Paternalistic culture is under strain: Director reverses decision to quit

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WHEN NFC's 33,000 employees bought the former National Freight Corporation from the Government in 1982 the world of transport and distribution was a different and easier place, writes Tom Stevenson.

Throughout the 1980s many of the country's largest businesses, especially the fast-expanding supermarket chains, were prepared to pay well to save themselves the high cost of in-house distribution, especially as it rid them of troublesome unions.

Companies such as NFC benefited because their customers paid over the odds to ensure quality of service, while inflation gave prices an added upwards thrust. As soon as NFC came to the market in 1989, however, the recession struck, squeezing the company on several fronts.

Consumers bought less just as NFC's customers became more sophisticated. Value for money became more important and margins slipped.

Although volumes are now rising as the economy recovers, large players such as NFC and Transport Development Group, which remains saddled with high cost bases, are struggling to compete with younger, nimbler rivals such as Tibbett & Britten and Applied Distribution.

The changing world has put a heavy strain on NFC's traditional paternalistic culture, prompting damaging rows about whether or not the company is turning its back on its past.