THE CON­VER­SA­TION

As he charts a course be­tween con­nect­ing com­mu­ni­ties and boost­ing ef­fi­ciency, the new head of BC Fer­ries must also work with a provin­cial govern­ment that wants lower fares

BC Business Magazine - - Contents - By Nick Rockel

As the NDP push for lower fares, new BC Fer­ries president and CEO Mark Collins finds him­self in un­charted wa­ters

Mark Collins grew up in a ferry-de­pen­dent com­mu­nity on a ferry-de­pen­dent is­land: St. John’s, New­found­land. Dur­ing win­ters in the 1970s, the president and CEO of Bri­tish Columbia Ferry Ser­vices Inc. re­calls, store shelves in the provin­cial cap­i­tal would empty as ice kept ships away. That ex­pe­ri­ence helps shape Collins’s ap­proach to lead­ing one of the world’s largest ferry com­pa­nies. Last April he suc­ceeded Mike Cor­ri­gan, who re­cruited him to BC Fer­ries in 2004.

Collins be­gan his trans­porta­tion ca­reer as an air­craft main­te­nance tech­ni­cian. Be­fore com­plet­ing a BA in ma­rine ge­og­ra­phy at St. Mary’s Univer­sity in Hal­i­fax, he went to sea as a ma­rine engi­neer for ship­ping com­pa­nies. Go­ing on to earn an MBA from UBC in 1992, Collins joined the ma­rine man­u­fac­tur­ing divi­sion of Rolls-royce PLC, ris­ing to president of its Ital­ian and Brazil­ian op­er­a­tions.

He ar­rived at BC Fer­ries just as Gor­don Camp­bell’s Lib­er­als were turn­ing the Crown cor­po­ra­tion into a pri­vately run, govern­ment-owned busi­ness. Af­ter al­most nine years as VP, en­gi­neer­ing, Collins left briefly to head tech­ni­cal ser­vices for Mon­treal-based ship­ping gi­ant CSL Group Inc., re­turn­ing in 2014. When he took the helm, the new NDP govern­ment was cam­paign­ing on a prom­ise to cut ferry fares that have climbed more than 30 per cent on some routes over the past decade.

Why does BC Fer­ries mat­ter to the prov­ince and its econ­omy?

We are a life­line to many, many com­mu­ni­ties. We’re the only sched­uled ser­vice in or out, and so we oc­cupy a crit­i­cal place in the func­tion­ing of a com­mu­nity. We have a re­spon­si­bil­ity to live up to the trust they place in us to de­liver re­li­able trans­porta­tion to al­low their com­mu­ni­ties to be vi­able.

How has the cor­po­ra­tion changed since you first joined in 2004?

We’ve been fo­cused on safe, re­li­able and ef­fi­cient ser­vices. The sys­tem was not suf­fi­ciently re­li­able when [Mike Cor­ri­gan and I] got here, from our view, and we’ve worked very hard on that. We’ve spent $2.1 bil­lion on new in­fra­struc­ture since 2004. In the 10 years be­fore 2004, about $1 bil­lion was spent.

That’s not to de­cry what went on be­fore. There were con­straints un­der the Crown cor­po­ra­tion model. The com­pany was up against schools, roads and hos­pi­tals at Trea­sury Board. Un­der the new model, we don’t have those con­straints. We raise our own money, and we pri­or­i­tize the in­vest­ments into the ferry sys­tem.

How fi­nan­cially sound is the ferry ser­vice?

We’re just com­ing off our best year ever in terms of net earn­ings. Traf­fic is up, tourism is strong—the sys­tem has never been busier. Av­er­age an­nual uti­liza­tion on our fleet this year will prob­a­bly be the high­est it’s ever been. But we al­ways need to be cog­nizant that your best year should not be taken to be your av­er­age year.

Since we were re­struc­tured in 2004, [we had] about eight pretty tough years where we un­der-earned. We al­ways had pos­i­tive net earn­ings, but they were far be­low tar­get. And be­cause we in­vested in those years, now we need some strong years to help us pay our debt, to con­tinue our in­vest­ment pro­gram into the fu­ture.

The new govern­ment has pledged to re­duce ferry fares, but how in­evitable were hikes over the past sev­eral years?

The pre­vi­ous govern­ment’s pub­lic pol­icy was to keep their in­vest­ment in the ferry ser­vice es­sen­tially flat, con­stant year-over-year. Which means that as op­er­at­ing costs rose, pri­mar­ily due to fuel and labour and cap­i­tal costs— or amor­ti­za­tion, be­cause we

were buy­ing new as­sets—the cov­er­age of those costs was borne by the fare box. We ap­plied to our in­de­pen­dent com­mis­sioner for per­mis­sion to in­crease fares to cover those in­creased op­er­at­ing costs, be­cause there re­ally is no other source.

In its re­view of BC Fer­ries, do you think the govern­ment will pro­pose big changes to the busi­ness model?

We’ll have to wait and see. Our board of direc­tors has com­mu­ni­cated with the [trans­porta­tion] min­is­ter that we’re ready and will­ing to work with the new govern­ment. We un­der­stand they have ques­tions, and we’re stand­ing by to an­swer them.

The new govern­ment is com­ing from a dif­fer­ent place, and af­ford­abil­ity is a big ob­jec­tive, and so we’ve al­ready said to them, “Yes, there’s ways we can do that.” We see our man­date as pro­tect­ing the in­ter­ests of fare-pay­ers, and so we will be dis­cussing with them any ini­tia­tives that we think im­pact the sus­tain­abil­ity of the ferry sys­tem in a way that would be dis­ad­van­ta­geous for the fare-payer.

How re­al­is­tic is it to ex­pect that BC Fer­ries can build all of its ves­sels in this prov­ince?

It’s to­tally re­al­is­tic, but the ship­build­ing in­dus­try needs to pro­vide com­pet­i­tive pro­pos­als. We would love to build in B.C., but not at any price. If the price to build in Canada gets too high, then you have fare-pay­ers, a rel­a­tively small seg­ment of the pop­u­la­tion, sub­si­diz­ing the ship­build­ing in­dus­try.

How do you plan to keep the busi­ness vi­able for the long term?

We’re very busy hon­ing our com­mu­nity en­gage­ment process. Some­times there’s an im­pres­sion that we make de­ci­sions which ig­nore com­mu­ni­ties. In fact, we don’t do that, but I know why peo­ple per­ceive it that way. So we’re try­ing to im­prove our prac­tice of reach­ing out to the com­mu­ni­ties and mak­ing them part of our de­ci­sion-mak­ing process.

Also, you’ve got to look at our en­vi­ron­men­tal pro­gram and say that be­ing en­vi­ron­men­tally sus­tain­able is im­por­tant. The pub­lic ex­pec­ta­tion now is that we will not op­er­ate at the ex­pense of the planet.

Fi­nally, you’ve got to be fi­nan­cially sus­tain­able, or you’re not go­ing to ex­ist. So we have to find ways to be­come ever more ef­fi­cient. We also have to ex­plain our model to the pub­lic so they un­der­stand why sup­port for the ferry sys­tem is im­por­tant if they wish it to be around for our grand­chil­dren and be­yond.

This in­ter­view has been edited and con­densed

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