Here in Australia, the big parental news (well, amongst parents of the under-5 set it’s a big topic, and amongst singletons and non-parentals it’s kind of a non-issue) is the failure of ABC Learning. A failure that comes despite guaranteed cashflow, subisidised products, high demand for services, and captive guilt-ridden parents. We have a 3 year old at one centre, so we know all about it!
Clearly Eddie Groves over-extended the company, and it’s become increasingly apparent that a business that seems too good to be true, with poor governance models, from a person whom you probably wouldn’t trust as far as you could throw him (‘Fast Eddie’ never gave a vibe as being the brightest candle in the candelabra), usually is too good to be true. It’s since emerged that the mounting profits were built upon structured relationships, dodgy accounting, and a very poor relationship with the truth. Apparently the company was valued at over 3 billion dollars, but 1.3 billion of that was intangible assets – most of which it seems related to the ABC brand, which is now more like the kiss of death than anything of value.
20-20 hindsight is a wonderful thing, and it seems the writing has been on the wall for some time. Nevertheless, it still came as a shock to parents who naively believed what they were told:
- It started out that the media was just being mean to ABC Learning.
- Then it became that ABC Learning was renegotiating with the banks and it would all be OK.
- Then it became that the receivers/managers had been called in, but it would all be OK and no centres would close.
- Then it came out that 40% of the centres were currently unprofitable.
- Then it came out that 40% were actually unviable and would be closed.
And then last Thursday we had TV cameras outside our centre. Not a situation to make working parents feel relaxed and comfortable.
As a result of all this uncertainty, parents seem to be taking their kids out in droves now. And staff have also got the message and lots have left. It has become a version of the prisoners’ dilemma. If all the parents stay, it’s unlikely that the centres will close. However, if you stay with the centres, you will discover that there are no places left when the centre does collapse, because all the other parents took those places.
It is a real pain and a worry, and at the least it’s clearly a distraction for staff. Our centre held a ‘positive pink’ day today, asking the kids to come in pink shirts to support the staff – and fair enough too, given that the staff aren’t the ones with over-ambitious ideas and a completely fatuous understanding of business and business ethics (hint: the ones with this would seem to include Eddie Groves, Le Neve Groves and indeed the erstwhile chairman, Sallyanne Atkinson). In particular, if Eddie Groves were to spend the rest of his life clutching a wine bottle and drooling into the gutter, I would only think uncharitable thoughts.
But Eddie is not the staff.
Today when I collected my child from the centre one parent was fixing to have a barney with the director over a lost water bottle. Admittedly such things are frustrating, particularly when they’re labelled and clearly belong to the child in question – but the director has had to battle staff shortages, parents withdrawing their kids, a bankrupt company, the receivers today and, to top it all off, a nice bout of gastro. For all I know, the staff decided to play soccer with the drink bottle by tying it to a rope and into traffic, and then sending the child to go get it. I am assuming that doesn’t happen, but of course sometimes I’m sure it’s a tempting idea :).
The receivers/managers, and the government, had better make sure there’s a clear path soon with these centres, or there’ll be worse to come for parents. If they’re going to be sold off, the sooner the better, I think, and get any rejigging over and done with as soon as possible. I for one won’t miss the jolly pink teddy bear threatening us all as we come into the carpark. I know that we as parents are getting a little tired of being lied to as to how things are going – we’ve got a couple more years of association with the centre and I don’t know where it’s going to go. We’ve been loyal, we’re staying loyal (to the staff), but eventually loyalty and $3 will buy you a cup of coffee, particularly if your child is out on the street.
The parents’ dilemma will become increasingly real for many parents over the next little while, and they had better get their act together soon.