AA

AA "profits from failing to fix a car at roadside"	Daily Mail April 4th
THE AA has a financial incentive to take broken-down cars to a garage rather than repair them at the roadside, it emerged yesterday. The motoring organisation has forged a deal with a chain of repair garages which has led to accusations that it is betraying its members. A leaked memo has revealed that the AA receives £10 for every vehicle it takes to a Nationwide Autocentre for repair. The system is currently undergoing trials in two huge areas - the North West and South West of England. The AA says the deal will be extended over the whole country if the trials are successful, while Nationwide has plans to increase its 225 garages to 300. Unions representing one in three of the AA's 6,700 staff say the deal will anger its 16million members. They accused the new venture-capitalist owners of "asset stripping" the 101 year old organisation. It was also claimed that patrols were being incentivised to sell parts at the roadside at "exorbitant" rates. A battery which can be for around £40 at retail outlets is being sold by the AA for £62. But the organisation - now with the new motto "You've got AA friend" after the Carole King song - insists roadside repairs are its "one number priority" and that eight out of ten breakdowns are handled this way. The deal with Nationwide was revealed by the leak of an AA "communication update" to staff. It says: "Every time they take work into NW (Nationwide Autocentre) they pay us £10 for every job. It is imperative that we direct as much work as possible in their direction."	Paul Maloney of the GMB union said "There is an incentive scheme in operation that benefits patrols every time they take a vehicle to one of these Nationwide Autocentres. There is a direct incentive not to repair vehicles at the side of the road." He estimated that with 2,250 of the 11,000 breakdowns a day taken to garages, the AA stood to make around £800,000 a year. Mr Maloney blamed pressure to make money for the AA's fall into third place for breakdown response times - behind Britannia Rescue and Green Flag, but ahead of the RAC. The AA was owned by its members until 1999, when it was demutualised and sold to Centrica, owners of British Gas. It was bought out by venture capitalists CVC and Permira less than two years ago and operating profits more than doubled, to over £190 million last year. The AA has around 43 per cent of the market and twice as many members as its nearest rival, the RAC. Chief executive Tim Parker, 50, has built his reputation by sharpening up and slimming down companies such as Kwik-Fit, from whose sale he made £25million. He has cut 3000 AA jobs and closed or sold off services centres, tyre fitting, roadwatch and vehicle inspection units which were loosing £30million a year between them. A spokesman for the AA said last night: "In two trial areas, our patrols get paid £10 for referring members to Nationwide Autocentres, but only if the car can't be repaired at the roadside. As before its the members choice." He said patrols were "strongly incentivised2 to carry out roadside repairs, but if this cannot be done owners can choose a garage. The spokesman added: "If the member has no preference, the patrol will recommend an AA-approved repairer. Nationwide Autocentres is the only AA-approved repairer."

GMB knocks AA asset-stripping		Morning Star April 12th 2006
INDUSTRY union GMB condemned the venture capitalist owners of the AA breakdown service yesterday after they revived it's "patrolman's salute while giving a two fingered version to their own staff. The salute made when patrols attended a breakdown returned for 24 hours to mark the launch of the new-livery AA patrol vehicles. But GMB national organiser Paul Maloney pointed out that the new owners have sacked 3.400 staff since taking over, while saddling the remaining 6,600 staff "with £278,000 worth of debt each." Mr Maloney said that AA boss Tim Parker had announced last week that borrowing by the association now stood at £1,900million -- a £500 million increase on the figure previously disclosed. The interest payment on this debt would amount to more than £13.900 per employee every year if the venture capitalist are able to borrow at 5 per cent per annum. It was previously reported that the venture capitalist would use the additional £500 million to pay themselves a special dividend of £500 million profit "The AA staff are saluting absent friends and the record debts of £278.000 that every employee is now carrying," he said. "To double profits, the AA are exploiting their workforce, fleecing their customers and generally reducing the service. Mr Maloney said that the union is working with Labour MP Gwyn Prosser and other GMB backbenchers to put down a House of Commons early day motion enabling MPs "to express their grave concern at the activities of the venture capitalist who took over the AA in late 2004 and are in the process of asset-stripping the organisation."

MPs accuse owners of asset stripping AA motoring group By Barrie Clement Transport Editor	Independent April 12th 2006
The private equity groups that own the AA motoring organisation are accused of “greed” and “blatant asset stripping” in a motion to be tabled in the House of Commons. The groups, CVC and Permira, are planning to borrow about £500m on the basis of the AA’s assets in order to pay themselves a dividend, it is understood. This would take the AA’s total debt to £1.8bn, or some £278,000 per employee, according to the GMB general union. News of the Early Day Motion, to be tabled by the Labour MP Gwyn Prosser, comes amid growing concern about the role played by private investors in British industry. The Financial Standards Authority is investigating the private equity market to ensure it has sufficient regulatory powers to ensure “transparency and disclosure”. The motion by Mr Prosser, a GMB member, calls for a change in company law to prevent “speculators” enjoying the protection of limited liability. It points out that some 3,400 of the 10,000 staff have been made redundant, putting the remaining workforce under “excessive pressure”. Some motorists had been abandoned at the roadside as a consequence, the motion says. It expresses concern at the 30 per cent rise in membership fees while company profits doubled to £100m and says that the interests of customers and employees had been “jeopardised by the greed of venture capitalists like Permira and CVC”. Mr Prosser said that such private equity groups were “hollowing out” companies and burdening them with massive debt which had implications for employees’ pensions. They are here today and gone tomorrow and simply want to make a quick buck,” he said. Yesterday AA patrol staff were instructed to salute members at the roadside. The old practice was reinstated for 24 hours to mark the introduction of a new livery for the AA’s vehicles. Paul Maloney of the GMB said “To double profits the AA are exploiting their workforce, fleecing their customers and generally reducing the service.” The consumer watchdog Which? recently reported that the AA fell from first to third among motoring organisations when it came to response times. An AA spokeswoman said Mr Prosser’s motion “trotted out” the arguments of the GMB, but she refused to comment in detail about the allegations. “There are inaccuracies in their claims. Nobody has approached us for a response and that includes the MP. We are happy to have a reasoned conversation with Mr Prosser.”