The actions taken by P&O Ferries on 17 March were necessary to save the company, according to Peter Hebblethwaite
This story starts in the 1970s when P&O Ferries signed up to a collective bargaining agreement (CBA) that committed it to a fixed crewing structure. On 17 March 2022, Peter Hebblethwaite was the latest in a long line of the company’s CEOs to be confronted by spiralling losses and business recovery options that were limited by an agreement made almost half a century ago.
“The CBA compelled us to operate every ship with two crews in each of two watches, forever,” says Hebblethwaite. “Operationally, this extended to 4.8 crews per ship when holidays, sickness, training and other absences were accounted for. Most other operators manage their fleets with around half the number of seafarers that we were committed to employing. It simply wasn’t possible to operate competitively or profitably with the structure that I inherited.”
Hebblethwaite’s predecessors all knew that breaking the agreement would invoke widespread wrath and so dodged Hobson’s choice. So why didn’t he follow the same well-trodden path too? “We had a number of options, but none were very palatable and most only reduced our losses or delayed us having to confront the issue,” he explains. “Only one gave us an opportunity to stem the losses and rebuild a sustainable business for the future. And then ultimately it came down to consult or not consult.”
It was inevitable that skipping the consulting phase of the redundancy process would have unpleasant consequences, yet Hebblethwaite believes there was no viable alternative. “If we followed the usual redundancy framework then our most optimistic forecasts were that we’d see additional losses of £309 million ($373.3 million). We’ve been losing around £100 million ($121 million) annually for the past few years and didn’t have anything like this amount available to us. If there had been any other option, we would have taken it.”
Hebblethwaite has been cast as the archvillain, yet he counters that he has also protected jobs that could otherwise have been lost too. “I do recognise that we did not consult, but within employment law if you fail to consult you are required to compensate for that, which we have done upfront and in full,” he says. “Furthermore, we have compensated people with the most generous redundancy package in maritime history. But please can we not lose sight of the 2,200 people whose jobs have been saved. And I’ve been really encouraged and inspired by how these people are pulling together to rescue our business.”
With optimism returning within the walls of P&O Ferries’ headquarters at Channel House in Dover, Hebblethwaite remains resolute about the wisdom of his decision and the company’s future prospects. “In the outsourced model that we moved to, which is an industry standard used by the vast majority of shipping operators, we now only pay people that are onboard working,” he says. “This has given us a framework for survival now, and a chance to thrive in the future – importantly a means to protect jobs for the long term.”
While ruefully reflective, Hebblethwaite is committed to his purpose. “We saw what happened to trade in the UK when we were not in service – nobody is well-served by an unviable P&O Ferries. Every action that we take is part of a much bigger ambition to radically change P&O Ferries so that we can become an industry leader again.
“As difficult as the last few months have been, professionally and personally, context is everything – we get to take an amazing legacy business on an important journey back to being the leading ferry operator in Europe and I am excited about it. I do regret the impact that my decisions have had on 800 seafarers and their families, but I passionately believe that I have a responsibility to save this iconic British brand and protect the 2,200 other jobs that were at risk. It was never going to be easy.”
Looking to the future, Hebblethwaite is focusing improvement efforts on three fundamental pillars. “We need to have the most efficient and flexible seagoing operation in the industry,” he says. “We must convert sales into profit more efficiently than anyone else and we have to deliver the best customer experience.”
For now, tourism traffic is back to 2018 volumes on all routes other than Dover-Calais where the market is still down across the board, but P&O Ferries is achieving its share of the Dover-Calais market and freight customers are returning. Hebblethwaite says that 2022 has become the year for “turning the vicious circle into a virtuous circle.”
2023 will start with significantly more positive news as the company looks forward to the arrival of Pioneer and Liberté, the two new double-enders hopefully dubbed the ‘Ships of the Future.’ Hebblethwaite is confident that their arrival will make a transformative contribution to the business, with a strong play in each of his priority pillars.
But there is still a lot of mileage left in this year and much to accomplish as the team in Dover unites to rebuild the fractured brand. Time will judge whether Hebblethwaite et al can turn it around at P&O Ferries. If they do, perhaps critics of the events of 17 March will soften in their judgement?
This article was first published in the Autumn/Winter 2022 issue of Cruise & Ferry Review. All information was correct at the time of printing, but may since have changed.
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