The Rise and Fall of a Vision: Wrightbus Enters Administration
Northern Irish bus manufacturer Wrightbus, most commonly identified in London with the manufacture of the New Bus for London (NBfL), has entered Administration.
Questions first began to surface about the firm’s long-term viability in July, when the firm acknowledged it had begun working with Deloitte to seek either investment or a buyout, but Wrightbus’ future has looked troubled for some time. In 2018 it reported a loss of £1.7m, citing a difficult UK bus market and near non-existent overseas sales aggravated by Brexit.
Brexit had threatened, and indeed has hit, Wrightbus particularly hard. Modern bus manufacture is long-removed from the world that existed when Wrightbus was first formed after WW2. Then, it was largely about onsite engineering and limited imports. Indeed much of Wrightbus’ early growth came from creating bus-bodies to sit on existing chassis. Today, it shares the complex ‘just in time’ outsourcing and parts delivery model seen in the world of car manufacture. The drastic fall of Sterling, as well as the uncertainty over future trading arrangements with the European Union, have increased both present costs and future risks for the firm. This has made it increasingly hard to win contracts outside of the UK.
This issue has been compounded by a prolonged period of low bus-renewal within the UK. To a certain extent, the UK bus market has always been boom-and-bust for manufacturers. Buses are, by definition, built to last. Operators don’t expect the 50-year lifespans seen in railway rolling-stock. They do, however, expect to limit full fleet renewals to roughly every 15 years.
Bus fleet renewal
Indeed the spur to periods of massive bus stock renewal is often regulatory change rather than a need for mechanical overhaul. This is something Wrightbus themselves benefitted from in the late seventies and early eighties, when a changing regulatory environment and massive privitization within the UK market created something of a golden age of sales for those manufacturers who were able to respond quickly to the changing market demand. Wrightbus were one of the major beneficiaries of this period, in part thanks to the fortunate arrival of noted vehicle designer Trevor Erskine, the creator of the Ford Fiesta. Their bus bodies, built on Scania and Volvo frames, proved particularly popular with new private operators during this period.
As a result, Wrightbus saw significant expansion within the UK market, with the firm (and its associated supply chain and support industries) swiftly becoming one of the major employers in Ballymena and Northern Ireland beyond. Indeed at its peak Wrightbus was the second largest manufacturer of buses in the UK (behind only Alexander Dennis) with an annual turnover of £100m.
The fallow period that eventually followed this golden age was prolonged but it was one that Wrightbus was largely able to weather, in no small part by boosting exports of its bus frames abroad. By 2012, however, Wrightbus (and the wider bus-building sector) were facing issues again. The recession hit Wrightbus particularly hard, with almost half of its domestic order book disappearing practically overnight.
Two things largely saved the firm from significant redundancies or worse – an even greater push to diverge into international markets (notably securing major contracts in Singapore) and the contract to create the New Bus for London (NBfL), one of London Mayor Boris Johnson’s flagship mayoral schemes.
The New Bus for London
Based off of a provisional design by Thomas Heatherwick, Wrightbus won the contract to to create the bus and fulfil London’s first major contract for a hybrid in full service operation. In line with Johnson’s manifesto promise, the bus was also to feature rear platform boarding supported by two-person operation and an iconic design to appeal to overseas buyers.
With the Mayor promising to have 2000 of the buses on the streets of the city, the size and security offered by the NBfL scheme was attractive to manufacturers. The promise of overseas sales, however, likely proved a particularly enticing benefit for Wrightbus as well, given their increasing reliance on such deals within their order book.
The contract, however, has proven a mixed blessing. Indeed implementing it was to highlight another, new difficulty that bus manufacturers now face – the research and engineering overhead of creating buses fit and reliable enough for an emissions-free future. In this regard, the NBfL was required to be if not bleeding, then at least cutting edge. That meant both increased production costs and an increased requirement to both directly and indirectly fund innovation in areas such as regenerative braking and battery design. Even with TfL prepared to pay a greater per-unit price for the resulting model and split some development costs, this meant that Wrightbus’ early profits were squeezed nonetheless.
It also quickly became clear that the NBfL scheme in general would struggle to deliver on the promises that Boris Johnson had made before taking office. Johnson had promised a “New Routemaster,” pulling heavily on the image of London’s iconic bus and a perceived ‘golden age’ of transport. In Johnson’s new vision, this translated largely into a similarly iconic design and two-person operation, reminiscent of that seen on the network in times past. Yet that vision came at a cost. Londoners, for example discovered that the problem with riding on a design icon through Boris Johnson’s promised sunlit uplands was that you soon became uncomfortably hot.
Nor did the promised second staff member last long. TfL had warned the new Mayor that the ongoing cost of meeting this commitment would be high, as had both the London Assembly and a variety of transport experts. That concern had been waved away, the Mayor indicating that he was optimistic of a long-term solution and talk of police community officers being used to fill the role in the short-term. Ultimately, however, reality intervened. By 2014, just two years after the NBfL’s introduction, TfL had already quietly moved to make all future NBfL routes one-person-operated in line with the rest of its services.
The conversion of existing routes followed, but this in itself brought back an old issue with greater vengeance – fare evasion. Without two-person operation, the multi-door, multi-entry model enforced on the design by the Mayor’s promises compromised the driver’s ability to prevent fare-dodging. By 2016 the NBfL had become the NFBL instead – the New Free Bus for London, a reputation previously held by the ‘Bendy Buses’ which had partly been used to justify the need for the NBfL. Indeed at Mayor’s Question Time in 2016 the new Mayor, Sadiq Khan, confirmed that of the top ten bus routes in London most affected by fare evasion, all were served by the NBfL.
Indeed although full figures have not been published, LR sources suggest that, on average, fare evasion of the NBfL generally runs at twice the level found on other models. It is perhaps no surprise then that, from August 2019, TfL began running routes 8 and N8 (both NBfL-served) with front-door-boarding only. Should this scheme be successful, it will be expanded to other routes.
Whilst all the above may seem something of a sorry history for one of London’s landmark transport schemes, it should be stated that the NBfL scheme has not been without benefit. As we wrote at the time, Johnson’s vision was always a misrepresentation and romanticisation of the real legacy of the original Routemaster. What had made the Routemaster and its successors so iconic wasn’t the clothes that the emperor of buses wore, it was what was lurking beneath them.
The original Routemaster was a revolution in reliability and systems design. That was what made it so successful on the streets of London. Both TfL and Wrightbus worked hard within the constraints of the Mayor’s wider vision to deliver in this regard. In a city increasingly populated by hybrid buses, the NBfL fails to stand out. Yet it served as a catalyst for the creation of that world and forced both Wrightbus and the industry to rapidly modernise. It also brought Mayoral support for TfL’s desire to invest in kicking off a step-change in how they dealt with the contribution buses make to London’s air pollution and climate change in general. And, as always, where London leads other cities – and countries – follow.
Wrightbus’ problem, however, has been that those other cities have largely not followed by investing in vehicles made by Wrightbus themselves.
Johnson’s faith in his vision that international customers would flock to the NBfL proved misplaced. The technical innovation of Wrightbus’ product and the eventual reliability that came from its baptism of fire on the streets of London were handicapped by the vision that had been laid on top of them – the overall design and the multi-door model. Both only made sense when viewed through a rose-tinted vision of a uniquely British past and held no real appeal abroad. As of today, export contracts for the NBfL have been zero.
Wrightbus have continued to innovate and create other models. Indeed London itself has been a recipient of both. It has ordered 20 hydrogen double-deckers, intended to be the first in public operation anywhere in the world, from Wrightbus. Yet what is critical is that these are the only TfL buses currently on Wrightbus’ order book. The last NBfL was ordered back in February 2016, part of a batch of 195. A final order in the dying days of the Boris Johnson Mayoralty. The order received some criticism for both its timing and it’s cost, although TfL pointed out that the per-unit price at around £315,000 was now closer to the market rate for an equivalent vehicle. Ultimately, the order was made and this brought the total of buses ordered by TfL up to 1000, roughly half the original promised total.
The long-term gap in the order book this has created, along with the lack of overseas orders for the NBfL was always going to leave Wrightbus in a fragile position. This has been compounded by uncertainty in the UK bus market. The potential for local authorities to run or commission their own bus fleets has left other operators reluctant to invest, which has combined with a natural lull in the market to mean fleet orders have been down 30% across the industry for successive years now.
The elephant in the room
On top of this, comes the inescapable elephant that is Brexit. This may only be one of the factors affecting Wrightbus, but it is arguably the crippling final blow. Wrightbus is a Northern Ireland based supplier, dependent on parts and orders from the EU and beyond, a strong UK economy, and a stable period of national and local government. All of those pillars have been cracked by Brexit.
That JCB heir Jo Bamford, one of two potential major investors, pulled out is likely reflective of the uncertain future that all the above offers to the firm. That Chinese group Weichai did the same is similarly reflective, but also perhaps hints at another problem lurking under the surface at Wrightbus. This is that when it comes to technology and innovation, the company perhaps no longer has any worthwhile intellectual property to market. In recent years, this has been the big draw for Chinese firms looking to snap up weakened transport companies overseas.
If that’s the case, then it arguably sums up more than anything else the journey that Wrightbus has been on in recent years, and how closely that aligns with the rise and fall of the NBfL. What started as innovation has become the norm, and in that market both the NBfL and Wrightbus are struggling to compete. They have become bound up in hubris and a vision of a past that was never really true.
Indeed if Wrightbus is to survive then it may once again be dependent on the promises of the man who contributed so much to its current position – Boris Johnson. Not only is Wrightbus a key Northern Ireland employer, but it is also part of the DUP heartlands and can perhaps be described as a ‘solid, god-fearing’ firm. Its relatively recent expansion into new premises was largely pushed through planning due to DUP support, and those premises include a church on the grounds as part of the amenities offered to staff.
Indeed when the firm’s future began to look uncertain in July, Ian Paisley MP raised the question of Johnson’s support for its future in Parliament.
The Prime Minister will know that, in order to make the United Kingdom the home of electric vehicles, he will need to protect the intellectual property of those making the electric vehicles. Will he therefore step in and save Wrightbus — a company that he is very familiar with — which is facing significant economic hardship at present? Will he make that a priority?
Johnson enthusiastically replied.
It is a great pity, in my view, that the current Mayor of London—not a patch on the old guy—decided to cancel the contract with Wrightbus of Ballymena, which has been of great value to the people of this country. I give the hon. Gentleman an assurance that we will do everything we can to ensure the future of that great UK company.
In the last few days, the Prime Minister has let Thomas Cook, another historic transport firm facing not-dissimilar issues fall. In that instance he cited the ‘moral hazard’ that would be created, should he intervene.
Perhaps Wrightbus can draw confidence from the Prime Minister’s July promise that he will intervene here. They have perhaps more reason than most, however, to be sceptical of Boris Johnson’s promises.