NORTH NORFOLK RAILWAY
HUGH HARKETT, managing director of the North Norfolk Railway, talks about the need for robust business plans and the importance of incorporating contingency measures.
Hugh Harkett on planning ahead and preparing for the worst, and how strategic thinking helps avoid problems
Acouple of years ago I wrote an article for Steam Railway, when it started Inside Track. I emphasised the need for a good strategic plan and a board committed to growth. That growth would only be possible if the business is generating cash. Well-paid staff, and volunteers, were key to our success too.
I would like to look back to the previous article, in 2016, to see if we have achieved what we set out to do, and from that define what we want to focus on in the future. Previously, I placed great emphasis on sustaining a profitable entity and being able to invest in new facilities, trains and services by means of our success. By and large we have been able to do that and we can point to the development of more enjoyable events, improved dining trains, a main line strategy, new customer amenities and a new engineering facility in the space of three years – and it has not crippled us financially, though we have had a ‘perfect storm’ that has eroded our profits. More of that later. What we have also done is provided the economy of the North Norfolk area with employment opportunities, and local businesses with income by virtue of the extra visitors, which creates a huge amount of goodwill among both the representatives of the county and district councils, and the local people themselves. This goes beyond just being a good neighbour and demonstrates our commitment to the Anglia region. That commitment often rebounds in their support for the NNR in the form of grants for capital projects. As an attraction sitting in an area that gets a large influx of summer holidaymakers, we provide a recreational activity that visitors enjoy and which encourages them to return to the area year after year – again adding to the area’s economic well-being. That attraction needs continual refreshment too, of course. A year ago we were proud to win the Savory Award for Best Attraction, but we don’t rest on our laurels. We frequently review our product to ensure its appeal hasn’t diminished. We have developed our special events so that they provide the best possible entertainment for our patrons, yet we make sure that they do not run at a loss. That includes our galas. Just this year we realised that we could make our ‘Thomas’ event even better by switching the stations where we ran the ‘Thomas’-hauled train. It was massively successful, a fact confirmed by the delighted patrons and by our operating staff who found it easier to manage. Next year some key changes are planned for a couple of other events so that they do not get stale.
DINING OUT
When I wrote my previous article we were just embarking on our first main line excursions, in the shape of the ‘North Norfolkman’ dining train running from Sheringham to Cromer, and then to Holt and back. I am often asked about the number of Cromer trains we run. People are surprised when I say that we only ran 12 in the first season and have no aspiration to run these trains more than once a week from May to September (a maximum of 22 trains per season). The reason is very clear. We want to make these exclusive, so we run them as First Class dining trains. We are fully booked through the season and can therefore count on making a pretty decent profit from them without disrupting Greater Anglia services and without competing with them for ordinary passengers. That way we leave the door open for assistance from GA, which we get, and their full support for our enterprise and any operational help we need. So how can we continue to grow our product? The key is listening to what our public want, measuring how each segment of the business performs and acting swiftly to address any risks that might prevent us from achieving our goals. This also takes me back to the point I made in the 2016 article about the beginnings of my tenure on the NNR.
Back then I talked of the need to pull ourselves out of a poor financial position. That was done in
exactly the way I just described – by listening to opinions, measuring performance by segment and taking swift action.
Looking to the future, there are a number of factors which we may encounter that will be large risks to the business. These include lower passenger turnover, availability of volunteers, locomotive failures, key personnel stability and the availability of coal. There are others, but these are the main issues. We tend to factor any risks into our plans to make our strategies more resilient. One example of this is our financial plan, which takes into account an ‘expected’ case for our following year’s budget but also includes a contingency strategy. This takes into account other possible scenarios, such as passenger numbers down by 5%, and the financial implications of that, plus any mitigating factors. But, in essence, this model works for anything that can happen that might be a threat to the business achieving its goal.
UNEXPECTED RISKS
The issue I would highlight first as a major risk to preserved railways – and recognised as such by most of our colleagues at the mainstream railways – is the availability of coal.
Already this year we are facing a small crisis in the supply of good (and by good, I mean to the necessary specification) coal for steam engines. Some supplies have already dried up.
Next year, we are told, the supply of coal outside the winter months (power stations do not burn coal in summer) will be negligible, or maybe even nonexistent. Naturally, with the supply chain being so markedly tight, the price of the commodity will be much higher and again, we are led to believe, the price ‘hike’ could be 10-15%! This may need a more co-ordinated solution than one railway can achieve.
Now I have not mentioned the dreaded ‘B’ word yet – ‘Brexit’ that is. I am neither qualified to comment nor current with the Brexit debate, but it has to be said that this has to be categorised as a risk – if only for the amount of credence given to the effect it may have on the economy. ‘Effect on the economy’ means its effect on us, and the effect may come in the form of people having less money to spend and therefore on holidays. In turn that could mean lower passenger numbers.
At the moment our business is going pretty well, but something like this can trigger changes. And if we see a ‘perfect storm’ as we did over a year ago we need to be fit enough to handle it. We are now managing our way out of that but it was certainly a rocky ride for a while. This year, many of us have been affected by the high fire risk associated with the very hot, dry weather. That has been managed as best we could and, in fact, we are seeing right now a return to a decent position versus our budgeted aims. With a following wind we should recover our position nicely and be in good shape to face a new year of challenges in 2019.
WE FREQUENTLY REVIEW OUR PRODUCT TO ENSURE ITS APPEAL HASN’T DIMINISHED