CALMAC FERRIES LIMITED
MINUTES of BOARD MEETING HELD ON WEDNESDAY, 11 MAY 2016
at 69 Buchanan Street, Glasgow, G1 3HL at 10 am
[FOISA Status - Sections of these minutes may be subject to exemptions under Section 30 (Prejudice to effective conduct of public affairs), Section 33 (Commercial interests) and Section 36 (Confidentiality) of this Act and so may not be included in copies of the minutes made available to the public]
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Present D C McGibbon (DM) (Chairman)
S Hagan (SH)
J Stirling (JS) (Chair)
A Tait (AT)
R L Drummond (RD)
In attendance: A Collier (DC)
Ms J McConnachie (JM)
Ms C Roberts (CR)
C Paterson (CP) (Board Administrator)
P Osman (PO) (Interim Company Secretary)
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1. PRELIMINARIES
1.1 Safety Moment
JS referred to a cement carrier which had sunk recently in the North Sea during a severe storm as a result of embarking on its voyage in dangerous weather conditions under pressure to do so from management. He hoped, and believed, that there was an embedded culture at CalMac that such decisions were for the Master, who is legally responsible for the safety of his/her ship, crew and passengers and that Masters were not subjected to commercial pressure to sail, but free to decide based on navigational and safety considerations. Any such decisions, taken professionally, would be fully supported by management.
1.2 Apologies for absence
These had been received from Martin Dorchester and Peter Breslin.
1.3 Declarations of interest
None were declared, other than those disclosed previously to the Board.
2. MINUTES AND MATTERS ARISING
2.1 Minutes from 22.3.16
Subject to certain minor amendments, these were agreed.
2.2 Action points from 22.3.16
These had all been completed.
3. CHAIRMAN'S REMARKS
3.1 [FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]
3.2 [FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]
3.3 MEDIA TRAINING
DM, SH and AT had attended a day of very successful and positive media training earlier in the month.
3.4 CORPORATE GOVERNANCE CHANGES
PO would be submitting a paper on this subject to the DML Board meeting on 23.6.16.
4. OPERATIONAL PERFORMANCE REVIEW
4.1 FINANCE REPORT
RD referred to this Report, dated April 2016, which showed positive results against Contract for the first half year resulting in a likely clawback for the period of [FOISA Status - Exemption under Section 33 (Commercial Interests and the Economy)] and a net Operator Return of [FOISA Status - Exemption under Section 33 (Commercial Interests and the Economy)]
In addition, staff costs were lower than planned and holding back from starting certain projects had produced the better than expected results. This produced lower costs than had been planned, an encouraging start for the new contract.
For the full year, RD believed clawback could amount to [FOISA Status - Exemption under Section 33 (Commercial Interests and the Economy)] and that the agreed operator profit of [FOISA Status - Exemption under Section 33 (Commercial Interests and the Economy)] should be achieved.
SH asked if clawbacks remained a feature of CHFS2 and RD confirmed that they were, though they were unlikely to be so significant since there would have to be much tighter control of costs, as the risk of the business would fall to the operator and not, as now, to TS. AT asked if bid costs could be charged over a period and RD stated that this was not allowed. Marchwood bid costs would be charged to the joint venture company and so DML would carry 50% of these.
4.2 SAFETY REPORT
DC referred to this Report by Louis de Wolff, dated 29.4.16, and highlighted the following:
Accidents and near misses - broadly, these were moving in the right direction, though crew incidents remained of concern as did the continuing under-reporting of near misses. Crew accidents were the subject of weekly safety meetings.
MV Finlaggan - Following a fault, use of themezzanine deck had been prohibited by the MCA and Louis de Wolff was meeting them today to discover why this action had been taken.
Ullapool - SH requested an update on the Ullapool situation and DC replied that the threat of a noise abatement notice being issued by the local authority had now receded. Both Ullapool Harbour Authority and CMAL had been helpful in this connection and remedial action had been proposed to the three local residents who had complained about the noise problem. DC expressed concern at the consequences of such a notice being issued, the setting aside of which might take many months with consequential effects on wider network service reliability. He mentioned the challenges in engaging with TS on this issue.
DM asked if Louis de Wolff was still introducing the DML Safety Strategy throughout the group and DC confirmed that he was.
4.3 COMMERCIAL DIVISION REPORT
JM referred to this Report and commented that more ticket sales were being generated online as a result of which, over time, the call centre would transition into more of a help centre. She then outlined the other developments in the Report and reflected on the response levels to the Mates Rates and Eejits campaigns of 4:1 and 3% respectively. These were acceptable in marketing terms, Mates Rates particularly.
SH enquired if there was a continuing risk from the Compass supplier and JM confirmed that this had now been abated as this contract was being much more closely managed than before. The Commercial Department were now strengthening the internal oversight of contracts, not the least since this would become especially important under CHFS2.
DM referred again to the media training that had been provided recently (see item 3.3 above) and JM tabled a sheet of very positive feedback comments that had been received and a list of communication materials that would be available when the bid award was announced.
[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]
4.4 TECHNICAL REPORT
The Board noted Peter Breslin's Report from which DC raised the following:
Mechanical breakdowns - a significant level of these had been occurring after overhauls and the reasons for this were being investigated. Part of the problem was that defects were not notified in good time - some had been extant for up to 2 years.
New builds - CFL had now introduced improved monitoring of new builds managed, to some extent, by the use of 'gates' during the course of the construction programme. This had sometimes provided a challenge for CMAL because of the extra delays caused by this technique. Catriona, for example, was now due to be delivered by the end of July, though DC considered that the LNG vessel, with its much more complicated build, would be much later than originally forecast.
Delivery dates - concerns had arisen about the delivery dates for two new vessels under construction which were both due for delivery in 2018, a situation now being discussed with CMAL.
Winter 2016-17 overhauls - these were now being planned, but would be dependent on the CHFS2 bid outcome and its consequences.
AT was concerned by correspondence he had been sent about CMAL's inspection regime for new builds and DC confirmed that a much more disciplined approach to this was now being taken by CFL. CMAL was raising issues with CFL as they developed, CFL responded and, where additional costs were involved, a request was submitted to TS.
DC stated that the Hi-Trans proposal to carry out a 'Smart Sea Route' investigation service, about which CFL had been surprised, was now being revised and so had been put on hold.
4.5 REPORT ON FINANCE, IS AND PROJECTS
RD added to his Report dated 2.5.16 mentioning:-
[FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]
Data storage - SG had asked CFL to promote data storage, since the Company was seen to be in the vanguard of users.
Business Improvement Team - were now introducing new hardware and software in many parts of the Group, so that more staff than before would be fully integrated on a common CalMac IS system.
Recruitment - difficulties remained in locating suitably qualified staff, especially in IS, willing to work in Gourock, in a market with a very short supply of candidates.
AT asked if IS security at CalMac was at greater risk than before and how this was being addressed. RD replied that it was and all the more as CFL was working towards sharing its data more widely. Again, recruitment of a data security officer was proving a challenge.
4.6 LEARNING AND DEVELOPMENT
CR gave a presentation on this subject (the slides for which would be available for those who wished to have copies). She outlined:
Manila - this initiative was being widely applied in the marine industry and, at CalMac, a two year plan had been introduced in Spring 2015 through an outside supplier, Stream Marine. For some longer-serving crew such a training programme was a new experience and they required encouragement to attend the training sessions. Nevertheless, a document of compliance had been obtained for 2015 and 2016 and the MCA had been very complimentary about the way in which the training was being conducted.
Strict discipline was being applied to attendance and a gap analysis, by vessel and position, was regularly produced to keep a careful track of this.Apprenticeships and young people - CFL had introduced a new contract for work experience and was developing with City of Glasgow College a 'modern apprenticeship' (MA) programme, this being a CHFS2 bid requirement across the Group. Although the process had started, CR emphasised how demanding of management these two areas of activity could be.
Two candidates, each with preliminary engineering knowledge, would be joining CalMac shortly for an 18 month Pre-MA engineering apprenticeship.
10 apprentices are committed to in the CHFS2 bid.
A further initiative, to introduce Maritime Skills to Year 5-6 pupils in the Outer Hebrides, had started.Diversity - for CHFS2, an Equality Action Plan had to be in place and this was being worked on. CR noted that, of recent trainee applicants, only 3% had been female. Her aim was to increase the number of female applicants applying to work for CalMac, so that the ability to select on grounds of ability and capability would still be available.
Training - CR hoped to expand Union Learning to a wider audience within CalMac and, to this end, had hired an in-house trainer as a pilot to carry out training on board vessels.
Management and Leadership - these courses, also provided by a third party supplier, had been well received, though were suffering from high cancellation rates.
Volume of training - 5,408 courses had been held in 2015 - 16 compared with 2,900 in the previous year. This showed CFL's dedication to learning and development and how hard HR's L & D team had worked over the past 12 months.
4.7 OPERATIONS REPORT
DC referred to his Report dated 2.5.16 and gave the following updates:
Ardrossan - the Irish berth cannot be used in easterly winds and reports on its condition are under consideration.
MV Isle of Lewis and MV Finlaggan - mechanical failures (oil leak and mezzanine deck embargo) had caused service reductions, but remedies were being pursued. The mezz. deck closure was due, originally, to design problems and should have been addressed much earlier.
Port Ellen - planned work here has been postponed at short notice by CMAL.
Ferry user groups - DC is working to reposition user groups with CFL throughout the network.
DM enquired whether there had been any follow-up from architects who had raised queries about the Brodick redevelopment and DC replied that there had not. The cost shortfall had arisen from unforeseen expenses for a temporary ticket office and related facilities. He noted that there would be no room for compromise on such issues under CHFS2.
Sleat - A long discussion took place concerning the effect on service levels of the new summer timetable to Sleat, which had been the subject of two papers sent previously to the Board. DC outlined the complaints of the community and its representatives and the steps that CFL were taking to overcome these, including contact with the local MP and the holding of local meetings. Indeed, a further community meeting was due to be held at the end of the week, on Sunday, which he and Martin Dorchester would be attending.
He tabled some statistics which, contrary to the views of Sleat businesses, showed that ferry usage had increased noticeably compared with 2015. These had been provided to TS. Nevertheless, DC accepted that there had been an adverse effect on the Mallaig - Armadale route as a result of the new timetable and the re-allocation of vessels elsewhere on the network. To return MV Coruisk to this route would seriously disadvantage customers on Mull, a larger community than Sleat, for example. The arrival of MV Catriona to the fleet would increase capacity for the network as a whole, but this vessel had the same practical problems as the existing ferries for use on this route.
The route, along with others, had been identified as being very difficult to support following the introduction of RET, though the Transport Minister had instructed that current arrangements on Mallaig - Armadale should be maintained. However, a new timetable was about to be introduced, which should provide a more reliable service.
JS asked what announcements were being made about these changes and what lessons should be learned from the situation. DC replied that no specific public releases were planned, though the community was being kept well informed, amongst other means, by way of local meetings, as mentioned above. CFL was continuing to work on promoting the benefits of the service to the wider islands population. As to lessons, DC commented that any future timetable planning should make no assumptions and should start with very basic facts, that weather implications should be considered at a very early stage and that TS and the local community should be kept appraised of these issues from the beginning of the planning process.
The Board noted that the Transport Minister had required existing services to be maintained, accepted the matters that had to be taken into account when planning timetable changes, as described by DC, and that further consideration would be given to ensuring that TS and the local community were kept informed of any such changes.
DC undertook to update the Board on progress at its next meeting.
5. [FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]
6. AOB
6.1 MARITIME REPORT
SH asked whether this CFL-commissioned report was available yet. It addressed the ways in which West Coast and Islands' environmental features might be developed in coming years, for the benefit of local communities. It was confirmed that this had been received and made available on Gangway, but a copy would be sent to SH if he required it.
6.2 [FOISA Status - Exemption under Section 30 (Prejudice to Effective Conduct of Public Affairs)]
7. CLOSE
There being no further business, the meeting was declared closed at 12.45 pm.
D C McGibbon
Chairman