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A clever supply model

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HS2 Ltd “have insisted whoever is granted the £4bn contract to build superfast trains for the HS2 rail line should hold a strong UK presence to boost domestic jobs”. Politics Home reported.

And Terence Watson, the Alstom UK chief and Rail Supply Group ‘co-chair’, has ‘laid out the case for bolstering Britain’s rail exports’. Alstom’s ‘hiatus from train making in Britain was ended after the company filed a planning application worth between £80m and £100m for a technology facility in Widnes’.

[‘High-speed technology is our DNA: Alstom plans to resume train building in the UK after a near 15 year hiatus. Country president Terence Watson talks to Sebastian Whale about what drew the company back to Britain.’ Politics Home, 3 March 2016]

The rail transportation heavyweight closed its UK train building operations at the completion of its contract building Pendolino tilting trains for Virgin Rail 15 years ago. The previous “fit and start” nature of the rail industry in Britain, reliant on short-term contracts, meant cashflow was an omnipresent concern, [Mr Watson] says.

The construction would be built in three phases, the first a near 28,000 sq m facility fit with car parking, service yards, rail sidings, landscaping and associated engineering operations. The later phases have the potential to include a new British factory, which would build HS2 trains if Alstom were to win that order.

[…] “We reached a point around a year ago where a clever supply model, assembling in Britain, roughly matches the price of a product shipped in from, for example, India in total. In other words we’ve reached that point of inflection. It is now, again, a reasonable proposition to make things in Britain competitively,” he says.

In fact, the hiatus hasn’t ended. Alstom isn’t making trains in Britain. It seems to be offering to assemble HS2 trains in Britain in the future, if it won the order, because of the government requirement to demonstrate some domestic employment benefit, no matter how minimal.

That requirement does not exist for other GB train orders — such as the Merseyrail fleet replacement, where Alstom has teamed up with Japan’s Mitsui and J-Trec to bid against Siemens, CAF, Bombardier, and Stadler.

If Alstom UK  was ‘too reliant’ on the “fit and start” nature of the rail industry in Britain, one might well ask why it didn’t try to seek out export business, instead of closing its factory.

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Written by beleben

March 14, 2016 at 12:46 pm

Posted in Great Britain, Industry

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