COMMENT


Left: RTM joined Bombardier workers on their protest trip to London ahead of the Transport Select Committee hearing in September.


tempts to discriminate in favour of Derby would be struck down by the EU. You can’t simply have a calculation of national ad- vantage and hope to have it stand up.


“It’s also fairly clear that in France, Ger- many and Italy, people contrive it so the orders go to the local firm. People would fall about laughing in a European country if they were told the poorer credit rating of their only train manufacturer was going to undermine their capacity to bid for large contracts. Everybody plays these kinds of games in Europe.”


How to build trains


compare to a manufacturing plant, saying that even now, Bombardier imports many of the components it uses at its Derby fac- tory, as will Siemens at its German facility.


Hammond said at the hearing: “I cer- tainly would like to see a viable train building industry in the UK. Fortunately, we know that that will happen. Hiatchi have committed, under the IEP, to build a plant in Newton Aycliffe in County Durham, with 600 direct employees.”


Professor Williams said: “Hitachi is a wild- card. It has come into County Durham with what amounts to an assembly plant, and the interesting question is whether it can develop a manufacturing capability.


“That clearly seemed to be what Hammond was implying. His evidence was quite in- teresting: he focused on one of the two key considerations, at the select committee – design – which, in the UK, Bombardier can do, and Hitachi can’t. Clearly, you could add a design operation to the Hiatchi fa- cility. I think we’d all be in favour of that, though if it’s going to be British orders only that they’re competing for, then to have two producers, not one, seems actually to be a pretty disastrous outcome.”


The broken supply chain


But there is a bigger issue at stake, Profes- sor Williams said, that affects manufactur- ing more widely.


“The problem is the low British content of whatever’s actually produced; the bogies from Germany, and so on. If the Govern- ment wanted to be really serious, they would be asking why German industry has a lower proportion of intermediate output imported, why does specific stuff have to be brought in from mainly high-wage north- ern Europe, what are the capacity limits in the UK, how do you rebuild broken supply chains, and so on.


“The number one problem for UK manu- facturing is the broken supply chain. That is to say, the benefit we get from increas- ing final output is limited, because a large chunk is imported components. You can’t solve that kind of problem overnight. As I understand it, for example, there’s nobody in the UK who actually makes automatic gearboxes for cars.


“There has been a chaotic decline and loss of capacity in all the basic engineering in- frastructure activities. If you want some- thing cast, forged, milled or whatever, it’s increasingly difficult to get that done in any formerly industrialised region of the UK.”


Continental drift


But supporting what’s left of our manu- facturing and engineering base – which Business Secretary Vince Cable would have us believe is not as feeble as all that, as it generates 11% of GDP, more than financial services – can be difficult if it means crash- ing up against European procurement law.


That has been one of the primary argu- ments employed by officials in defending the Thameslink procurement process and result – the need to abide by the law and not discriminate in favour of domestic in- dustry.


There is a widespread perception – ac- knowledged by Hammond and Cable – that other European nations do a lot more to protect their own workers and manu- facturing bases without falling foul of the law. Obviously the truth is more nuanced – Siemens, for example, is making inroads across the continent, not just in the UK – but Professor Williams thinks the UK is far too unimaginative when it comes to considering the consequences on domestic industry of handing contracts to foreign competitors.


He said: “It’s fairly clear that blatant at-


“The first thing you do is unbundle the fi- nance from the manufacturing, so that you get a fair playing field, or at least allow the manufacturer to set up some sort of spe- cial vehicle, so it can borrow on terms that aren’t just the parent’s credit rating.


“Then you could write the technical speci- fication so it was easier for Bombardier to do it…you could clearly put in rules about proven, tried-and-tested bogies, for exam- ple. It’s not science, it’s politics. It’s a value judgement, that one wants Bombardier at Derby to continue. There are umpteen dif- ferent ways to favour your domestic sup- plier without being blatant about it.


“We need to put some of our fine City minds onto this business of raising finance without it being on the public balance sheet, and without it disadvantaging your domestic manufacturer.


“In the longer term, we do need more self- sufficiency in manufacturing, and we need to think about building our own trains as part of European and world co-operative arrangement.


“You’re looking at ways of nurturing the basic capacities in engineering, and I would argue, high-tech engineering too, because I don’t think high-tech means supply- ing turbines to wind-farms, or graphene; high-tech is somebody making a custom component for a Bombardier train using a process technology which is electronically controlled and deliv- ers more efficiently. We need to maintain the supply chains be- hind that so precision fabrication has a fu- ture. If you let railways go, you lose so much.”


Karel Williams FOR MORE INFORMATION


CRESC’s influential ‘How not to build trains’ report is at tinyurl.com/CRESC-report


rail technology magazine Dec/Jan 12 | 21


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