'You trains had better learn to speak Japanese,' said Gordon
The UK Department of Transport (DOT) may have seen last week as another ‘good time to bury bad news’. Gordon Brown announced that the government had awarded the contract to upgrade our antiquated 125 Intercity trains to a consortium led by Hitachi of Japan. It is almost 7 years to the day since Stephen Byers was forced to resign for using 9/11 as the cover for an inconvenient DOT announcement. These days, almost any day would do. David Freud, ex-banker and ‘close advisor’ to Brown, quit to join the Conservatives, frustrated with the government’s palpable failure to address the failings in the employment market. HBOS, the toxic bank whose former CEO became another of Brown’s close advisors, then deputy chairman of the FSA, forced to resign last week, declared £10 billion losses. Now Lloyds TSB, a former steady Eddy of the banking sector, is likely to follow the other Gadarenes into forced nationalisation. Its shares have fallen by more than 80% in the past few months. The government encouraged Lloyds TSB to absorb HBOS.
BMW, owner of the iconic British Mini brand, today announced 880 job losses at its Cowley plant, where it hs been obliged to cut production to a five day week. In 2000, BMW was obliged to sell Rover for £1.00 to a consortium of nitwits who drove it into the ground and sold it in turn to Shanghai Automotive. Jaguar is now owned by Tata of India, whom the UK government, with seemingly endless largesse, is attempting to bail out. We’re not good at manufacturing on this evidence, but we’re not going to get any better if we reach for the first screwdriver solution instead of knuckling down to a day’s hard work.
So was it such a good week to kick Bombardier, a Canadian company, best-in-class in train rolling stock manufacture, who rescued the Docklands Light Railway project in the 1990s after the former suppliers, who included GEC, provided trains ‘unft for purpose’? Canary Wharf would have been home to canaries and not much else had Bombardier not fixed the transport link to the New City. They also made carriages for the Eurotunnel (after the first lot failed). By absorbing some of the afterbirth of the 2001 ABB meltdown – Percy Barnevik, the guru CEO who discovered the secret of perpetual growth and oversaw 30% annual compound growth in unfashionable metal bashing, having apparently overlooked that this involved double counting – Bombardier saved a lot of jobs in Derby and kept British rail engineering alive. (Incidentally, Barnevik was forced to pay back some of the breataking CHF 148 million bonus claimed from ABB upon ‘retiring’ when shares plunged from CHF 54 to CHF 15, but that’s another story).
So we reward Bombardier and encourage British heavy engineering by awarding the £5.7 billion train replacement contract to Agility Trains Ltd. a consortium led by Hitachi, Barclays Private Capital and John Laing, a UK construction company, in what looks like another Private Finance initiative (PFI). Over the last weekend, it was announced that the government would need to pump at least another £4 billion into PFIs(this year alone) to avoid school and healthcare investments going into administration.
As the train drain news squelched out last week, the figure of 15,000 new jobs was mentioned, amazingly similar to the 15,000 new jobs that apparently will result from building a third Heathrow runway. The joy was surprisingly muted here in England, the country which invented commercial locomotives (OK, we should have moved on in the intervening 250 years, but that’s yet another story). I think I know why. The Japan Times reported the Hitachi job creation prospects somewhat differently:
‘Hitachi said separately that it is planning to build a train assembly plant in Britain for the project, the first of its kind overseas. It will require an initial workforce of up to 200 people, a number that could climb to 500 in the future. After Agility Trains officially signs the contract for the project, Hitachi will provide trains on a 20- to 30-year lease. Britain plans to replace its high-speed trains, which are 20 to 30 years old, on the Great Western and East Coast main lines. Hitachi said it will provide up to 1,400 trains between 2013 and 2018. The consortium is expected to work out the details of the deal and sign the contract by October. (Japan Times 14 Feb 2009).
There are several worrying questions raised by this factual announcement. Firstly, the trains will be leased – we’ll be paying (at least) £5.7 billion for yet another significant piece of vital infrastructure which we will not own. Secondly, 200 -500 jobs is not the same as 15,000 jobs. Thirdly, why should the UK taxpayer pay yet more money for rolling stock when the train operating companies are already subsidised to provide investment in rolling stock? Fourth, whilst not disputing Hitachi’s proven expertise – they built the high speed Channel Tunnel ‘A’ trains, the replacement 125 trains, whilst containing hybrid technology innovations such as the ability to switch between diesel and electric power – are not ‘bullet trains.’ We should be capable of building these vehicles here, and if we can’t we should be very afraid indeed. Rolls Royce (a Derby company) make engines and turbines which power much of the world’s commercial air fleet. Bombardier (located in Derby) build and maintain carriages and have a proven track record (no pun intended) in delivering on time and in adversity. Barclays and Laing are British companies. It’s not (Stevenson’s) rocket science.
While we accept that in a ‘free global market’, the lowest cost bidder with the most appropriate credentials should prevail, by outsourcing technology for vital infrastructure projects, funded by the taxpayer, not to mention the fares paid over the next 30 years by the passengers, we are driving another nail – or rivet – into Britain’s manufacturing capability.
Alastair Darling, UK Chancellor, should be deeply aware of all these considerations. Before becoming Chancellor, he pretended to be the UK Transport Secretary. The contract will not be signed until October 2009. The Tories should make it a priority to make sure it isn’t, until all these elements of reasonable doubt are explored. This is not a call to nationalism or protectionism. We sympathise with the poor folk of Japan, (if indeed the grunt work will take place there), but we can and should build our own trains, especially if we’re paying for them out of taxpayer funds. And the train operators should bear the risk.
John J Kelly.
