Train maker to tackle Teutonic inefficiency

The world's biggest train manufacturer has dispatched a "hit squad" from Britain to sort out its German operations with a brief to bring them up to UK standards of efficiency and cost competitiveness.

The move by Adtranz, the ABB-Daimler Benz joint venture which owns the old British Rail Engineering works in Derby, is part of an overall strategy to cut the size of its European workforce by about 5,000.

Since Adtranz was formed in January 1996, it has cut its UK workforce from 8,000 to 3,500 and closed its York manufacturing works, making Britain the group's most efficient production base. Its UK operations, based mainly in Derby, Manchester, Doncaster and Plymouth, are now 50 per cent cheaper than those in Germany, where 8,500 are employed in 11 locations, while UK inventory levels are a sixth of those elsewhere.

Kaare Vagner, chief executive of Adtranz, said: "We have flown our British restructuring team into Germany to do the same thing there that they have done here."

The British team will assess the scope for rationalising the number of plants in Germany and introduce UK-style working systems. This involves project directors with responsibility for the design, development and manufacture of a train rather than the production system being broken up by function.

The process is likely to be repeated in some of the group's Scandinavian operations, notably Denmark, which is also reckoned to suffer from overmanning and excess capacity compared to the size of the home market.

Since the UK restructuring, Adtranz has won the lion's share of the rolling stock orders placed by the privatised rail operators and has also become the favourite location for building trains for export.

The total UK order book stands at pounds 500m, of which about a quarter are export contracts including one deal to supply rolling stock for a new light rail system in Bangkok.

Worldwide, Adtranz has manufacturing operations in 20 countries, a pounds 6bn order backlog and 25,000 employees, of which about 20,000 are in Europe, making it the world's biggest train manufacturer with a 14 per cent share of the global market and 22 per cent of the European market.

Mr Vagner forecast further consolidation and rationalisation of the rolling stock industry as prices continued to decline.

Ultimately Adtranz has its sights set on a merger with the rolling stock operations of General Electric of the US. The two groups have jointly developed a new freight locomotive called the Blue Tiger and are working together on projects in Latin America, Australia and South Africa.

The next big UK rolling stock order is a pounds 600m contract to supply Virgin with 40 tilting trains for the upgraded West Coast mainline. Adtranz is in competition for the business with GEC-Alsthom and Siemens and is being advised on its bid by Sir Alastair Morton, former co-chairman of Eurotunnel. Sir Alastair was appointed earlier this month.