivery of MV Loch Seaforth.

 

Mr McGibbon thanked Mr Dorchester and Ms Roberts for the efforts towards achieving the recent Pay Deal. Mr Dorchester indicated that the Minister for Transport and Veterans, Keith Brown, MSP, had been pleased about the discussions held with the recently appointed RMT General Secretary, Mick Cash. Mr Dorchester hoped that the Company could benefit from a similar opportunity.

 

Mr McGibbon enquired of Mr Hadfield if the Build Contract for the latest hybrid ferry had been concluded. Mr Hadfield responded that the Minister had signed a Contract with Ferguson Marine Engineering Ltd. Mr Dorchester noted that the Company would consequently await sight of the Charter Party and Build Contract documents.

Mr Ure noted that ports required significant infrastructure improvements in the case of whichever route the new hybrid vessel would be operated on. He also noted that the Minister had announced the tenders for two new 100M ships and that the PQQ had been issued, with the ITT expected at the end of November 2014.

 

Mr McGibbon noted that the Company had hosted its inaugural CalMac Travel and Tourism Conference in Oban on the 28th October and it had been a great success. He was pleased to note the attendance of the Cabinet Secretary for Rural Affairs, Food and Environment, Mr Richard Lochhead, MSP, as well as delegates from other countries.

 

4.         OPERATIONAL PERFORMANCE REVIEW

 

MANAGING DIRECTOR'S SUMMARY

 

Mr Dorchester presented his paper.

 

1. OPERATIONAL PERFORMANCE UPDATE

 

1. Safety and Environment

 

Mr Dorchester noted that there had been one RIDDOR and six MAIB reports submitted in the last period.

 

1.1.6   Mr Dorchester noted that the investigation and matter regarding HMS Dauntless was now closed.

 

1.1.7   Mr Dorchester noted that the Audit team had been working hard to close out non-conformities and there was less tolerance of carried-over items.

 

1.2 Key Business issues

 

1.2.1 Safety campaign

Mr Dorchester noted that an overview of the Aristos safety leadership programme created by the Wood Group would be presented later.

 

1.2.2 Weather

Mr Dorchester noted that the considerable increase in weather cancellations and the long-term weather forecast would provide a challenge in managing potential disruptions.

 

1.2.8 Stornoway

Mr Dorchester noted that the Stornoway Port Authority had released a recent estimated works completion date of 15 December. Mr Ure noted that the approaching dates of the annual overhaul of the MV Isle of Lewis, the reinstatement of the MV Clipper Ranger's ramp and the refurbishment of Ullapool Linkspan would prove to be additional challenges due to the anticipated timing of the Stornoway works completion.

 

The Board discussed the Stornoway works and the anticipated completion date.

 

1.2.17 Pay negotiations

Mr Dorchester noted that the Nautilus Telegraph had reported the Unions' agreement to the new Pay Deal before the Company had been advised.

 

1.4 Our people

 

1.4.1 Gangway

Mr Dorchester was pleased to note that Gangway, the Company's digital platform for staff, had been launched. Ms Roberts noted that the platform gave staff the opportunity to receive push messages, arrange on-line meetings, set up communities, collaborate on topics and share work-related pictures and comments. It would also be accessible from staff members' mobiles.

Mr Dorchester encouraged the Board to view the platform.

1.5 Technical

 

1.5.2 MV Loch Seaforth

Mr Dorchester noted that the new vessel was currently berthed at Inchgreen.

 

1.5.6 Vessel replacement strategy

Mr Dorchester noted that Ms Milliken was liaising with Transport Scotland in the matter of the Vessel Replacement Strategy

 

1.5.7 Hybrid report

Mr Ure noted that QinetiQ had been engaged to provide a study on the performance of the hybrid vessels. In response to Mr Hadfield's interest in the matter Mr Ure agreed to provide a copy of the study's terms of reference to him. 

Action1 Mr Ure

 

The Board discussed the reliability of the hybrid vessels and the significantly higher amount of lost operational time over other fleet vessels.

 

1.6 Competitors and Regulation

 

1.6.8 MV Sewol

Mr Dorchester noted that the MV Sewol was apparently carrying three times the permitted tonnage in freight and vehicles. Mr Easton noted that the Company should reinforce support to ship and port staff for ensuring that goods vehicles' weights were checked on weighbridges. Mr Ure noted that the Company did not put any commercial pressure on Masters to convey any particular vehicles.

 

2. Strategic Developments

 

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

2.7 A&BC Forum

Mr Dorchester noted that he and Mr Drummond had attended the Argyll & Bute Council's Economic Forum and awaited news on what actions would result from it. He would advise the Board of anything appropriate in due course.

 

4. Outlook

 

5. Civil engineering

Mr Dorchester noted the significant amount of civil engineering works that would be carried out in the network over the next three years and that the Company would be planning for each project.

 

Additional discussion

 

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

The Board discussed how Audit preliminary results could be shared.

 

FINANCE REPORT

 

Mr Drummond presented his paper.

 

Key financial highlights for FY 14/15 6 months.

 

Mr Drummond presented his report.

 

Mr Drummond noted that the report presented the financial performance of the Company for 6 months to date. The performance showed a positive variance ahead of plan, being 4% ahead of plan due to a successful summer.

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

CHFS Contract year 7 update

 

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

Mr Drummond emphasised that the figures provided for Contract Year 7 provided a provisional base case to be signed off and to be subsequently used as a basis for Contract Year 8.

 

The Board discussed the matter of costs arising from performing new and additional requirements, noting that whole life models would help inform the business in respect of new tonnage operational costs.

 

5.  PROGRESS FOCUS

 

PORTFOLIO OVERVIEW

 

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

The Board enquired about whether or not the table represented benefits and Mr Drummond responded that benefits would be tracked. Mr Dorchester noted that a paper describing what will be delivered and how would be brought to the Board in due course.

 

Mr Collier expanded on Project Anchor's progress, noting that the contractor had been on-site conducting ground investigations. He noted that it had been stressed to CMAL and the Contractor that Wemyss Bay would not be released for the planned refurbishment until the Gourock upgrade was complete.

 

Mr Drummond noted some welcome progress with Project Ecoship as procurement for the Ships Energy management System was now being re-tendered. It was of interest that there was anecdotal evidence that some ship's crews were competing over who could burn less fuel.

 

CHFS BID UPDATE

 

Mr Drummond noted that the Transport Scotland Procurement Team had started work on a competitive dialogue process for the Tender Competition.

 

The Board and Mr Hadfield discussed a competitive dialogue approach to the Tender and its effect on the process. It was recognised that care had to be taken on how to respond to Transport Scotland regarding the bid process. Mr Drummond indicated that he would circulate a proposed response to the Board for comment.

Action3 Mr Drummond

 

As an example of a service not captured in the current Contract, Mr Drummond highlighted Retail Operations.

 

6.  PRESENTATIONS

 

Ms Sumner, Ms Daniels, Mr Taylor, Mr Main and Mr Slorach joined the meeting.

 

DML CUSTOMER MATURITY - IMPROVE CUSTOMER EXPERIENCE
 

Mrs Craig introduced an overhead projection presentation.

 

Mrs Craig outlined how the Company was focusing on improving the Customer Experience and noted that a Working Group had been set up to examine current travel.

 

Mrs Craig noted that the customer experience needed to be viewed differently in order to improve it. She noted that it was not currently included in the Corporate Plan but that it should be considered. A lot of initiatives had already been introduced but there still some gaps. She noted that customer evidence is important so that it can be seen that the Company will introduce improvements that have been requested.

 

Mrs Craig noted that customer research is not generally available from other sources as a comparator. Listening to customers was important. Social media such as Twitter gave the opportunity for the Company to respond quickly and address negative comments. The Company's YouTube channel currently has 120 videos which inform customers.

 

Mr Dorchester and Mr Collier left the meeting.

 

Mrs Craig noted that it was important to be more focused on how to improve the customer's journey and more initiatives would be developed and introduced to address this.

 

CUSTOMER OPERATIONS

 

Ms Sumner introduced an overhead projection presentation.

 

Ms Sumner also introduced Ms Daniels, Mr Taylor, Mr Main and Mr Slorach who were either based at, or were employees of, the Contact Centre. Each gave a small presentation on their roles and contribution to the operation of the Contact Centre or the Company's operations.

 

Ms Sumner indicated that awards for customer excellence were being considered as one way of encouraging staff effort at the Contact Centre.

 

Mr McGibbon thanked the Ms Sumner, Ms Daniels, Mr Taylor, Mr Main and Mr Slorach for their presentation.

 

Ms Sumner, Ms Daniels, Mr Taylor, Mr Main and Mr Slorach left the meeting.

 

Mr Wood and Mrs Dyer joined the meeting.

 

Mr Dorchester and Mr Collier returned to the meeting.

 

SAFETY ORIENTATION TRAINING

 

Mr Wood introduced the Safety Orientation Training presentation. Four Safety Orientation Training video modules were shown to the Board.

 

The Safety Orientation Training consists of a number of videos which a user is required to watch, starting with introductory videos from Mr Dorchester and Mr Stirling, followed by selection of videos addressing various ship and port operations with a subsequent multiple choice questionnaire. The correct selection of the correct answers results in a Course Completion Certificate.

 

            Mr McGibbon thanked the Mr Wood and Mrs Dyer for their presentation.

 

 

Mr Willison-Gray and Mr Black joined the meeting.

 

7.         ANY OTHER BUSINESS

 

COMMUNITY BROADBAND SERVICES OPPORTUNITY

 

Mr Drummond introduced the paper and noted that Board approval was sought to agree funding for Contract bid strategy, preparation and initial bid submission.

 

Mr Willison-Gray noted that 85% of the population currently has access to BT's network. Rural communities however are well less well served. Local rural and remote communities across Scotland were being encouraged by Community Broadband Scotland to develop solutions.

 

The proposal suggested that the existing broadband network built by Horsebridge Network Services for the Company could be extended to rural and remote communities as a separate business opportunity in a joint venture with David MacBrayne Ltd. More customers would provide economy of scale savings.  

 

Mr Willison-Gray noted that the Contract award would be announced in March 2015. He advised that the Contract was estimated to break even in 2 to 2½ years. Mr Drummond noted that a main risk was not capital costs but ongoing running costs.

 

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

Mr Hadfield noted that he would follow up the proposal bi-laterally and would review resource and costs. Mr Drummond noted that the venture would be entirely funded by David MacBrayne Ltd.

 

Mr McGibbon noted that the Board approved the submission of the bid in principle.

 

Mr Willison-Gray left the meeting.

 

MARCHWOOD OPPORTUNITY

 

Mr Drummond presented the paper.

 

Mr Drummond noted that the business opportunity was now being presented to the Board for 'Go/No go' approval. He noted that the PQQ process had been completed and the joint venture was one of three successful applicants from 15 original submissions. The opportunity was set up as a joint venture with an external company, GBA Group, which provides logistics services to motor manufacturers, shipping lines & the renewable sector.

 

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

Mr Black noted that in terms of the current proposed bid, PwC had been advising the MoD, resulting in a robust bid process. The MoD was principally looking at outsourcing tasks to release armed forces from handling and logistics tasks.

 

Mr Black noted that GBA Group currently enjoys 75% of the vehicle shipping market and had not lost a contract once it was secured. GBA Group also had port operations and logistics experience.

 

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

Mr Drummond and Mr Black outlined further positive aspects of the bid and noted that [FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

Other potential bidders had been identified. Mr Drummond highlighted that the joint venture holding would be on a 50/50 basis.

 

The Board discussed the joint venture proposal. Mr Dorchester emphasised that the CHFS Bid was the main focus and that the Marchwood Bid would not detract from that. Additional resource would be brought in as and when necessary.

 

Mr Black noted a timetable challenge and indicated that a prepared Bid would need to be put to the Board in December.

 

After further discussion, the Board approved the preparation of a detailed bid paper.

 

Mr Black left the meeting.

 

FURTHER BUSINESS

 

Accessibility Fund

Mr Hadfield noted that the Minister had announced that a new £500,000 fund had been launched to improve accessibility on Scotland's ferry network. The Fund will be open to bids from the public and private sector, and Mr Hadfield hoped that the Company would consider submitting a bid.

 

Dunoon/Gourock Steering Group

Mr Hadfield noted that the Deputy First Minister, Nicola Sturgeon, MSP, had attended the meeting. He noted the unfortunate timing sequence of the CHFS and AFL Contracts.

 

Northern Isles Contract

Mr Hadfield noted that RBS Leasing had announced it interested in making the current vessels available for leasing for the next Contract. Local Councils were keen to see new tonnage however, but there were constraints in operating larger vessels from Aberdeen Harbour. 

 

Corran Contract

Mr Hadfield noted the possibility that the Contract might be let to avoid conflicting with State Aid rules. 

 

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

9.         NEXT MEETING

 

To be held at Gourock on 4 March 2015.

 

CALMAC FERRIES LTD

 

BOARD MEETING ACTION POINTS

 

Meeting

Action No.

Responsibility

Topic

Action

10/11/14

1

SU

Hybrid report

To provide the report terms of reference to

Mr Hadfield.

10/11/14

2

RD

CHFS Contract year 7 update

Circulate Board with paper presented at meeting with Mr Lee Shedden.

10/11/14

3

RD

 

[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]

 

 

 

 

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