There's more than one way to skin a cat

Thers a lot of talk about the ferries these days, I see both Paul MacNeill from the Guardian and the Premier both hinted at the mistake of signing away the constitutional guarantee. I have wondered if there is appeal process.

Anyway, I want to talk about an even more interesting aspect of the ferry service, who makes the money and how much. Read on, because I think you are going to be in for a big surprise.

Have you ever watched the old shell game where the pea is put under a walnut shell and no matter how close you watch you can never figure out what happens, thats what this is all about. So after I looked at the constitutional part of the equation I continued trudging along to figure out, how much money is in this game. Well, the first thing I discovered was that the operator of the service was given what amounted to "the right to operate a concession" thats what they called the service "a concession". Then I found out that the concession came up for renewal on a regular basis. Funny I thought I've never seen a tender notice in the paper maybe they do it a different way.

Exactly, it turns out the different way is that the Department of Transport would sit down with Northumberland Ferries and they would negotiate the terms of the next concession period. This process would produce what was known as the operating agreement. Ah ha I thought I'll get a copy of that and see whats going on. You see that operating agreement is a public document and if a Company wins a Government tender you get to see what a good job those doing procurement for government do, how they look for the best price for the taxpayer blah blah blah.

And seeing as how this particular Government contract never went to tender I was equally interested in seeing what kind of negotiators these birds were. So off went a letter and some phone calls to the Federal Minister of Transportation requesting a copy of the last operating agreement. Well blow the man down sailor, it was no time at all until I got a phone call from the Ministers office. "What do you want the agreement for" the caller asked, well I said aside from the fact that I have a right to see it for curiousities sake I am interested in whats about to happen with the ferry service down here. "I don't think we can give it to you" he went on. Hmmm I thought "we'll see about that" so after a long session I must have done pretty good job of talking because eventually he got the point that I wasn't going away and he agreed to send it.

And sure enough one day a big package arrived and inside was a document that stared with something like "Agreement between the Government of Canada and Northumberland Ferry Corp, it appeared I had struck paydirt. But when I opened it, the first thing I noticed was that every where there was a place to mention a monetary amount it was blacked out. So I phoned the guy "sorry he said but we can't tell you the $ amounts" I didn't argue with him but made a mental note to figure out how to get it.

Well let me tell you it is quite a document and not at all like I thought it would be. I figured that a subsidy amount was agreed to and then the Company would try to operate the ferry in an efficient manner to make some money, you know, things like market the ferry experience, polish up the service on board, make sure the schedule matched the needs of the travelling public, truckers etc. Was I ever naive to try to apply some old fashioned business principles to it and what a lesson, I learned there is an old saying " I have a plan so cunning that if I put a tail on it you could call it a weasel" and I just stumbled upon it.

You see, the way the agreement reads it was impossible for the ferry service to lose money, all they had to do was run the boats back and forth. It didn't matter if the boats only carried one vehicle a trip or if they were full from spring to fall it didn't effect the bottom line. They made exactly the same amount of money. Basically the agreement goes like this, all expenses are added up, fuel, wages, repairs food etc, everything it takes to run a ferry and then from this is subtracted the amount of money they figure is going to taken in from tolls.

Now get this the amount left over is the profit, sounds OK so far, except that the AMOUNT OF THE YEARLY PROFIT is negotiated before any expenses or revenues are determined.

If the expenses go up the amount given to cover them goes up the exact amount to keep the profit the same. The same with revenues if its a good year the extra money goes to Government and again the profit stays the same.

Holy macaroni I thought I wouldn't mind some of this milk. It just seemed like to good a deal for Northumberland Ferries, no risk just show up every few and go through the sham of a negotiation and take the money home. But I still hadn't figured out how much that was so I set out to get the figures and was I in for a shock.

I can't disclose how I came upon a copy of the operating agreement that hadn't been inked out and when I saw the number for the profit it was stunning, not because it was so high but because it was so low. If I remember right, and this figure is close, the total corporate profit before taxes was $185,000.00. Now come on, this is a major Company and by the time you distributed that in a dividend to all the shareholders it just didn't make sense and because I never saw any of them lining up at the soup kitchen there had to be something else. You see so far all I had found was the goose and you can read tomorrow how it was able to lay a big fat golden egg each year.