Nightfire the business model was not unviable at all.  This was not the problem with the company.  There are many many examples of companies entering markets to create a play based on disintermediation.

I know it is an older thread but those were the days when a smaller operator could scare the bigger guys.

What a ridiculous statement.

Several smaller operators doing a much better job today than El Zorro ever did, and without stealing from their employees.

I don't think so.  El Zorro did build business that was not there and since there demise that business has gone.  I cannot comment on the employee situation.

Smaller operators have the potential to scare the bigger guys because of lower cost structures and are seen to be more nimble.

If by more nimble you mean that they have the ability to declare bankruptcy and then phoenix themselves opening up again under a new name and avoiding paying anyone then you might be right!

Still waiting for Transvolution to start running and make their $$$ millions so they can pay SRHC and the VGR as well as all of the employee entitlements  

How did El Zorro build business and then it disappear when they went bankrupt from running an unviable business? Did they open new factories to carry new freight ? Where were all of the train loads of new freight coming from when El Zorro started and where did it all of sudden disappeare to when El Zorro went broke?

Run by the same people who think it’s viable to build a passenger train line for half a mini bus full of passengers, bevans?

El Zorro should not have been in business as long as it was. SHRC had no idea of how to run a hire business, and allowed ridiculous debt to pile up and up. The rule in the hire industry is that if the bills are not paid on time, the company takes the equipment back. Further business is then done on a cash deposit system.

I give up.  You guys are missing the entire point or perhaps I am not explaing myself properly.  I am not sure how we got onto the subject of business viability.  The point is market forces rely on supply of services and their prices can vary.  In order to create price/supply tension you need multiple players.  A smaller company coming into a market can offer same or better services for a cheaper price then that can cause price reduction on current contracts and/or new contracts to be established with the new entity.

Qube and SCT have done exactly that with bluescope.

I did this successfully in the telecommunications optical fibre area.  It has been done may times.

El Zorro failed yes they did but not because they were a new entrant into a market dominated by BIG organisations, and not because they had a bad business model, they failed for other reasons.

I see there is yet another barb from Richard sadly.  Tell me Richard, did you ever see the financial accounts for El Zorro?

Nightfire the business model was not unviable at all.  This was not the problem with the company.  There are many many examples of companies entering markets to create a play based on disintermediation.

These companies have very deep pockets and are willing to part with a vast amount of capital to secure a desired market share (where they can jack up their prices to cover past losses)

El Zorro failed yes they did but not because they were a new entrant into a market dominated by BIG organisations, and not because they had a bad business model, they failed for other reasons.

A summary of El Zorro's demise follows.

In May 2013 Consolidated Rail Leasing filed a petition in the Supreme Court of New South Wales to wind up El Zorro. El Zorro director Ray Evans said cash flow problems had been caused by agricultural products distributor Cargill refusing to pay his company for work carried out during the previous four weeks. Evans said that although El Zorro owed Cargill $2 million as a long-term debt, there was a repayment plan in place, which was not being fulfilled. Due to this Cargill had recently stopped all payments to the rail operator.
Michael Vines president of the Victorian Goldfields Railway, which leased a locomotive to El Zorro through the Seymour Railway Heritage Centre, said in a newsletter that his organisation had not been paid for nine months for the use of the locomotive.
At the same time, the NSW branch of the Rail Tram and Bus Union said it was talking to legal representatives over El Zorro's failure to pay full superannuation entitlements to its members since February 2013. The Seymour Railway Heritage Centre is reportedly owed more than one million dollars by El Zorro in relation to the hiring of the centre’s rolling stock to the company.
The company ceased trading on 4 June 2013. The Australian Securities and Investment Commission listed El Zorro Transport Pty Ltd as being under external administration following the submission of documents on 14 June The company subsequently entered liquidation with the liquidators, Hosking Hurst, appointed by the Supreme Court of NSW.


That is a sad litany of managerial incompetence by El Zorro, and its creditors who allowed El Zorro far too much latitude. Cash flow problems allegedly caused by Cargill refusing to pay for only four weeks' work, whilst being owed $2 million in return,  is a bad joke.

Thanks for business operation lesson bevans and how you successfully used it in the telecommunications industry with fibre optic cable.

Would that be why nbn have previously sent emails to head contractors that all sub contractors must have one English speaking employee on site at all times, due to previous issues. I’m not going to name nationalities , but imported labour has undercut the price of hard working Australians.
With rumours the imported staff are getting paid less.

Is that the type of business success you mean?

El Zorro failed yes they did but not because they were a new entrant into a market dominated by BIG organisations, and not because they had a bad business model, they failed for other reasons.

They always had an operating expense bigger than revenue coming in. How the smeg did they NOT have a bad business model.

Just because they had the gunzels equivalent of a wet dream for consists doesnt mean they were good.

Nightfire the business model was not unviable at all.  This was not the problem with the company.  There are many many examples of companies entering markets to create a play based on disintermediation.

These companies have very deep pockets and are willing to part with a vast amount of capital to secure a desired market share (where they can jack up their prices to cover past losses)

Qube can undercut on the scale on logistics, it's how they got the Maryvale contract. They cover the additional trucks going to Melbourne as well, along with handling the terminal at either end.

A smaller company coming into a market can offer same or better services for a cheaper price then that can cause price reduction on current contracts and/or new contracts to be established with the new entity.

Yes but if the price they are getting for the work does not cover their costs then it is doomed to failure. Anybody can win business by undercutting their competition, pretty much all you need to do is drop your price and the work will come.

In the case of El Failo they may have won business from road by offering to do work that the likes of PN etc didn't want or they may have taken business from the existing players by offering to do it cheaper.

The key to running a successful business is setting that price so you at least break even. Otherwise it is a flawed business model.

As pointed out by other posters above integrated logistics companies like Qube are now starting to win a bit of business back to rail by offering a flexible full service model. Got too many containers for the Hay train? No worries, we'll send out some trucks. Need a last mile service for your copy paper? No problems, we'll send out some trucks.

However the El Shonko failure may have also had a detrimental effect on the total rail business, if a customer got burned when they fell over with delays or unfulfilled contracts they may well have gone back to road never to entertain the idea of using rail again.

El Zorro may have given the railfans the visual delight of VR liveried motive power that it was hiring to operate the trains but it came at a cost to those providers of said motive power. It was a harsh lesson to learn.

El Zorro may have given the railfans the visual delight of VR liveried motive power that it was hiring to operate the trains but it came at a cost to those providers of said motive power. It was a harsh lesson to learn.

Though the VR liveried motive power were mostly retired from revenue service around the 1980's ~90's (after been superseded by more modern / efficient machinery)

The old loco's were brought back Into revenue service, sentenced to "hard labour" crippling mechanical failure was more or less a certainty.  

Just how long was that going to last  ?

The old loco's were brought back Into revenue service, sentenced to "hard labour" crippling mechanical failure was more or less a certainty.  

Just how long was that going to last  ?

More to the point, how were the groups who maintained these locos going to pay for any maintenance, given the fact that El Zorro was not paying them?

I considered Great Northern a good company who found markets in the fields of loco hire, loco/wagon maintenance, crew provision and infrastructure maintenance. If memory serves it was a massive increase in PLI Insurance that crippled them as the model had been seen to work till then. SSR was born from the ashes of this operation as we know with the acquisition of the locos and operator accreditation from CFCLA 12 months after GNRS ceased operations under it's own accreditation. Without one falling the other may not have happened but who knows for sure.

I know it is an older thread but those were the days when a smaller operator could scare the bigger guys.

What a ridiculous statement.

Several smaller operators doing a much better job today than El Zorro ever did, and without stealing from their employees.

By scaring the big guys, are you acknowledging the fear held by many rail workers when they knew the oncoming headlight was an El Zorro train?

El Zorro may have given the railfans the visual delight of VR liveried motive power that it was hiring to operate the trains but it came at a cost to those providers of said motive power. It was a harsh lesson to learn.

Though the VR liveried motive power were mostly retired from revenue service around the 1980's ~90's (after been superseded by more modern / efficient machinery)

The old loco's were brought back Into revenue service, sentenced to "hard labour" crippling mechanical failure was more or less a certainty.  

Just how long was that going to last  ?

Age shouldn't mean much if they are properly maintained and aren't already beyond repair, and you aren't doing stupid crap like running them in notch 8 at 1 km/h up a hill for half an hour, which would either burn out the traction motors or put a few holes in the rails or both. Getting bogged inside a metal rut you made by yourself would be pretty embarrassing, such as shown here.

Trains aside, I see and hear 1970s/80s era Kenworth/Mack etc. trucks all the time, usually making a ridiculous amount of noise hauling 8- and 12-wheeled trailers (if not two trailers) regardless of whether they're full or empty or even when it's just the tractor itself running "light engine" (for lack of better term). Before anyone mentions it, no, it's not (entirely) because the truck has a Jake brake fitted thus makes noise when slowing down to save the brakes, these old trucks are just as noisy when accelerating from the lights and maintaining speed on a completely flat section of road. I'm assuming they are 30+ years old given the amount of noise they make, they would have to predate the 90s noise laws and the Euro series emissions standards (yes, when they accelerate they sometimes leave a pair of black smoke plumes in the air that would rival an Alco, and of course they have straight vertical pipes with no mufflers).

TL;DR, I hear vintage big rigs all the time on Eastlink or the Ringwood Bypass (and also a fair share of straight piped (or muffler-may-as-well-not-exist-piped) Harleys, fart-cannoned ricers and wannabe-heroes in 6-cylinder Falcodores too but that's another matter entirely). Clearly they still work otherwise they would have been replaced by something built this side of the year 2000 long ago.

"Age shouldn't mean much if they are properly maintained and aren't already beyond repair, and you aren't doing stupid crap like running them in notch 8 at 1 km/h up a hill for half an hour, which would either burn out the traction motors or put a few holes in the rails or both. Getting bogged inside a metal rut you made by yourself would be pretty embarrassing, such as shown here."

Heihachi_73

The linked post seems to have been deleted.

TL;DR, I hear vintage big rigs all the time on Eastlink or the Ringwood Bypass (and also a fair share of straight piped (or muffler-may-as-well-not-exist-piped) Harleys, fart-cannoned ricers and wannabe-heroes in 6-cylinder Falcodores too but that's another matter entirely). Clearly they still work otherwise they would have been replaced by something built this side of the year 2000 long ago.

The worst ones up here are the tradie utes with various bits of the emissions system strategically removed.

Clearly old enough to have owned a V8 Commo or Falcon ute when they were in the latter stages of their apprenticeships these blokes yearn for the days when they drove a really good sounding rig with that cool V8 note.

Unfortunately hacking into the muffler of a six cylinder diesel with an angle grinder doesn't produce anywhere near the same glorious effect but simply serves to annoy everyone else on the road along with those of us unfortunate enough to live within earshot of the main drag. Because no one is impressed the poor unfortunates are then forced to drive in a really aggressive manner preferably right up the smeg of the old lady in front piloting her Hyundai to the shops at the signposted speed limit just to get noticed.

And like the straight piped Harleys the local constabulary don't bother doing anything about it either because the confrontations are too much like hard work or more likely that they know that the defected vehicle will get an RWC and then the offending audio device will go straight back on.

"Age shouldn't mean much if they are properly maintained and aren't already beyond repair, and you aren't doing stupid crap like running them in notch 8 at 1 km/h up a hill for half an hour, which would either burn out the traction motors or put a few holes in the rails or both. Getting bogged inside a metal rut you made by yourself would be pretty embarrassing, such as shown here."

Heihachi_73

The linked post seems to have been deleted.

Fixed, I've changed the Reddit URL to "old" instead of "www" so the image will show.

A sad sight!

El Zorro may have given the railfans the visual delight of VR liveried motive power that it was hiring to operate the trains but it came at a cost to those providers of said motive power. It was a harsh lesson to learn.

Do you mean in terms of owed payments not recovered or something else or both?

El Zorro may have given the railfans the visual delight of VR liveried motive power that it was hiring to operate the trains but it came at a cost to those providers of said motive power. It was a harsh lesson to learn.

Do you mean in terms of owed payments not recovered or something else or both?

The continued hire of locos despite not being paid for existing hire fees. I thought it would be a long shot for those providers to get the money owing to them when there were larger creditors in line First for any sort of remuneration (I dare say they still had to write some off). If a provider of motive power does this again with the knowledge of what happened a decade ago they need a head-check.

Yes that has been a real problem for sure.  There were many problems but El Zorro had come very good business and it could have been fixed when I reviewed the accounts with a business partner but the information provided could not easily be verified without doing DD.

Figures available show that El Zorro owed:-
Cargill: $6m plus.
Vic Gov Rail: $3m plus.
CFCLA: $2m.
Former Employees: $1.4 m.

Add to those  "a string of motels": average $5k each.

El Zorro's 3 consecutive years losses were; $3.5m, $6.5m, $6.5m.

I cannot understand how it could have been said to have had "some very good business" with figures like these. Anybody can run a business if he doesn't pay his bills, for as long as creditors let him get away with it. Business doesn't just mean getting the work; it means getting the work, making enough money to pay the bills, and having some left over for a roof over the head and three meals a day. In my opinion, El Zorro was a latter day business train wreck. Others have succeeded, so it shows it can be done. El Zorro failed lamentably, and the creditors, with the exception of employees who had nowhere to turn, got what was coming to them for their appalling lack of financial control.