Posted 3rd March 2009 | 6 Comments

Hitachi bid ‘could be start of UK train-building renaissance’

The Hitachi Super Express train.

WHAT SEEMED like a shock decision to award a £7.5 billion contract to Hitachi of Japan could mean a new factory in Britain making railway rolling stock for the UK and the rest of Europe—in much the same way that Nissan, Toyota and Honda set up car plants here to serve the whole of Europe. 

AWARDING the £7.5 billion Intercity Express Programme contract to a consortium in which Japanese industrial and electronics’ giant Hitachi is the principal shareholder could be the start of the renaissance of train manufacturing in the UK.
  
That is the view of Bob Rixham, National Officer for Railways for Britain’s biggest trade union, Unite, after his investigations following the Department for Transport’s controversial decision to award the contract to the Agility Trains consortium—rather than the Rail Express Alliance, which includes Derby-based Bombardier Transportation.
  
Agility comprises Hitachi, John Laing and Barclays.  It was selected on 12 February as preferred bidder for the £7.5 billion contract—extending beyond 2035—to build and maintain new trains that will replace ageing HSTs.   
  
A competing bid was submitted by Express Rail Alliance, which includes Bombardier Transportation, Siemens, Angel Trains and Babcock & Brown.
   
The contract covers both construction, and then maintenance for 20 years, of a new fleet of ‘Super Express’ trains for the Great Western and East Coast main lines. First of the new 125 mph trains should enter service on the East Coast mainline in 2013.
  
According to the DfT, the fleet will comprise electric, diesel and bi-mode variants—“the latter being able to make use of an electric or a diesel power source at the end of the train. This is the first time in recent history that a bi-mode train has been earmarked for the UK rail network,” said the DfT.
  
The new trains—17 per cent lighter and with 21 per cent more passenger capacity than their HST counterparts—should enter full service from 2015-17 “linking London with Cambridge, Leeds, Hull, York, Newcastle and Edinburgh and linking London with the Thames Valley, Bristol and South Wales.” Cambridge and Hull are not currently served by intercity trains.
  
The DfT is also considering an option to use Super Express units between London Euston, Milton Keynes and Northampton, to gain some extra capacity at the southern end of the West Coast Main Line.

The announcement on 12 February led to immediate controversy over claims by Transport Secretary Geoff Hoon that “over 12,500 jobs will be created and safeguarded.”
  
Very quickly a backlash developed in the East Midlands over the exclusion of Bombardier—Britain’s only remaining train builder, which employs around 2,200 people at its Litchurch Lane, Derby, factory—amid fears among Bombardier staff and the company’s suppliers that much of the construction of the new trains would take place in Japan, with only final assembly taking place in Britain.
  
But after a meeting on 24 February with Sir Stephen Gomersall, Hitachi’s European chief—and a former British Ambassador to Japan—Unite’s Bob Rixham told Railnews: “I am much more encouraged than I was on 12 February.
    
“The undertakings Hitachi have given us mean they are here for the long term and, if so, we would be crackers not to welcome a second big player in train manufacturing in Britain.”

Mr Rixham made it clear that Unite, with over 10,000 members in rail vehicle manufacturing and maintenance, would continue to demand the Government ensures a stable order book for Bombardier at Derby, and that Bombardier stops using 300 agency staff and makes them full-time employees instead.
  
But he said that with Hitachi’s plans to establish a permanent manufacturing plant in Britain—sites in Ashby de la Zouch, Leics, Sheffield and Gateshead have been short-listed—“we could be looking to capture much of the UK rail market in the UK, and also capturing some of the rest-of-Europe market to the UK.
  
‘This could be the start of the renaissance of train manufacturing in the UK.”

Bombardier at Derby has been Britain’s only train manufacturing facility since Alstom closed down its factory at Washwood Heath, Birmingham, following completion of the Virgin Pendolino fleet in 2004.
   
According to Unite’s Bob Rixham, since 2002 around 70 per cent of British rolling stock orders have gone to Bombardier, which is a global company and has other factories on the Continent which supply some components to Derby.  Unite has calculated, therefore, that only about 50 per cent of British orders have been fulfilled in Derby and involved the British supply chain.
  
“But with Hitachi setting up a manufacturing facility here we could see a win-win situation,” said Bob Rixham. “Hitachi could become a major player serving the UK and also serving demand in the rest of Europe, as well as Bombardier.”
  
In the short term, Bombardier’s order book is to be topped up with an order for 120 new electric vehicles for Stansted Express. The DfT said: “The preferred bidder for this order is Bombardier Transportation, who plan to build them in Derby and therefore safeguard jobs there.”
  
Bombardier is also one of four companies that are tendering for 200 additional diesel-powered coaches, and also for 1,200 coaches for Thameslink.

The three-way, flexible Super Express

UP to 1,400 new 125 mph SET – Super Express Train – coaches will be built to run in typically 10-car formations. The IEP contract covers both construction and maintenance of the trains for the Great Western and East Coast main lines for 20 years.

First of the SETs should enter service on the East Coast main line in 2013, with a full service on Great Western and East Coast by 2015.

The key advantage of the trains is claimed to be flexibility of operation on most infrastructure, with interior layouts to suit individual operators. Bi-mode capability will allow some sets to cut the use of diesel engines under the wires but still allow full diesel operation on non-electrified lines – while diesel engines will also boost electric operation.

The trains will have the latest fuel-efficient engines and be able to regenerate electricity when braking.

FleetAbility – at your service
  
The IEP contract gives responsibility for constructing depots and maintaining trains to the successful bidder. TOCs using the trains will pay ‘Set Availability Payments’ for each train available for duty each day and which remains reliable during the planned operational period.
  
Railnews understands a Joint Venture is being formed between Hitachi and Axiom Rail—now a subsidiary of DB Schenker (formerly EWS), a division of German Railways—to undertake servicing and maintenance of the ‘Super Express’ trains for 20 years after delivery. 
  
FeetAbility, along with Agility Trains, will be headquartered with DB Schenker at Lakeside Business Park, Doncaster.


Where are the ‘Super Express’ jobs created or safeguarded?


There has been endless controversy since Transport Secretary Geoff Hoon’s claim that “over 12,500 jobs will be created and safeguarded” by the £7.5 billion ‘Super Express’ contract.

The DfT has given no further details, but Railnews now understands the allocation of jobs to be:

*  Train assembly at new Hitachi factory — 200 initially, rising to 500

*  Train maintenance and servicing depots (FleetAbility) – 1,400

*  Agility/ FleetAbility back office staff (Doncaster)  —  200

*  Bi-mode power system manufacture — 120 - 150 approx.  (Hitachi is considering two contractors for this part of the deal — Brush Traction in Loughborough, Leics., and Vossloh España, in Valencia, Spain, a former Alstom subsidiary that was bought out by its managers.)

The remaining 10,000-plus people are accounted for by jobs in the supply chain, including staff employed in maintenance depots between 2015-35, and jobs in the construction industry created by the building of five new train maintenance depots during the next five years.

Hitachi’s long-term strategy for European expansion

THE award of the Intercity Express Programme contract to Hitachi—and its partners in the Agility Trains’ consortium, John Laing and Barclays—is the result of a long-term strategy aimed at moving the Japanese manufacturing and electronics’ conglomerate into the European railway market from a British manufacturing base.
  
And since November 2004, the strategy has been the responsibility of a former British Ambassador in Tokyo, Sir Stephen Gomersall, Chief Executive of Hitachi (Europe) Ltd, based in Maidenhead, Berkshire, and who is also now a Senior Vice President and Executive Officer of the Japanese parent company, Hitachi Ltd.
  
Hitachi’s big breakthrough came with the decision of the former Strategic Rail Authority to award the company the contract to build the 140 mph class 395 electric trains to operate between St Pancras and Kent via High Speed 1.
  
This followed five years of preparatory work by Hitachi in Britain, including operating a demonstration train—a converted class 310 British Rail electric multiple unit—to prove Hitachi’s systems on the UK railway system.
  
In an article in ‘Japan Railway & Transport Review’ Sir Stephen Gomersall wrote “this helped not only convince the policymakers that Hitachi was serious, but also built relationships with future partners.”  He added: “We hope that the introduction of Hitachi's trains on [HS1] in 2009 will be another positive step in re-building railways in Britain to the highest international standards.”
  
Hitachi also won a contract for the class 465 traction replacement programme, and tested hybrid battery technology on the Network Rail New Measurement Train, based on a class 43 HST.
  
The class 395 trains — also to be known as Javelins when operating services for the 2012 Olympics — are based on Hitachi’s latest aluminium railcar system, the A-train, which uses a precision, high-quality aluminium double-skin body constructed by a technique called friction-stir welding (FSW) which is currently only used in Japan and Italy.
  
FSW is a crucial issue in the current debate about whether Hitachi intends to create a manufacturing plant in Britain, or only an assembly plant.  Transport Secretary Geoff Hoon has told the trade unions that Hitachi definitely intends to “transfer technology” to Britain from Japan, which would be confirmation of the company’s long-term manufacturing intentions.
  
Hitachi has said that the first 70 IEP vehicles will be built in Japan. But there are other signs that it does want to become a major European player.
  
Since it was awarded the class 395 contract and established a new maintenance facility in Ashford, Kent, Hitachi says it has appointed 20 “tier one” suppliers in the UK, and now it is looking for further suppliers and will hold ‘open days’ later this year.
  
Following news of Agility’s preferred bidder status last month, the company said: “Hitachi will, in stages, establish assembly and manufacturing operations in the UK that will be operated to support the delivery of the East Coast fleet in 2015.
  
“The manufacturing facility will initially employ up to 200 staff for more substantive manufacturing, refurbishment and lifetime support for the trains in the UK.
 
“Once fully developed, the Hitachi UK manufacturing facility is planned to be capable of the assembly of up to 30 vehicles per month, employing up to 500 staff, according to market demand, in addition to those involved in maintenance operations.”
  
Alistair Dormer, General Manager of Hitachi Europe’s Rail Group, said: “Hitachi hopes to contribute to the development of a strong rail industry and infrastructure in the UK through the transfer of high quality Japanese manufacturing processes and skills to the UK and the development of its relations with European suppliers.
  
“Our commitment in the UK is for the long term.  Through this manufacturing programme and involvement in other rapid commuter, high-speed and rail infrastructure projects, we aim to deliver quality and reliability which will benefit our UK customers and provide a basis for business in continental Europe.”

• Former envoy in charge

Stephen Gomersall was appointed Hitachi’s Chief Executive for Europe in November 2004. In October 2006 he was further appointed Senior Vice President & Executive Officer of Hitachi Ltd. 


Earlier in his career Sir Stephen joined the Foreign and Commonwealth Office, being posted to Japan in 1986 and again in 1999, this time as Ambassador (until July 2004). He also served as a political officer in Washington (1982-6), and as Deputy Permanent Representative to the UN (New York, 1994-98). From 1979-1982 he worked in London as Private Secretary to the Deputy Foreign Minister dealing with European affairs.

Sir Stephen obtained an MA in International Studies from Stanford University, California.


Reader Comments:

Views expressed in submitted comments are that of the author, and not necessarily shared by Railnews.

  • Mike Breslin, Liverpool, United Kingdom

    It is a sad state of affairs that British involvement in the train building industry was allowed to die some years ago and, as a result, our domestic train operators (both passenger and freight) have had to rely upon foreign-based companies such as Siemens, Bombardier and EMD to supply their new trains and locos. However, I suppose it is no use crying over spilt milk and we can only hope that Brush Traction and those British companies still manufacturing ancilliary train equipment will reap some benefit from this potential renaissance.

  • james kirkman, salisbury, england

    Did I hear this right? (Hitachi is considering two contractors for this part of the deal — Brush Traction in Loughborough, Leics., and Vossloh España, in Valencia, Spain, a former Alstom subsidiary that was bought out by its managers.)
    Why is Hitatchi even allowed to look to Spain for a job that can be done perfectly well by a British company?
    First the Goverment don't give the deal to Bombardier and then Hitatchi start to look to see if they can give part of the deal to Spain. Is this goverment going to perform political suicide again by allowing this to go on? Haven't they learned that after Total's fiasco the British people arn't going to stand for this?

  • Roderick V. Louis, Vancouver,, BC, Canada

    (re-sent, slightly amended)

    "RESEARCH AND DEVELOPMENT ALSO NEEDED!!"

    Improving the UK's rail systems is an unassailable objective for UK industry and govt...

    But putting the best British minds to work- preferably in collaboration with overseas partners- on the designing of rail-related products that eventually end up on and part of the UK's rail systems ought to be an integral part of this objective...

    Ensuring that these products and their underlying technologies- if necessary in adapted formats- have significant potential for export- should be as well.

    In terms of long-term industrial strategies, the establishment of facilities in the UK to construct and/or assemble new trains/rail-related hardware for the country is less than 1/2 of what industry leaders and govt officials ought to be aiming for…

    The creation of a self-sustaining rail technology (and public transport) research and development base in the UK is needed just as much...

    The likelihood of EU member nations (and places such as India) that are upgrading their rail systems buying from the UK will be greatly increased if products and systems marketed are perceived to be coming out of a creditable, cutting-edge technology joint-venture- with its own well resourced, demonstrably functional R & D centre....

    With the many billions upon billions of pounds being allocated as UK economic stimulus by the current govt, it could only make constructive sense for some of this money to be put towards the establishment of a rail transport R & D technology centre/campus in the UK... if necessary with the UK govt as a temporary minor shareholder in the venture....

    Such a centre/campus comprising significant representation from a world-class rail technology leader such as Hitatchi, along with a leading UK firm that has leading-edge complimentary technology expertise- such as Rolls-Royce- would be one way of providing the new centre/campus with automatic positive world-recognition...

    A company like Rolls-Royce paired with an effervescent and competent international partner- such as Hitatchi- and its Japan-based R & D resources- would immeasurably strengthen the viability and export-related potential of a UK based "world centre" for rail technology research & development....

    In addition to the establishment of new (non Bombardier) factories in the UK to manufacture and assemble rail-related hardware, the construction of a 'World-Centre' rail-transport research and development type facility in the UK needs to be expeditiously facilitated...

    Roderick V. Louis,
    Vancouver, BC, Canada

    rvlouis@patientempowermentsociety.com

  • Roderick V. Louis, Vancouver, BC,, Canada

    "RESEARCH AND DEVELOPMENT ALSO NEEDED!!"

    Improving the UK's rail systems is an unassailable objective for UK industry and govt...

    But putting the best British minds to work- preferably in collaboration with overseas partners- on the designing of rail-related products that eventually end up on and part of the UK's rail systems ought to be an integral part of this objective...

    Ensuring that these products and their underlying technologies- if necessary in adapted formats- have significant potential for export- should be as well.

    In terms of long-term industrial strategies, the establishment of facilities in the UK to construct and/or assemble new trains/rail-related hardware for the country is less than 1/2 of what industry leaders and govt officials ought to be aiming for…

    The creation of a self-sustaining rail technology (and public transport) research and development base in the UK is needed just as much...

    The likelihood of EU member nations (and places such as India) that are upgrading their rail systems buying from the UK will be greatly increased if products and systems marketed are perceived to be coming out of a creditable, cutting-edge technology joint-venture- with its own well resourced, demonstrably functional R & D centre....

    With the many billions upon billions of pounds being allocated as UK economic stimulus by the current govt, it could only make constructive sense for some of this money to be put towards the establishment of a rail transport R & D technology centre/campus in the UK... if necessary with the UK govt as a temporary minor shareholder in the venture....

    Such a centre/campus comprising significant representation from a world-class rail technology leader such as Hitatchi, along with a leading UK firm that has leading-edge complimentary technology expertise- such as Rolls-Royce- would be one way of providing the new centre/campus with automatic positive world-recognition...

    A company like Rolls-Royce paired with an effervescent and competent international partner- such as Hitatchi- and its Japan-based R & D resources- would immeasurably strengthen the viability and export-related potential of a UK based "world centre" for rail technology research & development.....

    In addition to the establishment of new (non Bombardier) factories in the UK to manufacture and assemble rail-related hardware, the construction of a 'World-Centre' rail-transport research and development type facility in the UK needs to be expeditiously evaluated...

    Roderick V. Louis
    Vancouver, BC, Canada

    rvlouis@patientempowermentsociety.com

  • Mark, London, UK

    The whole rail industry needs to get leaner. At the moment there are still too many people involved at all stages of train manufacturing and operation. If UK train fares are ever going to even approach being competitive then wage costs must go down across the board!

  • andrew ganley, cheam,surrey, united kingdom

    Well my maths isnt great but the total comes to under 2,000 tops,
    What abou the other 10.000? dont say in the construction industry thats all
    East/ European labour now so no jobs for Brits there.
    And mention Toyota,arent they cutting jobs now?

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