National Express & the pension fund risk of it killing American children?

This morning I went to a breakfast seminar in London run by the North American transport trade union the Teamsters. This was before the start of the annual Pension Governance conference run by PIRC

The collection and return home of school children by the iconic yellow buses is a huge business in the USA.  There are 500,000 such buses transporting 24 million students per day.

What the Teamsters are concerned about is the USA arm of the British listed transport Company National Express (Durham School Services).

Which is accused of not only treating its school bus drivers very poorly as employees but also consistently breaks health and safety rules for its staff and student passengers. Who often have to endure overcrowded, badly maintained and potentially unsafe buses.

The Teamsters had brought two of their actual yellow school bus drivers to the UK to speak to us about the awful, bullying, nasty and unsafe work practices they have to endure. They told us first hand of their unacceptable experiences while working for National Express in the United States.

Not only were they treated with contempt and disrespect by their management, it is also clear that the safety of drivers and the children is at risk due to overcrowding, defective and poorly maintained equipment, worn tyres and drivers forced to work despite being ill.

The National Express model is to win school bus contracts by the lowest price tender and then make profits by cutting wages and maintenance to the bone and beyond.

This is a disaster waiting to happen. Apart from the absolute morale argument that we do not want   companies we invest in on behalf of our pension scheme members to act in such a way, nor do we want them to face the risk of legal or even criminal action.  There is also ongoing financial reputational risk to the company for being such a poor and irresponsible employer.

The USA has a reputation as a litigious Country. If there was to be a mass tragedy on a yellow school bus which had been previously reported to be unsafe or if the driver was sick but had been forced to work to save his job you will expect at the least a massive law suit.

The experience of the disaster in the Gulf with BP tells us that safety should be a key issue for UK pension trustees. As asset owners it is in our own long term interests to contact our fund managers and make sure that they investigate these complaints.  Then they need to take action against National Express to make it act in a responsible and safe way.

An Offer You Cannot Refuse - Support the Teamster School Bus drivers

Bit last minute, but UNISON Transport Executive agrees to support the UNISON Capital Stewardship Forum efforts to ask our funds to vote in favour of a motion sponsored by UNITE (TGWU) and US trade union funds on Thursday 12 July 2007.

On Thursday there is the First Group plc annual shareholder conference in Aberdeen. There is a resolution at this conference moved by socially responsible investment funds Domini Social Investments and the Calvert Group, together with 142 Unite (TGWU) members at First Group and 2 other trade union pension funds. They filed the resolution in light of ongoing labour relations concerns, particularly at First Student, Inc., the company’s U.S. subsidiary. At last year’s Annual General Meeting, First Group admitted to anti-union acts. The Board then urged a vote against the shareholder proposal stating that the company was committed to “stamping out anti-union behaviour in the U.S.” and enforcing its own policy of neutrality toward unions.

Despite this commitment, the company has failed to protect workers from intimidation and harassment by U.S. manager’s intent on thwarting workers’ efforts to join a union, as documented in a recent report by three labour rights experts.

Support for the human rights resolution at First Group, plc is critical to protect the interests of investors as First Group expands operations throughout North America and takes on greater operational and financial risk.

Many LGPS funds will invest in First Group. Please let your money managers know that you will be carefully monitoring their vote on Resolution 15 at First Group. The proponents believe that supporting this proposal will send a clear message to management that reducing labour risks and grievances is vital to First Group’s long-term success and sustainability. They urge investors to vote for Resolution 15.

If you can, please write to your fund managers (via your investment committee Chair?) asking them to support Resolution 15 at this AGM. If it is too late then make sure that during the next investment panel meeting you will be questioning the fund managers on how and why they voted on this issue.