So, what we all feared and indeed expected has now materialised. First Devon and Cornwall has now been forced into the position of no longer being able to continue the operations in Barnstaple, with an onward sale to Stagecoach now off the cards thanks to the decision by the OFT. The press release on the First Devon and Cornwall website states:
First Devon and Cornwall today (23 July 2012) announced plans to discontinue its bus services in the North Devon area, including closure of the Barnstaple depot. The company also confirmed that it has started the collective consultation process with trade unions on the possibility of redundancies.
Firsts bus services in North Devon have underperformed for a number of years, despite the introduction of a variety of marketing and promotional initiatives. The company is now faced with extra cost pressures due to the economic climate and cuts in external funding and routes are now being discontinued in order to ensure the long term sustainability of operations elsewhere.
A range of alternative options including the potential sale and transfer of employees and assets to Stagecoach Group plc were fully explored. That option will no longer go ahead following the Office of Fair Trading's announcement on 10 July that it was referring the case to the Competition Commission.
Giles Fearnley, FirstGroup Managing Director, UK Bus, said: "We understand that this news will be distressing for employees affected by the decision and that it will similarly cause our customers in the area some concern. We apologise and will be supporting affected employees over the coming months, as well as working with Devon County Council on the future of bus services in the area. We will give customers ample notice of the date that services will cease to operate in North Devon.
"We will be working hard to minimise the extent of redundancies, trying to redeploy people where possible. We would like to take the opportunity to stress that the decision to close the North Devon operation is a business driven one and does not reflect on the effort or individual performance of the employees in North Devon.
"We are progressing our strategy to reposition and rebalance our UK Bus portfolio to restore operating margins and help facilitate improved growth and returns. The decision by the Office of Fair Trading to refer our proposed sale of our North Devon operations, where we had a uniquely high degree of overlap with Stagecoach, was disappointing. We are confident, however, of future successful transactions in the coming months as a number of potential bidders exist in the markets where we have identified other businesses for disposal.'
First Devon and Cornwall today (July 23) began its official consultation process with affected staff. This will include offering opportunities in other areas. The timescale for closing the business will be confirmed once the consultation with the affected employees has been completed.
As afore mentioned, we all saw this coming as soon as Stagecoach pulled out. With such a large and powerful presence within the town, it was hard to see who would be willing to step up to the mark, where the 2nd largest operator in the UK couldn't successfully compete. Its been a rapid takeover by Stagecoach of the town, having only run in Barnstaple since 2006. But contracts have been won thick and fast, and their investment in a modern fleet, coupled with successful branding opportunities has meant First has been hugely weakened in just 6 years. Amazing really when you compare it to what it was during the Red Bus days.
So now that First are being forced into a direct closure, this will mean that unlike with an onward sale to Stagecoach, no set routes can be preserved, and no employees from FDC will 'have' to be taken on by the company. This also means of course Stagecoach won't have to shell out the 2.8million asking price for the Barnstaple operation, and will effectively be able to step into its shoes for free, other than adding some extra buses in and expansion of depot space, with hiring of extra employees, still a huge amount less than what it would have cost them otherwise. On top of this, First at this time could certainly have used that money in some extra investment to help its other suffering sectors in the UK. There is no set date as of yet for the closure of the depot, but at a guess it will be after the holiday season; hopefully there's at least a bit of cash that can be made during the summer boost in passengers!