There’s been quite a bit of debate today around a report prepared by economic analysts BERL, which suggests that the economic benefits of constructing (at least part of) Auckland’s electric trains within New Zealand would be significant. Here’s the executive summary of that report:
I can certainly see the argument here, and the numbers are pretty compelling. With around $500 million being spent on Auckland’s electric trains, the economic benefits of retaining that money within New Zealand, rather than the bulk of it going to some Japanese, Australian or Korean company, appears to make good sense. Furthermore, the long-term benefits of ‘building up’ our ability to manufacture electric trains would be quite significant I think – as I certainly see the need for another set of electric trains (perhaps around the same number again) to be purchased around 2020 when (hopefully) we open the CBD Rail Tunnel.
However, I come from the perspective of really wanting those electric trains on time and on budget, and really wanting us to squeeze as many (top quality of course) trains as possible out of the money that is available. Without reading the entire report, I don’t necessarily think that Asian manufacturers will necessarily create something of a lower quality than you would get from a North American or European manufacturer – after all Japan is the rail capital of the world, while China’s rail system is the fastest growing in the world. Wellington’s new Matangi trains are being manufactured in Korea, for example.
It is a tricky situation, and as much as I would like the money being spent on these trains to remain within New Zealand, I also think that we need to make sure we get as good value for money as possible out of this purchase. These two issues may not necessarily compete with each other, and I am a huge fan of considering “whole of life” costs, rather than just initial purchasing price when we look at such a big investment as these trains. All other things being equal, of course we should choose to go with making as much of the trains in NZ as we can, I just worry that all things aren’t equal, and possibly that all things aren’t anywhere near being equal – especially when one considers that there are factories overseas that churn these trains out all the time, whereas we have actually never made electric trains in NZ before (as far as I know).
I certainly think that KiwiRail should absolutely strongly consider making a bid for the contract (and it is disappointing to hear them effectively writing off the idea so quickly), but at the same time I think we need to be realistic here. Who can produce the trains on time, on budget and of an excellent quality? If the answer is not KiwiRail, then our judgement of who the contract goes to shouldn’t be clouded too much by other issues.
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I think the chance of it going to an Australian company is probably zero percent, and Japan highly unlikely for the same cost reasons. If not Hillside, it’ll be either China or Korea.
Walkers in Queensland have built for decades all the narrow gauge electrics for QR and Perth – generations of them – you join the dots!
As well as what you say above, there is also a “social” cost, by that i mean 1300 potentially of the dole and probably other costs that should be added to the cost of the trains. Not by kiwirail, but by the government.
It’s the same question we had with the Navy ships, do we back ourselves to create industry that can compete after the local work is finished or not..?
Hmm, on one hand this looks like a real risk to getting aucklands trains on time and on budget. But on the other hand if it can be done in house then why not keep the money in the country and potentially develop a new export product? The flip side is with a domestic train manufacturing industry there might be political pressure to keep churning out the trains, growth on the Auckland and Wellington networks could be sustained by producing a new set every four or six months after the initial order is filled. And if a rail renaissance does occur nz wouldn’t be restricted by production constraints on the international market.
I think we should get the best quality trains we can get and we should pick a supplier that can guarantee they can be delivered on time. I noted in part of the report I saw that it was suggested that the delivery timeframe be changed to 69 months instead of the current 45 month timeframe. That would mean it would be an extra 2 years before we get all the trains running.
I have said before that I would be supportive of the Kiwirail working with an international supplier where the EMU’s are built overseas and we build the electric loco’s that are needed to pull/push the SA sets. This means we can gain some expertise in doing this without risking the entire project running late. I also think it would be good to make these look like part of the set rather than a freight loco by converting some SD cars to have an engine in them, we could then put one at each end so that if one engine breaks down the whole train doesn’t have to stop.
It is fair to say when you think of train building countries New Zealand is not near the top. We should go with someone who knows how to do this already and get a good reliable train set at a good price. The country as a whole needs to focus on what we are good at- explore and build niches that we can prosper in. Are we really going to ever be competitive in this industry? – probably not.
I think this is something that should be looked at long-term, not rushed to meet a 2013 deadline which would no doubt impact quality.
Let’s get the 114 units first by 2013, and then start to acquire the knowledge and skills around building the units and maintaining them going forward.
And I am getting sick and tired of labour and the Greens having a go at national about it, conveniently ignoring the deal signed with a Korean manufacturer for Wellington’s trains
Next up: Labour and the Greens propose that Air NZ should build airliners rather than buying them off Airbus or Boeing. After all, they already have some large hangars and their mechanics know all about aircraft.
A solution would be to get the overseas manufacturer to allow for some licence-built or kit-set construction in NZ, but the bulk of the order to come from overseas. That way, when extras are needed, they can be built, fitted out, or modified by Hillside or whereever with added experience, that way we keep all the benefits of local production, while also saving on the money and time costs.
I think some compromise like that can be found, I really like Geoff’s idea about investigating wagon assembly for export…
Its funny, something similar is already found with our buses.
http://en.wikipedia.org/wiki/Designline
Building trains is much less specialised than building large passenger aircraft.
EMU’s are built in many countries around the world, not just by 2 heavily state dependent companies.
http://offsettingbehaviour.blogspot.com/2010/05/big-numbers.html
Some people are not giving much weight to this report.
I’m guessing BERL has included economic feedbacks, which are hard to determine at the best of times…
How come the trains at Kuala Lumpur airport are made in Canada if Asian manufacture is so cheap?