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BUS RIDE TO EMPOWERMENT

11 Aug Transport

GOLDEN ARROW BEGINS NEW CHAPTER IN ITS LONG HISTORY Behind an inconspicuous paragraph in THISDAY’s July 21 business section – HCI acquires Golden Arrow – lies a fascinating story of a South African enterprise that spans 143 years. Government policy today favours small, privately owned undertakings, but one cannot prevent a business from growing, nor avoid its being bought out by a larger company. More than 70 years ago a tiny Cape Town concern called Golden Arrow began life with a single bus. Aware that its business and future depended upon reliable service, the little company sensibly set high standards in its modest workshop and built up a contented staff. While other operators cut costs by skimping on maintenance and wages and ran themselves out of business, Golden Arrow expanded healthily. Its principal services ran to Mowbray station where, by the 1940’s, a Golden Arrow bus left and arrived every minute during peak hours. Fares remained amongst the lowest in South Africa, once staying unchanged for more than 10 years. Golden Arrow made news in 1956 when it effectively took over the much bigger Cape Electric Tramways group, that name and identity of which were retained. Takeovers, of course, are the name of the game in private enterprise. Notable mergers and acquisitions have highlighted tram and bus history in the Cape, but essentially the same organisation has maintained an unbroken presence in the Mother City, serving greater Cape Town since 1863. This South African commercial venture began when the Cape Town and Green Point Tramway company was formed, two years before its first horse-drawn tram set out in 1863. Alone among South Africa’s four biggest cities, the local authorities in Cape Town have never owned and subsidised a public transport system, In 1894 the company was combined with a separate undertaking called City Tramways Company Limited, which had been registered in 1878. Twenty years later City Tramways and the Port Elizabeth Electric Tramway company were brought together under a new parent – Cape Electric Tramways – a pretty substantial entity for the decade before 1900. By 1896 electricity had ousted the horses, four years before the first electric tram was seen in London. In 1911 City Tramways bought its first bus. Although from the beginning Capetonians were accustomed to double-deck trams, the earliest double-deck bus did not arrive until 1928. Diesel motive power came in 1936, a year after the inaugural electric trolley buses, always known as trackless trams in Cape Town, ran in the city bowl, the dish-shaped indentation in the foothills of Table Mountain behind the citiy centre. Sixty years ago a first-class ticket to Wynberg cost 8p, a penny cheaper than the same bus trip. For years it was to be suggested many times that bus fares might be lower – like those on the trains – if there were no need for the private operator to make a profit. Profit, however, provided dividends for the shareholders who had put up the capital, saving ratepayers this burden. City Tramways not only covered its own expenses, but faced additional costs that were not encountered by municipal bus operators, such as municipal rates and provincial fees. Prudently it retained much of its profit to help find future bus purchases. Train fare income contributed nothing towards capital costs and the railways paid no licence fees. More to the point, train journeys would have cost passengers more than journey by bus had it not been for generous government subsidies. South Africa has subsidised train fares liberally always; in recent years many commuters have contributed only about 30 percent of the costs incurred in carrying them After 1948, when the apartheid government moved people to far-off places, at least the burden of travel cost was recognised and bus subsidies came to Cape Town for the first time. There was no question of a private company, as with municipalities elsewhere, introducing below-cost fares, running at a loss and having this made good, no matter what its extent, by a benevolent political machine,. Instead the subsidy was effected via actual, audited ticket sales, the effect being to lessen the effect on the passenger, not to provide a handout to the operator. This formula still applies today. In a surprise 1998 acquisition Cape Tramways was absorbed into the Duros stable, an enterprise better known for canned fruit, furniture and ladies stockings. An extensive shopping expedition brought other large transport companies into the fold, but it did not take the principals long to discover that urban buses are not the world’s most lucrative avenue for investment. By 1992 Duros had disposed of all the transport subsidiaries. In Cape Town, in a management buy-out of City Tramways, it was decided to re-establish the Golden Arrow identity. In an innovative move in 1994 the shareholders donated 50 percent of the company to a newly created foundation in which the company’s fortunes are shared with the community it serves. This unique concept funds, out of the dividends, underprivileged community projects, bursaries and benevolent causes. Continuing with constructive change in step with government policy, chairperson Nic Cronje announced last year that the company’s black economic empowerment (BEE) profile – already a leader in its field through the Golden Foundation, which has received international recognition – was to be further enhanced. The fruit of this was seen last week when Hosken Consolidated Investment (HCI) announced it had finalised the purchase of Golden Arrow’s entire shareholding for R250 million. The result of this, HCI chairperson Marcel Golding says, is that the Golden Arrow comes under the control of a prominent black empowerment shareholder “marking a new chapter in its long history”. The Sactwu (South African Clothing and Textile Workers Union) he points out, is “the largest and dominant shareholder in HCI” Golden Arrow chief executive officer Nic Cronje comments: “Having a shareholder with a large social base will align our bus service even more with its commuters”. THE FUTURE Elias Mphande is chairperson of the new Golden Arrow board and Marcel Golding (chairperson of Hosken Consolidated Investment) is his deputy. Existing executive directors Nic Cronje, mark Wilken and Barry Gie continue in office. In Golding’s words: “Hosken has great confidence in management’s expertise in running Golden Arrow and its presence …. Will not only assist to ensure a smooth shareholder transition, but provide the support required to steer the company into the future. THE BACKGROUND Marcel Golding, a former chairperson of South Africa’s standing committee on mineral and energy affairs in parliament, was appointed chairperson of Hosken Consolidated Investment following its takeover by the Mineworker’s Investment Comaony and the South African Clothing & Textile Workers’ Union investment group by means of a reverse listing. In 2000 the Hosken group was ranked third in the Sunday Times Top 100 companies survey. SOME HISTORY At the end of June 1885 the motive power of Cape Tonw’s City Tramways company – according to the 1886 director’s report – comprised 17 horses. Following adjustments (“sold five and shot one”), the balance at June 30 1887 was 37, a net gain of 20 for the year. ‘The cost of horses’ says the report now stands at £646 12s 6d, but as there has been a great fall in the price of horses during the past five months, it will be necessary to write off a sum for loss in selling, death and depreciation.’

Source: This Day – Rollo Dickson