BIXI Social Enterprise Subcontractor

Executive Summary

From 2011-2014, The Learning Enrichment Foundation (LEF) was subcontracted by BIXI to maintain the Toronto bicycle fleet. Integrated with other training and programs, the contract was the basis for a social enterprise that provided paid work experience, skills development and employment opportunities to graduates from our bicycle mechanic training program. We employed youth and low-income individuals who often went on to work in bicycle shops across the city. The enterprise was based on a three-year contract for service, which ended in 2014.

Community Background

The Learning Enrichment Foundation (LEF), our parent organization, has served the former City of York in northwest Toronto for more than 30 years through community-driven programs for low-income individuals, youth, and newcomers. We offer a number of skills training courses designed to help people quickly gain credentials that get them back in the workforce. Having delivered bike mechanic training for several years, the organization noted the need for graduates to gain additional experience as the work was seasonal.

Development History

The social enterprise was directly connected with the opportunity presented by BIXI Toronto. BIXI (an acronym for ‘bicycle taxi’) was a bicycle based public transportation system that began in the city of Montreal through a company called Public Bicycle System (PBSC) Urban Solutions. Users paid a fee to access bicycles from docking stations in a service area. BIXI Montreal had helped set up a social enterprise to maintain the Montreal fleet and strongly advocated that the City of Toronto’s BIXI system should seek a social enterprise as a subcontractor to maintain and repair the fleet. In partnership with the Bicycle Trade Association of Canada, LEF had existing experience in bicycle mechanic training, available expertise, and space to do the work. Prior to the official agreement, there was considerable public speculation that Toronto would hose a BIXI system. In anticipation, LEF conducted a study to explore the operational and financial feasibility of maintaining the fleet..

In January 2011, LEF hosted executives and staff from PBSC, BIXI Montreal, the City of Toronto , and CycleChrome (the Montreal social enterprise that maintained the BIXI fleet). This visit included meeting with LEF staff, inspecting the premises for potential maintenance operations and discussion on possible contracts. In March 2011, LEF’s Lead Mechanic and Social Enterprise Developer visited the Montreal social enterprise to see the operation and consult their mechanics. Things moved rapidly—our contract followed shortly after, and the fleet was launched in May of the same year.

As the enterprise evolved, our training model significantly changed: in the second year of operation, we shortened the training period from 12 to 6 months, and integrated youth specific internship positions with the program. At one point, we considered moving our operation downtown, as the distance from our location to the fleet located downtown made work difficult, but this did not happen.

The City of Toronto later transferred oversight of the BIXI operation from Cycling Infrastructure to The Toronto Parking Authority (TPA). Our staff were engaged with TPA as they were brought up to speed on all aspects of the operation including the value add provided by the social enterprise.   Several months before the completion of the third year of the contract, PBSC declared bankruptcy. This had significant impact on the overall operation as well as our maintenance contract. TPA awarded the contract to a private sector American firm. Despite appreciation for the quality of work and the impact of the social enterprise, the new operator did not want to subcontract the fleet maintenance. As our contract came to an end, so did the enterprise. Four of our mechanics applied to work for and were hired by the new operator. The new operator also expressed to LEF and TPA that they were very impressed with the work ethic and the skill level of the LEF mechanics and that this had been a significant advantage in assuming operations.

Revenue Model

The enterprise was based entirely on service contracts with BIXI Toronto. The primary 3 year contract was based on a specified maintenance fee per bicycle deployed in the fleet. Some additional revenue came from work above and beyond the contract. The advantage to this model was that we had clear revenue projections to predict staffing and expenses. This lent itself well to a social enterprise model that provided training and paid work experience. However, a business based on a contract with a single customer is also very vulnerable.

The business model remained the same for the period of operation. We later included new services at additional rates such as rebuilding wheels, a service we were able to provide more conveniently and at a lower cost than the company’s alternatives. The size of the fleet fluctuated somewhat with a reduced fleet deployed in winter. Additionally in the second year of operation, it was determined that a slightly smaller fleet functioned better for the service area and the number of bicycle docking stations available. Downsizing decreased contract revenue slightly, so in Year 2 and 3 we integrated a couple of work experience positions for youth. In 2014, our three-year contract was completed and the enterprise ceased operations.

Challenges

The first year of operation involved many challenges as the entire operation was new to the city. We only had a few weeks to plan and launch the business. We were able to visit the social enterprise that maintained the Montreal fleet. That visit and the ongoing relationship was a huge help.

Especially in the first year, there were many technical challenges to overcome and a steep learning curve. The bicycles themselves had anti-tampering screws, internal cabling and drive train. This dramatically increased the length of time it took for maintenance and repairs. Our repair facility was a 30-60 minute commute from the downtown core where the fleet was deployed. We also had to learn how concentrate our efforts and work efficiently, and in the first year we incurred a small deficit.

Winter was also a major challenge. Unlike Montreal, which operated from March to November, Toronto was the first city with significant snowfall to attempt a 12-month operation. This added complexity for maintaining repair and parts replacement schedules, as well as dealing with the bicycles after the effects of snow, slush and salt.

In addition to technical issues, there was also confusion for people learning to use the BIXI system. For example, the bikes had problems with the lock-up mechanism as people would push on the mechanism by mistake. With a large service area, the maps were also often inaccurate because many stations moved. We developed an inventory system to track the repairs. In the beginning, our employees moved from station to station with repair kits. This limited the number repairs we could do on the street because of the time consuming travel and technical problems. We found it much more efficient to transport the bikes in a van to our facility and fix them there.

We also experienced some challenges from a staffing point of view. Initially we offered employees a 12 month paid work experience contract. Most of the initial employees found that working on the same model of bicycle for 12 months straight was monotonous. Shortening the work experience to a 6 month term worked far better. To ensure we didn’t lose all our trainined mechanics at the same time, we also staggered contract starts so experienced mechanics would gain additional experience by helping to teach and train new mechanics.

Lessons Learned from Start-up Experience

Our social enterprise start-up process was unique, as it was designed around one big contract. This made it more predictable and stable for our operations, but vulnerable to closure when the contract was not renewed.

It was an untapped market, but required a specific level of expertise. A key success factor was consulting many people who had the relevant experience and knowledge. BIXI kept us well informed, sharing the history of the Montreal social enterprise subcontracted by them, and their maintenance standards. We benefited from joining a technical support group, gaining access to conference calls, and meetings for mechanics from BIXI.

We also found it critical to invest in developing team spirit by choosing a supervisor who not only had technical skills but also leadership qualities to deal with conflicts and personal issues. When performing repetitive tasks, trainees tended to isolate themselves in closed quarters. A good instructor/supervisor knew how to manage people so they taught one another.

The time commitment required from instructor/supervisor should not have been underestimated. It was important to budget for the appropriate amount of hours to train and manage operations.

Having an overlap between the incoming and outgoing trainees also helped us retain the knowledge and skills within the enterprise to ensure smooth operations.

Needed Support

As a social enterprise built around a large contract, we did not have a funder who required reports on impact or outcomes. The revenue model was breakeven in that our expenses matched our revenue. Both of the factors resulted in very limited focus on tracking social impact on participants. Additional documentation of impact would have been good learning to capture, as well as building a stronger case for encouraging similar contracts among social enterprises.

Organization Structure

Our social enterprise was part of LEF, a charitable non-profit organization located in the former City of York. LEF provided all HR and accounting support as well as project oversight from staff with extensive social enterprise experience. LEF had been operating a 7-week Bicycle Assembly & Maintenance (BAM) mechanic training course for several years. This training program provided a steady flow of mechanics with a basic level of aptitude and skills. The BAM instructor oversaw day-to-day operations of the BIXI maintenance. The City of Toronto contracted the operation of the fleet to BIXI Toronto, a division of PBSC. PBSC subcontracted the maintenance of the BIXI Toronto Fleet to LEF.

Partnerships

The support from the City of Toronto and BIXI played an essential role in the successful launch of our social enterprise. The main investment on our side was the time we spent on figuring out how to do the work and design the enterprise. When we had a contract with them, BIXI contributed to the cost of tools, parts, insurance, and subleases. Participating in technical group conferences with mechanics from other fleets developed our skills in dealing with technical issues that arose.

Impacts & Outcomes Objectives

Over the three years of running the social enterprise, we employed about 20 people: youth and unemployed individuals on welfare. Among them, over 80% were able to secure work within 6 months of completing their position.

Vision for the Future

If the opportunity came up again, we would still be interested in becoming a subcontractor for the public biking system operator. From this experience, we have developed the technical expertise and have been able to share our knowledge with other social enterprises interested in bike share schemes in Glasgow and Ottawa. They appreciated learning about our revenue model, operations, service standards, training curriculum, and maintenance databases.

Last Year's Revenue was 160,000

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