Thursday 8 December 2016

Richard Curran: McRedmond faces big job to deliver change at An Post

Published 25/09/2016 | 02:30

David McRedmond Picture: Brian McEvoy
David McRedmond Picture: Brian McEvoy

When David McRedmond takes over at An Post next month, the surroundings of his GPO office won't be unfamiliar to him. His father had been editor of the Irish Independent just around the corner.

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So he will appreciate the past history and tradition of the place, but he will have to be very focused on the future.

'A lot done but more to do' might be the mantra at An Post, given the way its industry is changing - and rapidly.

The company has responded to a shrinking traditional postal delivery market by cutting costs, reducing the number of post office outlets it owns, while growing profits on the back of parcel deliveries and other ancillary interests.

Technology should have killed off old-style post office companies around the world, but the explosion in online shopping that has accompanied internet growth has been a godsend.

An Post increased its operating profits last year to €5.2m. But when pension interest of €9.6m and additional tax charges were added, it made a full-year loss of €2.4m, down from €5.5m in 2014.

All is not rosy in the garden. Its chairman, Dermot Divilly, spelled out the challenges when he took over earlier this year.

He said: "The present model, whereby the profitable retail and other group businesses subsidise the loss-making mails business is, in my view, becoming increasingly unsustainable."

He also said that if Ireland "wishes to maintain a post office network of a comparable size into the future, given its historical, community and social value, a radical rethink of the funding and business model is required".

Mr McRedmond will have to contend with an industry that continues to change.

The more it can compete on the delivery and retail side, the more it will be hampered by reductions in traditional mail and the financial burden of a very large post office base.

Traditional mail deliveries are on track to be 50pc below their 2007 peak within the next five years.

Closing post offices, mainly in rural Ireland, is a tough political nut to crack, especially when the Minister for Communications is a rural TD from Roscommon. However, Mr McRedmond is no stranger to cost-cutting, trade unions and political sensitivities. Eircom was privately owned when he was commercial director but it was heavily unionised and cost-cutting programmes had to be negotiated. Eircom did have the luxury of a large cheque book at the time, which helped secure cost cuts.

When he took over at TV3, the station was riding high, but about to get hit by the tsunami of the economic crash.

Mr McRedmond steered the station through the crisis and out the far end.

He also did that by committing to produce more Irish programming, which was a gamble that could have gone wrong.

Facing down trade unions, independent TDs and rural ministers won't be quite the same as confronting Glenda Gilson and the Exposé girls.

Limerick rises up from Anglo's ashes

You have to hand it to Limerick city. It came right out of the traps with its €500m investment and jobs plan at a time when everybody is crying about Brexit.

Chaired by former Kerry Group managing director Denis Brosnan, the city's new development company is communicating a very different message about the future than just a few years ago.

So what has changed? Firstly, the economy has recovered more than many expected and this is mainly due to foreign direct investment. In fact, in the last five years, there have been several thousand multi-national job announcements for Limerick. After the closure of Dell's manufacturing operation during the crash, people in the Mid-West felt the place would never recover.

Having a Limerick man as Minister for Finance probably didn't do any harm over the last five years either.

But equally, the city council has run with many of the recommendations of the regeneration programme. Under the new jobs and investment plan for Limerick, it will develop the Opera Centre, as a location for companies and job creation.

This site was put together during the boom by developers David Courtney and Terence Sweeney.

They planned to build a massive shopping centre in the middle of Limerick but ran out of luck, money and time. The company behind it, Regeneration Developments, had debts of €140m by the time it went bust and receivers were appointed.

Anglo Irish Bank had jumped in by buying 50pc of this company in December 2007, even though it wasn't even banker on the project. How late in the day was that? It would have cost the bank around €60m at the time when it was obvious the property bubble had burst.

It was another €60m heaped on to the debt mountain of Anglo that was picked up by the taxpayer. The site was valued at around €12m in 2010. Its accounts for the period say its value may have been overstated at the time. There were even moves to have it declared formally derelict.

So you can bet Limerick Council paid a lot less than that for it.

So it is good to see the council doing something worthwhile with the site and turning something positive out of such a disaster.

Room to roam - but just not around the UK

The implications of Brexit are beginning to reveal themselves in all sorts of ways. This week, Ryanair announced that as part of its scaling back of services in the UK, it was dropping two of its routes from Derry Airport. Given that a huge percentage of people who use the airport are actually from Donegal, it is bad news in the South too.

Meanwhile, the European Commission presented as good news its U-turn on EU mobile phone roaming charges. But Brexit may end up at play here too.

An initial plan to only allow people roam for a maximum of 90 days per year was scrapped because, well, it was a rubbish idea, basically.

But what about roaming in the UK? Once the UK leaves the EU, no price caps will apply. All of these tariffs ceilings are arranged on an EU-wide basis. Other countries, like Switzerland, which is outside the EU, has its own roaming arrangements.

The EU is moving towards the removal of roaming charges and data price caps across all EU member states. In 2013, there was an 800pc gap between data-roaming charges and average national at-home charges across the EU. In 2014, the gap was 300pc. Once the UK leaves, it could be open season with the mobile operators on voice and data.

It won't just affect Irish business people on the red eye to London for a meeting, or families going on holidays in Scotland. It could be very bad news for Irish people living in a border area where your phone is roaming in and out of a UK signal every day.

Roaming charges, especially on data, are an enormous earner for mobile phone operators. Brexit might just breathe new life into an area of European business they thought was gone.

I wonder what Brexit will throw up next week.

Sunday Indo Business

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