A Scottish Ferry company that lost its monopoly recently.

1. Assignment
Strategic Analysis of Caledonian MacBrayne
Course: Strategic Management
Code: MGT-4802
Prepared For:
Major General Alauddin M A Wadud (Retd.)
Professor, FBS, BUP
Prepared by:
Maisha Rahman (1203002)
Jabid Raiyan (1203020)
Mubarrat Shadman Chowdhuty (1203030)
Abdullah Muhammad Dhrubo (1203032)
Rahiq Ahmed (1203052)
BBA Batch – 03
Bangladesh University of Professionals
Mirpur, Dhaka
August 23, 2015

3. Introduction
Caledonian MacBrayne (Scottish Gaelic: Caledonian Mac a' Bhriuthainn), usually shortened to
Calmac, is the major operator of passenger and vehicle ferries, and ferry services, between the
mainland of Scotland and 22 of the major islands on Scotland's west coast. Since 2006 the
company's official name has been CalMac Ferries Ltd although it still operates as Caledonian
MacBrayne. In 2006 it also became a subsidiary of holding company David MacBrayne Ltd,
which is owned by the Scottish Government. CalMac Ferries Ltd (CFL) is a wholly-owned
subsidiary of David MacBrayne Ltd, which is wholly owned by Scottish Ministers.
Previously operating as Caledonian MacBrayne Ltd, CalMac was created in October 2006 to bid
for the Scottish Government contract to operate Clyde & Hebrides Ferry Services, which it
subsequently won.
At the same time Caledonian MacBrayne Ltd changed its name to Caledonian Maritime Assets
Ltd (CMAL) and retained ownership of the vessels and piers which it leases to the operator of
the Clyde & Hebrides Ferry services (currently CFL). CMAL is also wholly owned by Scottish
Ministers but is entirely separate from CFL. Although they have the same shareholder, each has
its own Board and their relationship is solely contractual.
CalMac Ferries Limited has one wholly owned subsidiary; Caledonian MacBrayne Crewing
(Guernsey) Limited, which employs and supplies all sea going staff (approx 770) to CFL. There
are currently 27 routes within the network. In the 12 months to December 2014, nearly
4.7 million passengers, 1.1 million cars, 93,000 commercial vehicles on 130,000 annual sailings.
Company History
Caledonian MacBrayne has a long history stretching back more than 160 years. Its name is
synonymous with the west coast of Scotland, providing vital lifeline ferry services and carrying
millions of people each year to and from the islands and remote peninsular communities. It has
been, and remains a major local employer, both on shore and at sea. This short history
summarises the key milestones from its inception in the 1850s to the modern, award-winning
operator it is today: Caledonian MacBrayne started life in 1851 as a steamer company under the
name of David Hutcheson & Co. The main sphere of operation was from Glasgow through the
Crinan Canal to Oban and Fort William and then on through the Caledonian Canal to Inverness.
In the late 1870's the Hutcheson brothers retired leaving the firm in the hands of David
MacBrayne to which the firm was renamed. Throughout the late 1870's and 80's the MacBrayne
empire continued to expand with a mail run to Islay, Harris and North Uist from Skye and an
Outer Isles run from Oban to Barra and South Uist.
In fairly quick succession new railways began to reach the West Coast - at Fort William, Kyle of
Lochalsh and Mallaig and the fleet rosters were altered to meet the new situation. There followed
a period of new ship building, largely for the mail routes to the islands and remote mainland
communities.

4. Following the Great War of 1914 - 1918 David MacBrayne was operating a much-reduced fleet
and this eventually resulted in the company's withdrawal from the tender for the mail contract.
Thanks to a rescue operation jointly with LMS Railway and Coast Lines Ltd a new company was
formed - David MacBrayne (1928). 1948 saw the nationalisation of the LMS shares in the
company and the acquisition of the ships.
Five years later the state-owned Scottish Transport Group (STG) was formed to operate not only
MacBrayne's services but also those of the Caledonian Steam Packet Company (CSP) on the
Clyde together with the dominant Scottish Bus Company.
Soon after, the shipping companies were amalgamated and renamed Caledonian MacBrayne Ltd;
lorry services were operated by MacBrayne Haulage while David MacBrayne was retained for
certain minor services. The CalMac vessels soon sported the red CSP lion in the yellow disc in
the centre of the red funnel. From the sixties to the mid-eighties many improvements and
refinements took place in order to complete the modern roll on-roll off ferry revolution and
ensure that all vessels were operated to the maximum levels of safety.
In 1990 Caledonian MacBrayne threw off the umbrella of STG and became wholly owned by the
Secretary of State for Scotland (now the Scottish Government.)
In 2006 the then Scottish Executive, decided that under EU rules ferry services were required to
be put out to tender, but this presented an issue as the vessels required to operate the services,
and many of the ports to which services ran, were owned by Caledonian MacBrayne Ltd, giving
it an unfair advantage over potential competitors. The solution was to rename Caledonian
MacBrayne Ltd as Caledonian Maritime Assets Ltd (CMAL) in order to retain the vessels and
ports in state ownership, and a separate ferry operations company, CalMac Ferries Ltd, was
created. It is a wholly-owned subsidiary of David MacBrayne Ltd, which is wholly owned by
Scottish Ministers. (CMAL also retained ownership of the Caledonian MacBrayne brand, which
CalMac uses as a trading name under licence from CMAL. The lion rampant device is also used
by CFL with the permission of CMAL.) CMAL is also wholly owned by Scottish Ministers and
is based in Port Glasgow, Inverclyde. CFL and CMAL are two entirely separate entities. CFL
provides certain services to CMAL under contractual arrangements.
In 2007 the contract to provide services under the Clyde and Hebrides Ferry Service (CHFS) was
awarded to CalMac Ferries Ltd for a period of six years. CMAL leases the vessels and piers to
the operator of the Clyde Hebrides Ferry services (currently CFL) and is also responsible for the
procurement of new ships and the maintenance and development of port facilities in its
ownership. (Some ports are owned by local authorities or private harbour trusts/ authorities.)
In 2013, Transport Scotland, which is part of Scottish Government, announced it was to extend
the period of the CHFS contract by a further three years, and go out to tender for a new contract
to commence in October 2016. This process is now underway.

5. Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis
STRENGTHS WEAKNESSES
 Relatively sheltered route offering access to
western coast of Scotland and beyond
 Established shipping route with buoyage
 Lower impact on climate compared to moving
passengers and cargo by land vehicles
 Some existing infrastructure that could be
utilised and developed further to support
increases in shipping.
 Number and size of vessels currently unable
to support increased in ferry routes or
frequency
 Existing shore facilities and infrastructure
may not be suitable or available for loading
and discharging vessels
 Poor transport links, i.e. road and rail
 Low residential population size may be
unable to justify cost of increased passenger
services
 Volume of goods requiring shipment may not
be great enough to justify increased
investment
 No designated shipping lane in SOM to
safeguard best route, environment and other
users
OPPORTUNITIES THREATS
 Potential for increased transportation of goods
on and off Mull and Morvern e.g. forestry,
aggregates, nationally and internationally by
sea to reduce economic and environmental
costs.
 Increased frequency of ferry sailings at peak or
popular times.
 Fast ferry services between Mull, Morvern,
Ardnamurchan, Coll/Tiree and Oban.
 Possibility of trade between sectors at sea e.g.
supply of fish/seafood and other products to
shipping in transit
 Potential for lack of support for increases in
shipping activity due to public perception of
risks and impacts
 Potential for increases in shipping to result in
an unacceptable increase in the risk of
pollution, grounding, collision and interaction
with other marine sectors and the natural
environment.
 Road equivalent tariff scheme on ferries may
result in more visitors to locations in the
scheme and less to those outside i.e. Mull,
Morvern
 Finance for business/infrastructure
development and marketing
 Fuel prices

6. 1.1 Porter’s 5 Force Analysis of CalMac
SUPPLIER POWER
CalMac’s suppliers include those who
sell them ferry and its spare parts.
There are few sellers with intense
competition. Besides CalMac is a giant
buyer. Therefore, suppler power is low.
BARRIERS
TO ENTRY
Government policy:
Getting license for this
business is difficult. So
barrier is high.
Capital requirements:
There is high capital
requirement to get into
the market. Therefore,
barrier is high.
Brand identity: CalMac
has high brand equity.
Therefore, it will be
difficult for other
players to enter the
market.
THREAT OF
SUBSTITUTES
-Substitute: Airway
-Switching costs:
Buyers have no
switching cost.
-Buyer inclination to
substitute is low
because of price.
BUYER POWER
Buyer volume: Volume is low. Thus
buyer power is low.
Buyer information: Buyers have
information. This gives them some
power.
Price sensitivity: Buyers are not highly
price sensitive. Thus, they have less
power.
Threat of backward integration: There
is no threat of backward integration.
Substitutes available: Air way is
available but too costly.
DEGREE OF RIVALRY
-Exit barriers: High
-Fixed costs/Value
added: High
-Industry growth: High
-Switching costs: Low
-Brand identity: High
-Diversity of rivals: Low

7. 2.1 Bargaining Powerof Suppliers
The term 'suppliers' comprises all sources for inputs that are needed in order to
provide goods orservices.
Supplier bargaining power is likely to be high when:
The market is dominated by a few large suppliers rather than a fragmented
sourceof supply,
There are no substitutes for the particular input,
The suppliers customers are fragmented, so their bargaining power is low,
The switching costs from one supplier to another are high,
There is the possibility of the supplier integrating forwards in order to obtain
higher prices and margins. This threat is especially high when
The buying industry has a higher profitability than the supplying industry,
Forward integration provides economies of scale for the supplier,
The buying industry hinders the supplying industry in their development
(e.g. reluctance to accept new releases of products),
The buying industry has low barriers to entry.
In such situations, the buying industry often faces a high pressure on margins from
their suppliers. The relationship to powerful suppliers can potentially reduce
strategic options for the organization.
2.2 Bargaining Powerof Customers
Similarly, the bargaining power of customers determines how much customers can
impose pressure on margins and volumes.

8. Customers bargaining power is likely to be high when
They buy large volumes, there is a concentration of buyers,
The supplying industry comprises a large number of small operators
The supplying industry operates with high fixed costs,
The productis undifferentiated and can be replaces by substitutes,
Switching to an alternative productis relatively simple and is not related to
high costs,
Customers have low margins and are price-sensitive,
Customers could producethe productthemselves,
The productis not of strategical importance for the customer,
The customer knows about the production costs ofthe product
There is the possibility for the customer integrating backwards.
2.3 Threat of New Entrants
The competition in an industry will be the higher, the easier it is for other
companies to enter this industry. In such a situation, new entrants could change
major determinants of the market environment (e.g. market shares, prices,
customer loyalty) at any time. There is always a latent pressure for reaction and
adjustment for existing players in this industry.
The threat of new entries will depend on the extent to which there are barriers to
entry. These are typically
Economies of scale (minimum size requirements for profitable operations),
High initial investments and fixed costs,
Cost advantages of existing players due to experience curve effects of
operation with fully depreciated assets,
Brand loyalty of customers
Protected intellectual property like patents, licenses etc,
Scarcity of important resources, e.g. qualified expert staff
Access to raw materials is controlled by existing players,
Distribution channels are controlled by existing players,

9. Existing players have close customer relations, e.g. from long-term service
contracts,
High switching costs for customers
Legislation and government action
2.4 Threat of Substitutes
A threat from substitutes exists if there are alternative products with lower prices
of better performance parameters for the same purpose. They could potentially
attract a significant proportionof market volume and hence reduce the potential
sales volume for existing players. This category also relates to complementary
products.
Similarly to the threat of new entrants, the treat of substitutes is determined by
factors like
Brand loyalty of customers,
Close customer relationships,
Switching costs for customers,
The relative price for performance of substitutes,
Current trends.
2.5 Competitive Rivalry betweenExisting Players
This force describes the intensity of competition between existing players
(companies) in an industry. High competitive pressure results in pressure on prices,
margins, and hence, on profitability for every single company in the industry.
Competition between existing players is likely to be high when
There are many players of about the same size,
Players have similar strategies
There is not much differentiation between players and their products, hence,
there is much price competition
Low market growth rates (growth of a particular company is possible only at
the expense of a competitor),

10. Barriers for exit are high (e.g. expensive and highly specialized equipment).
3 Use of the Information form Five Forces Analysis
Five Forces Analysis can provide valuable information for three aspects of
corporateplanning:
StaticalAnalysis:
The Five Forces Analysis allows determining the attractiveness of an industry. It
provides insights on profitability. Thus, it supports decisions about entry to or exit
from and industry or a market segment. Moreover, the model can be used to
compare the impact of competitive forces on the own organization with their
impact on competitors. Competitors may have different options to react to changes
in competitive forces from their different resources and competences. This may
influence the structure of the whole industry.
Dynamical Analysis:
In combination with a PEST-Analysis, which reveals drivers for change in an
industry, Five Forces Analysis can reveal insights about the potential future
attractiveness of the industry. Expected political, economical, socio-demographical
and technological changes can influence the five competitive forces and thus have
impact on industry structures.
Useful tools to determine potential changes of competitive forces are scenarios.
Analysis of Options:
With the knowledge about intensity and power of competitive forces, organizations
can develop options to influence them in a way that improves their own

11. competitive position. The result could be a new strategic direction, e.g. a new
positioning, differentiation for competitive products ofstrategic partnerships (see
section 4).
Thus, Porters model of Five Competitive Forces allows a systematic and structured
analysis of market structure and competitive situation. The model can be applied to
particular companies, market segments, industries or regions. Therefore, it is
necessary to determine the scopeof the market to be analyzed in a first step.
Following, all relevant forces for this market are identified and analyzed. Hence, it
is not necessary to analyze all elements of all competitive forces with the same
depth.
The Five Forces Modelis based on microeconomics. It takes into accountsupply
and demand, complementary products and substitutes, the relationship between
volume of productionand costof production, and market structures like monopoly,
oligopoly or perfect competition.
4 Influencing the Powerof Five Forces
After the analysis of current and potential future state of the five competitive
forces, managers can search for options to influence these forces in their
organization’s interest. Although industry-specific business models will limit
options, the own strategy can change the impact of competitive forces on the
organization. The objective is to reduce the power of competitive forces.
The following figure provides some examples. They are of general nature. Hence,
they have to be adjusted to each organization’s specific situation. The options of an
organization are determined not only by the external market environment, but also
by its own internal resources, competences and objectives.

12. 4.1 Reducing the Bargaining
Power of Suppliers
4.2 Reducing the Bargaining
Power of Customers
Partnering
Supply chain management
Supply chain training
Increase dependency
Build knowledge of supplier
costs and methods
Take over a supplier
Partnering
Supply chain management
Increase loyalty
Increase incentives and value
added
Move purchase decision away
from price
Cut put powerful
intermediaries (go directly to
customer)
4.3 Reducing the Treat of New
Entrants
4.4 Reducing the Threat of
Substitutes
Increase minimum efficient
scales of operations
Create a marketing / brand
image (loyalty as a barrier)
Patents, protection of
intellectual property
Alliances with linked products
/ services
Tie up with suppliers
Tie up with distributors
Retaliation tactics
Legal actions
Increase switching costs
Alliances
Customer surveys to learn
about their preferences
Enter substitute market and
influence from within
Accentuate differences (real or
perceived)
4.5 Reducing the Competitive
Rivalry between Existing Players
Avoid price competition
Differentiate your product
Buy out competition
Reduce industry over-capacity
Focus on different segments
Communicate with competitors

13. Article 1: Done By – Maisha Rahman (B1203002)
The CalMac strike: What's it all about?
(https://commonspace.scot/articles/1699/the-calmac-strike-what-s-it-all-about)
RMT union says it has not been given assurances on jobs, pay and pensions
for CalMac staff
CALMAC staff have begun three days of industrial action after last minute talks between the
RMT Union and CalMac to avert the action broke down on Monday evening.
Staff have begun a 48-hour overtime ban before staging a 24-hour strike on Friday, and RMT's
Scotland organiser Godon Martin warned there will be "widespread disruption throughout the
CalMac network".
What is the dispute about?
The dispute centers around the fact that Calmac's contract to run ferry services in Scotland is
going out to tender - which means other companies can bid to run them - and staff and unions
say they have not been given assurances about their jobs, pay and pensions.
Mick Cash, general secretary of the RMT said: "RMT wants cast iron assurances and we want
them now. We are prepared to engage in meaningful talks around that agenda as we prepare for
the first phase of industrial action."
Nearly half of CalMac's 14,000 staff are in the RMT, which represents ferry crews, and over 90
per cent who returned their ballot backed strike action.
CalMac is hopeful that it will be able to run the majority of services over the next two days but
almost all sailings will be cancelled on Friday as there needs to be a certain number of crew
working for the ferrys to go to sea.
CalMac managing director Martin Dorchester said: "We have made several serious concessions
to the RMT including a commitment on no compulsory redundancies in our bid submission in
return for the RMT calling off the industrial action planned for this week. Unfortunately this was
rejected.
"We were also willing to work together with both the RMT and TSSA over the coming days to
agree a form of words in our collective agreements which would provide greater protection to
employees around terms and conditions of employment but without success."

14. What is the tendering process?
The Scottish Government must ensure the provision of transport for islanders. This means that it
must make sure there is an operator to run ferry services. CalMac, which is state-owned, runs
most of the services currently.
Tendering - a process which enables other companies, including private operators, to bid to run
public services - is necessary under European law. Private company Serco, who won the contract
to run Shetland and Orkney ferries in 2012, is in the running for the Clyde and Hebridean ferry
routes.
There are fears that Serco winning the tender will result in privatization of the service. Many of
the routes are not profitable and the government subsidy awarded was £90m in 2013/14,
although £1.9m was then returned to the government.
There are concerns that privatization will result in a poorer, more expensive service.
Transport minister Derek MacKay has repeatedly said this tender will not result in privatization
of lifeline services, telling the Scottish Parliament: "All of the vessels and ports currently in
public ownership will remaining public ownership and, together with Clyde and Hebrides
services, remain under public control by Scottish ministers throughout the contract."
What do islanders think?
Many islanders accept Calmac’s reasons for striking but are angered that it comes at a time that
will cause maximum disruption as school holidays are just starting. Alternative timetables are
running across the network.
Cash told the communities affected: "The last thing that (the staff) would want is to
inconvenience their own friends and neighbors but when you have had your arm twisted up your
back, and you know exactly what is looming on the horizon, there comes a point when you either
make a stand or you roll over.
"Our members have chosen to make a stand in ballots showing over 90 per cent in favour of
action – our trade union is proud of them."
A campaign has seen CalMac staff agree to run a ferry from Oban to Castlebay at 12.45am on
Saturday in order to get runners to the island for the annual Barrathon half marathon.

15. Article 1 Synopsis
In this article it talks about the dispute of not giving the given assurances on jobs, pay and
pensions for CalMac staff also the disagreement centres around the fact that Calmac's contract to
run ferry services in Scotland is going out to tender - which means other companies can bid to
run them. The Rail Maritime and Transport union (RMT) declared a dispute with Caledonian
Mac Brayne, known as CalMac, in May stating that pensions must be protected and staff must be
kept on with the same pay and conditions regardless of who wins the contract for the routes
when it goes out to tender.
CalMac is hopeful that it will be able to run the majority of services over the next two days but
almost all sailings will be cancelled on Friday as there needs to be a certain number of crew
working for the ferrys to go to sea. CalMac managing director Martin Dorchester said: "We have
made several serious concessions to the RMT including a commitment on no compulsory
redundancies in our bid submission in return for the RMT calling off the industrial action
planned for this week. Unfortunately this was rejected. Tendering is a process which enables
other companies, including private operators, to bid to run public services. Argyll Ferries RMT
members have also been out on strike alongside CalMac workers, although the SNP have
insisted that the Argyll Ferries contract is not up for tender. The RMT, however, have argued
that Argyll Ferries relies upon CalMac engineers and expertise, and that any change to Western
Isles route would affect Argyll Ferries. For this many islanders accept Calmac's reasons for
striking but are angered that it comes at a time that will cause maximum disruption as school
holidays are just starting. CalMac and Argyll Ferries are both part of the state-owned David
MacBrayne Group.

16. Article 2: Done By – Jabid Ryan (B1203020)
Keep CalMac and carry on: Brian Wilson tackles 5 myths, half-
truths & downright lies over ferry group's future
BY BRIAN WILSON, Daily Records
(http://www.dailyrecord.co.uk/news/scottish-news/keep-calmac-carry-on-brian-5971526)
FORMER Labour MP Brian Wilson has strong links to Scotland’s western islands and has
campaigned for improved transport links to the area.
He believes the Scottish Government have painted a misleading picture of the issues at hand.
Wilson says the Record’s campaign to Keep CalMac Public has sent a crucial message – all
Scotland has a stake in safeguarding services on which west coast communities depend. He
added: “The SNP have taken refuge behind a script which lurches between dodgy half-truths and
downright lies. Each must be nailed and ridiculed.”
Even if Serco win, the service will not have been privatized
THIS is a bizarre re-writing of what “privatization” means. From Nicola Sturgeon down, the
SNP claim the operators’ “ownership status” does not matter because they would still be working
within the terms of a public contract.
By that definition, nothing has been privatized – railways, Royal Mail, NHS contracts – because
they’re all governed by terms laid down by Government. That is not how the SNP defined
privatization in the past, when Westminster was the villain.
If Serco secure the billion pound contract for eight years, CalMac will be dead. The private
sector will be in control – and the history of privatization confirms they will then use that
position to rewrite the rules.
The Scottish Government have been forced into this by European law.
IT is far from clear that Brussels has any interest in forcing a competition for lifeline ferry
services, though the issue has been waved under its nose by pro-privatisation forces in
Edinburgh. The unionsbelieve,asdoI, that ministersshould have sought a derogation in line with the
Altmarkrulingwhichexemptedlifelinetransport from competitive tendering. At very least, this would
have sent a signal of intent to defend CalMac.
SNP ministers did the opposite. In their 2012 Ferries Review, on which the competition is based,
they boasted of how many operators would bid for west coast routes and the money to be saved
in reduced subsidy through competition. There was no reluctance in any of this.

17. Labour and the Liberal Democrats did the same thing when running Holyrood.
THIS is, at best, a half-truth with the important half ignored. The Scottish Executive – wrongly
in my view – went along with inviting tenders. But they worked with communities and unions to
ensure the rules would exclude a private operator.
It worked – and CalMac wer sole bidders. So, contrary to what the SNP suggest, there has never
been a competition of the kind we are now witnessing.
As Manuel Cortes, general secretary of Transport and Salaried Staff Association, said: “They
frightened off privateers whose aim was to make a quick buck by slashing jobs and conditions.
Consequently, CalMac stayed in public hands”. That approach could not be more different from
now.
There is a level playing field for CalMac to compete on.
THE untruth of this explains the reasons for industrial action. Serco are in business to make
profit out of public subsidy – it is what they do all over the world. They would use the same
methods as other privateers, starting with terms, conditions and pensions of the workforce.
On pensions alone, CalMac would be at a £60million disadvantage if they bid on the basis of
their current scheme while Serco are allowed to offer only minimum provision. That’s why it’s
important the contract insists, no matter who wins, they will inherit prevailing terms and
conditions – including pension obligations. The Scottish Government have refused to accept this
– a clear litmus test of their preferred outcome.
Even if that is all true, there’s nothing we can do about it now…
BY hiding behind lies and half-truths, SNP ministers have got themselves into this mess. At the
outset, they had grounds to disqualify Serco because of their negative balance sheet.
Any government are duty bound to assure themselves the contenders for contracts have the
wherewithal to meet commitments. When the CalMac contest began, Serco were about to raise
an emergency £555million bail-out from shareholders as well as launching a fire sale of assets.
Would you trust your lifeline to such a company?
It should be pointed out to Serco it might be in the interests of their lucrative wider dealings with
the Scottish Government if they stopped trying to wipe out CalMac.
But if they keep trying, there must be a level playing field – and a fight to the death in the
interests of communities which rely on a company who exist only to serve.

18. Article 2 Synopsis
Brian Wilson is the former labour MP of Britain who has to have strong links to Scotland’s
western islands and has campaigned for improved transport links to the area. He claimed that
Scottish Government gave a misleading picture of the issues at hand later added that says the
Record’s campaign to Keep CalMac Public has sent a crucial message all Scotland has a stake in
safeguarding services on which west coast communities depend. He also said “The SNP have
taken refuge behind a script which lurches between dodgy half-truths and downright lies. Each
must be nailed and ridiculed.”
If though Secro wins and gets the advantages still CalMac would be still working within the
terms of a public contract and the service will not be privatized. One thing that can effect
CalMac is that if Serco secure the billion pound contract for eight years, CalMac will be dead.
The private sector will be in control and the history of privatization confirms they will then use
that position to rewrite the rules. At very least, this would have sent a signal of intent to defend
CalMac. Many council leaders from the Clyde area gather to show support for the Daily Keep
Calmac and “Carry On” Campaign. Labour and the Liberal Democrats did the same thing when
running Holyrood. They worked with communities and unions to ensure the rules would exclude
a private operator. It worked and CalMac were sole bidders. So, contrary to what the SNP
suggest, there has never been a competition of the kind we are now witnessing. There is a level
playing field for CalMac to compete on which explains the reasons for industrial action. Secro
mentioned that they were here to only make profit out of public subsidy it is what they do all
over the world. They would use the same methods as other privateers, starting with terms,
conditions and pensions of the workforce. On pensions alone, CalMac would be at a £60million
disadvantage if they bid on the basis of their current scheme while Serco are allowed to offer
only minimum provision. That’s why it’s important the contract insists, no matter who wins, they
will inherit prevailing terms and conditions including pension obligations. The Scottish
Government have refused to accept this a clear litmus test of their preferred outcome. If
everything is true then there is nothing that can be done. Just because of hiding behind the lies
and half-truths, SNP ministers have got them into this muddle. At the outset, they had grounds to
disqualify Serco because of their negative balance sheet. Any government are duty bound to
assure themselves the contenders for contracts have the wherewithal to meet commitments.
When the CalMac contest began, Serco were about to raise an emergency £555million bail-out
from shareholders as well as launching a fire sale of assets. Would you trust your lifeline to such
a company? But if they keep trying, there must be a level playing field and a fight to the death in
the interests of communities, which rely on a company who exist only to serve.

19. Article 3: Done By – Rahiq Ahmed (B1203052)
Loss of Northlink tender hits profits at MacBrayne
Greig Cameron, Deputy Business Editor, Herald Scotland
(http://www.heraldscotland.com/business/13127342.Loss_of_Northlink_tender_hits_profits
_at_MacBrayne/)
PUBLICLY owned ferry operator David MacBrayne has seen its revenue slide from £201.6
million to £155.7m and pre-tax profits halve as a result of losing the Northlink ferry tender. The
annual report of the company, which runs Argyll Ferries and Caledonian MacBrayne, said total
passenger numbers declined from 5.2 million to 4.8 million with poor weather cited as having an
adverse impact.
The financial statement details a £40,000 payment to former chief executive Archie Robertson
for loss of office after he stepped down in August last year.
Mr Robertson also received a salary of £136,000, a performance payment of £28,000, pension
contributions of £28,000 and benefits with a value of £12,000.
The accounts for the 12 months to March 31 show David MacBrayne posting pre-tax profits of
£20.4m, down from £4.1m in the prior year. The document also shows the company brought in
£70.8m from fares and other income while it also got more than £86m of grants from the Scottish
Government.
That compares to fares of £85.6m and net grants of around £116m in the previous financial year.
The Northlink service, which goes to Orkney and Shetland and is now run by Serco after it
secured a six-year contract worth £243m in May last year, brought in only £20.2m of revenue
and £325,000 of operating profit compared to almost £70m and £1.3m of operating profit.
The David MacBrayne workforce fell from 1667 to 1374, according to the annual report. Writing
in the accounts, Chairman David McGibbon said: "The Gourock and Dunoon service, operated
by Argyll Ferries, continues to be challenging, with campaigners seeking the return of a car ferry
to the routes. Following a very tough winter, the reliability of the service was hit hard."
A spokesman for the group said trading since the year-end had been mixed, with extremely busy
periods at the height of the summer weather along the Clyde contrasting with a relatively static
performance on more northerly ferries.
Mr McGibbon confirmed that several new initiatives are being launched in the coming months.
He said: "Work is progressing to improve our customers' experience of our services, including
the revamp of our ticketing and online booking system and introduction of wi-fi across the fleet.
Our rolling programme of boat replacement also continues, with the MV Loch Seaforth on
schedule for the Ullapool-Stornoway route next year and our two new innovative diesel hybrids
MV Hallaig and MV Lochinvar also due to enter service in the coming months."

20. Article 3 Synopsis
Caledonian MacBrayne is one of the largest ferrying company in Scotland. But for the recent
event of losing tender to another ferrying company “Northlink” the revenue has declined. The
revenue reduced sharply from £201.6 million to £155.7m. Even the number of passengers has
also reduced and to make it worse the weather is adverse. The company has incurred serious cost
as their CEO Robertson stepped down. Their number of workers have also shirked.
Mr McGibbon of MacBrayane has said that several initiatives have been taken to change the
situation. A leading company is now having difficulity to maintain it position in the market.
These steps will change the scenario that’s his hope.
Some of those initiatives are:
 Improving Customer Services.
 Online ticketing and booking.
 Digital environment i.e. allowing free wi-fi in the fleet.
 Including some improved and advanced ships.
 Replacing some old boats as well.

21. Article 4: Done By – Abdullah Muhammad Dhrubo (B1203032)
Public sector ferry giant worth £270m a year to Scotland's
economy, study finds
Helen McArdle, Transport Correspondent / HeraldScotland
(http://www.heraldscotland.com/news/13211518.Public_sector_ferry_giant_worth___270m
_a_year_to_Scotland_s_economy__study_finds/)
FERRY giant CalMac is worth £270 million to the Scottish economy according to a
major new study highlighting its value to rural and island communities.
The report by the highly respected Fraser of Allander Institute will be unveiled today at
the second annual Scottish Transport Conference in Edinburgh, where Transport
Minister Derek Mackay is the keynote speaker.
The report finds the ferry and port operator supports a total turnover of nearly £270
million in companies across Scotland. The figure is calculated as a combination of the
jobs and wages supported by CalMac's own spending, and the jobs it enables on
Scottish islands by transporting the tourists which enables other businesses to thrive.
It estimates the state-owned ferry operator enables 3,247 jobs and £53.4m worth of
wages in Scotland's island tourism industry.
It also confirms that CalMac, one of the largest companies headquartered in Scotland
and the UK's largest ferry network operator, employs 1476 people and supports a total
of 5883 jobs in mainland and island communities across the country. It also carried 4.6
million passengers in 2014 and was the main channel of support for commercial activity
on the islands, transporting 92,734 commercial vehicles between the mainland and the
islands in 2014.
Stewart Dunlop, the researcher who compiled the report, said: "The results demonstrate
that the company's activity in transporting tourists to the islands has a very considerable
effect on the local tourism industry.
"CalMac is clearly the key channel of support for commercial activity on the islands it
serves.

22. "Items exported from the islands include food and drink products, notably high value
exports such as whisky and shellfish, both of which contribute significantly to total
Scottish exports.
"In terms of imports, CalMac's activity covers the majority of items sold by local retailers,
including fuel, food, mail, medical supplies, oil, gas, and utilities, without which it would
be difficult to maintain an acceptable quality of life on the islands."
Average wages at CalMac are 12 per cent higher than the average wage in Scotland,
according to the report.
The operator is a major employer in Argyll and Bute, the Western Isles, Inverclyde and
the Highlands, with a combined workforce of 782 across these four regions and a total
annual wages bill of £26m in these areas alone - an average of £33,248.
Salaries across its entire Scottish workforce cost the company £41m, meaning that a
typical CalMac employee earns £27,778 a year.
Martin Dorchester, managing director of CalMac Ferries Ltd, said: "The Fraser of
Allander's report outlines in detail the extent of the contribution which CalMac's people
and operations make to Scotland's economy across all these key areas.
"As we move forward, our ambition is to further enhance our support for the
communities we serve and continue our investment in customer service."

23. Article 4 Synopsis
CalMac is worth £270 million to the Scottish economy. Its total turnover in Scotland is around
£270 million. It provides 3,247 jobs and £53.4m worth of wages in Scotland's island tourism
industry. It employs 1476 people and supports a total of 5883 jobs in mainland and island
communities across the country. It also carried 4.6 million passengers in 2014 transporting
92,734 commercial vehicles between the mainland and the islands in 2014. CalMac is a crucial
channel of support for commercial activity exporting from the islands include food and drink
products and importing fuel, food, mail, medical supplies, oil, gas, and utilities. Average wages
at CalMac are 12 per cent higher than the average wage in Scotland. It spends a total of £41m in
salary in Scotland, meaning that a typical CalMac employee earns £27,778 a year.

24. Article 5: Done By – Mubarrat Shadman (B1203030)
Calls for end to ferry monopoly
By Kit Fraser
Political correspondent, BBC Scotland
(http://news.bbc.co.uk/2/hi/uk_news/scotland/7596857.stm)
Two of the first submissions to the European Commission inquiry into Scottish ferries have
called for the breakup of Caledonian MacBrayne's monopoly on Clyde and Hebridean and
Northern Isles routes.
They were compiled by two noted transport experts, one of whom is an SNP councilor.
Both argued CalMac was heavily inefficient, with private operators better able to provide
services, but the operator has long warned against the risk of "cherry picking" routes.
CalMac, along with Northlink Ferries, is under EU investigation amid complaints that subsidies
they received breached competition law.
Roy Pedersen - a transport consultant, SNP Highland councilor and former deputy chair of the
authority's transport committee - pointed to the example of Western Ferries and Pentland Ferries.
"In both of those cases, private operators are providing a high-quality service at modest cost to
the public - at no cost to the Exchequer at all," he said.
"In that situation, parallel routes are operated by the state sector, the services are heavily
subsidized."
The second submission to the Brussels inquiry came from Alf Baird, of Napier University.
"Subsidy is increasing all the time, but that subsidy is being used to finance high operating costs,
it's not coming through in reduced charges to the user," said Prof Baird.
"It means the economies of the islands aren't really benefitting. Who's benefitting here is, to a
large extent, the ferry operator, staff and management."
Those points, and the example set by CalMac's only current competitors, have chimed with the
Scottish Tories' outlook.
The party's Holyrood transport spokesman, Alex Johnston, said: "In both these cases, we see
independent ferry operators who are able to compete against subsidized competition.
"That indicates to me that the private Scottish ferry industry, small as it is at the moment, is able
to compete on an economic basis.

25. "That's why it's important that we give them the opportunity to expand and become better at
providing public services."
Mr Pedersen has called for CalMac's monopoly to be broken up, by offering each individual
route to private bidders instead of lumping almost all Clyde and Hebrides routes into a single
bundle.
Both he and Prof Baird argued the state-owned ferry company was serving both taxpayer and
island and remote communities badly.
Long inquiry
Prof Baird has gone further, calling for the privatizing or scrapping of CalMac - but how would
the loss-making lifeline routes be safeguarded and fares protected?
"That is overcome quite easily by the imposition of tariff ceilings on certain routes, if prices can
be agreed with an operator," suggested the academic.
"The increases in prices can be kept to certain levels below inflation, perhaps, like the Isle of
Man does."
He added: "In almost all other parts of the world, ferry services are provided by the private
sector. They are reliable and there's little public concern about them continuing."
CalMac has insisted that maintaining the current situation, where the Clyde and Hebridean routes
are offered as a package of 24, best served island communities and the taxpayer.
The operator said allowing private operators to pick the most profitable routes would lead to the
need for more subsidy, to keep up existing levels of service provision.
It had become widely accepted, CalMac argued, that the targeting of high-value routes would
pose a substantial threat to the future of subsidized lifeline services.
The European Commission investigation is expected to last up to 18 months, but these early
submissions may set Brussels on a course of demanding radical reform of Caledonian
MacBrayne - for so long as much a part of the Highlands and Islands as rain and midgies.

26. Article 5 Synopsis
The article is about a recent scrutiny faced by CalMac Ferries Ltd. CalMac Ferries Ltd (CFL)
was created as a wholly owned subsidiary of David MacBrayne Ltd which in turn is wholly
owned by the Scottish government. According to the article European Commission is
investigating Scottish ferries industry as they believe Caledonian MacBrayne's is enjoying
monopoly on Clyde and Hebridean and Northern Isles ferry routes.
European Union (EU) competition law concerning regulation of competitive markets in the EU,
was set to ensure that corporations do not create cartels and monopolies that would damage the
economic interests of society. The EU inquiry led by two renowned transport experts are
investigating complaints that subsidies that CalMac receives from the government is a breach of
EU competition law. Both the experts pointed out that the government owned CalMac was
highly inefficient in providing service, whereas the private ferry companies like Western Ferries
and Pentland Ferries, though small compared to CalMac; had been providing quality service at a
reasonable cost to the public.
The second inquiry report was submitted by Alf Baird, of Napier University. He stated that the
subsidy paid from the taxpayer’s money is used to fund the inefficient, high cost operations of
CalMac. CalMac’s monopoly wasn’t helping island community rather its helping the ferry
operators, its staff and management.
The suggestion by Prof Baird in the report is more severe from CalMac’s point of view. He
suggested to dismantle CalMac altogether or privatize it completely because it is failing to
perform its role of providing cheap quality service to the public. He argued that in almost all
other parts of the world the ferry service is privatized and they are operating quite efficiently. He
also assured that the government could still ensure public interest by setting a price ceiling on
fares and the competition in private sector will automatically drive the price down. The added
benefit is that the redundant wastage of taxpayer’s money in the name of subsidy will all be
stopped.
The EU investigation is still months ahead to reach conclusion but it have already made the
future of CalMac very uncertain.