Rolling stock faces last siding: The rail privatisation Bill will bring little hope to Britain's train makers, Christian Wolmar reports

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The Independent Online
IN MAY 1994, the last Networker 465 train for Network SouthEast's Kent Link line will roll off the production line at ABB's modern York works. Barring some unexpected development little short of divine intervention, the plant will then close. And this after a pounds 50m modernisation was completed last month.

At best, Bo Sodersten, the managing director of ABB Transportation, hopes the closure of the works will be temporary. He is struggling to keep the gap as short as possible. But the dearth of orders for new rolling stock makes him concerned that it may be forced into permanent shutdown. 'Even if we got a new order tomorrow, I don't see how we could avoid having a gap when we are producing nothing because the lead time in this industry is always quite long,' he said.

The problems at York are replicated throughout the industry. Last month, David Gillan, director of the Railway Industry Association, warned the Commons Transport Select Committee that his industry, which employs about 30,000 people, was 'staring annihilation in the face' because of the hiatus in orders. Now he says the malaise has spread. 'During the current financial year, which finishes at the end of March, BR were supposed to put out 25 signalling contracts. So far they have offered five, of which only three have been let.'

Yet when John MacGregor, the Secretary of State for Transport, constantly reiterates that investment in BR is at record levels, he is telling the truth. The trouble is that most of it is concentrated on work related to the Channel tunnel - half of this year's pounds 1.6bn - and, in any case, it is set to plummet next year.

For the year starting 1 April, the overall total is set to fall to pounds 1bn, of which about pounds 300m is tunnel-related. A large part of the remainder will go on the 465 Networkers. BR's chairman, Sir Bob Reid, has consistently said that the network needs investment of pounds 1bn each year just to maintain the present levels of service and more than that to make improvements.

In practice, the eventual amount available for investment is likely to be much less. BR is dependent on revenue for much of its investment and passenger numbers are declining rapidly in the recession. While BR is given about pounds 1bn a year by the Government to run 'socially necessary' trains, investment is paid for out of revenue or by borrowing from the Public Works Loan Board. This make BR vulnerable to the effects of short-term fluctuations, a situation that is not conducive to ensuring the survival of a strong railway equipment supply industry.

The downturn in the economy, for example, spelled the end of the London-to-Glasgow West Coast main line upgrade. First, plans to buy 32 new trains for about pounds 400m were scrapped, even though the order had been put out to tender. Then much of the pounds 400m budget for improving the track and signalling was frozen. There are so many speed restrictions due to the poor condition of the line between London and Rugby that it is almost impossible for the trains to run to schedule - 17 per cent of trains are 10 or more minutes late.

The proposals for privatisating the railways have added further uncertainty. The Government hopes that new investment from the private sector will be attracted to the railways but there is bound to be a time-lag. The private sector operators who take up the first franchises, expected to be let from April 1994 but almost certain to be delayed, will not rush to put in orders for new rolling stock.

They will need to have time to assess the viability of their business and even then it is difficult to see how they will be encouraged to buy new trains when the marginal extra revenue they attract, compared with eking out the life of the existing ones, will not make it worthwhile. As John Prescott, Labour's transport spokesman, said recently, it will be the paint producers who will be the initial beneficiaries of rail privatisation, not the rolling stock manufacturers.

It is impossible to see how the existing rolling stock works can all survive. Roger Ford, the industry and technology editor of Modern Railways, said he had never seen such a bleak situation in more than 20 years of studying the industry. 'There is simply no work in the pipeline. While the situation varies from company to company, most will run out of work next year or in early 1995.' He dismissed the argument of transport ministers that it is too early to make such predictions: 'They seem not to be attached to the real world. There is no way you can avoid long lead times in this business, but there has been no long-term planning. It is a disaster.'

The rolling stock part of the industry is the largest single employer. According to Mr Ford, it has 12,000 workers, and he sees no way that the present capacity can be maintained. He reckons about 36 coaches a week could be produced by the three manufacturers - Hunslet, Metro-Cammell and ABB - and that currently they are making about 22.

Only Metro-Cammell, which is building the 'hotel on wheels' night trains for the Channel tunnel and will build the Jubilee Line trains when the go-ahead is finally given for the extension, has orders stretching into 1995. For the others, apart from refurbishment work, the only prospective large order is for 50 coaches for the Strathclyde area, a few weeks' work for York, for example, which could produce up to 10 coaches per week at full capacity.

ABB has won an order for trams in Strasbourg and all the companies are looking to the export market, but they have to compete with indigenous firms who, pace the single market, have the backing of governments committed to investment in the railways.

Some in the industry are hoping that what amounts to a government ban on new train orders has been a deliberate ploy to encourage the privatisation process. They hope that the new 'semi-privatised' regime, which is due to start in April 1994 but almost certain to be delayed, will be supported with largesse from the Government or a relaxation of the rules on public borrowing.

There was a glimpse of hope in the Autumn Statement when the Government said that BR could lease pounds 150m worth of trains in the next three years. It is, BR argues, only a small amount and no order has so far been placed. In any case, with BR's finances so rocky, any large commitment to leasing would have to be underwritten by the Government, with all the ensuing problems over already-inflated borrowing levels.

Next week, the Railway Industry Association will produce a report suggesting that the limit placed on BR's borrowing by the Government should be abolished. Otherwise, it stresses, its warnings about annihilation will become a reality.

(Photograph omitted)