Comment
became a national scandal and some key services – including Berlin’s S-Bahn – have been severely disrupted by rolling stock problems. Is this the kind of performance the DfT’s critics would like to see in Britain? At the heart of the Bombardier controversy is the Department
for Transport’s naming in June of Germany’s Siemens, rather than Bombardier, as preferred bidder to build 1,200 vehicles for the new Thameslink service. Siemens will build the trains in Germany, while Bombardier would have built them in Derby. Bombardier blamed the loss of the Thameslink order for the factory’s scaling back. Although the DfT insisted there would have been at least 1,000
lay-offs as a result of the tail-off in orders even if Bombardier had won Thameslink, it is hard to imagine anything like as many lay-offs would be under way if the factory were supplying such an enormous order. That makes the key question whether or not the DfT should have taken into account the impact on the British economy of which country the trains were built in, before it awarded the work. In the wake of the lay-offs, a series of pressure groups and academics have produced studies suggesting the reduction in tax revenues from the work being done outside the UK is more than the gap between the two suppliers’ bids. The implication is that the UK would clearly have been better off preferring Bombardier. But it is impossible to see how the government can give any
kind of preferential treatment to Bombardier without creating a hopelessly skewed market. Since no other manufacturer retains a UK manufacturing base, Bombardier would know that it could be less price-competitive for any tender featuring clauses on UK-built content and still expect to win. Is that really the kind of message that a UK rail industry seeking to drive down costs wants to give out? It is at least conceivable, too, that Siemens, as well as offering a
lower capital price, can promise higher levels of reliability or lower running costs than its rival – since neither side is allowed to advertise its designs in the run-up to a competition, it is genuinely hard for an outsider to know these details. But, if the Bombardier product were even only marginally more expensive to run, harsher on the track or less reliable than Siemens’ product over its 30-year life, any putative
‘It is impossible to see how the government can give any kind of preferential treatment to Bombardier’
advantage to the exchequer from higher tax receipts could easily be wiped out. The truth is that the problem with the UK’s trainmaking industry
is not how one order was awarded, or its precise terms, but the whole, chaotic way rolling stock policy – if it deserves such a dignified name – has been handled. The piqued DfT, eager to extend its railway industry reach everywhere, has taken on the role rolling stock leasing companies once undertook. The DfT has placed hardly any orders and, for the InterCity Express programme – where it has named a preferred bidder – has insisted on a design that almost no-one outside the DfT thinks is optimum. The Roscos, whatever their faults, encouraged the development of standard, relatively reliable designs for the UK railways that could readily be moved around the system. One Rosco – Porterbrook – even favoured Bombardier Derby for orders to nurture expertise in the UK railways. The DfT has also consistently behaved as if more competitors
would automatically produce better competition. It initially encouraged Siemens into the UK market in the late 1990s and has since encouraged Japan’s Hitachi. But it is hard to imagine that the DfT’s encouragement of a range of still more new entrants – including Korea’s Rotem, Spain’s CAF and China’s CSR Nanjing Puzhen – is encouraging existing suppliers to invest in new designs or other ideas for the British market. Sometimes the most competitive markets have smaller numbers of stronger competitors. Yet the biggest problem remains a pattern of train ordering that
could be expressly calculated to make life impossible for factories relying on UK train orders. No firm train orders have been placed since February 2009, while in the middle of last decade there was a deluge of orders that overstretched most manufacturers. In France, by contrast, Bombardier’s Crespin factory has a long-term, €8bn order for 800 regional trains for SNCF. The company knows it can invest heavily in sophisticated equipment to produce the regional trains, confident there will be the work to justify the investment. The incentive at Derby must be to minimise investment, in the knowledge that the next order lull could be fatal for the facility. With a sensible rolling stock policy and a less clumsy DfT,
Bombardier Derby could now be sitting securely with a reliable stream of future work, confident in the knowledge its loyalty to the UK railways would be rewarded. It is a cause for real regret that it is not. But, whatever the mistakes of the past, a future of markets rigged in Bombardier’s favour would be no more desirable.
ROBERT WRIGHT is transport correspondent for the Financial Times:
robert.wright@ft.com
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