Written evidence from Bombardier Transportation
UK Limited (TE 89)
INTRODUCTION
Bombardier Transportation UK Limited is pleased to
submit this evidence to the inquiry by the House of Commons Transport
Committee into Transport and the Economy.
Bombardier is a global corporation and leader in
the fields of aerospace and rail transportation. With operations
in 35 countries, Bombardier Transportation leads the world's rail
equipment manufacturing and servicing industry. Our 33,800 employees
continue a proud tradition of delivering innovative rail transportation
solutions, including:
- Rail vehicles - automated people movers, monorails,
light rail vehicles, advanced rapid transit, metros, commuter/regional
trains, intercity/high-speed trains and locomotives;
- Propulsion and controls - complete product portfolio
for applications ranging from trolley buses to freight locomotives;
- Bogies - product portfolio for the entire range
of rail vehicles;
- Services - fleet maintenance, operations and
maintenance (O&M), vehicle refurbishment and modernisation,
and material management;
- Transportation systems - customised "design-build-operate-maintain"
transportation system solutions; and
- Rail control solutions - advanced signalling
solutions for mass transit and mainline systems.
In the United Kingdom, Bombardier Transportation's
activities are concentrated at our world-class manufacturing facility
in Derby employing over 2,500 people, from where we have produced
over 2,600 vehicles for the UK mainline rail industry, the London
Underground and for export since 1996. The Derby factory is currently
recruiting 400 temporary workers to meet a peak in demand, but
these will not be required in the trough that we can see following
in 2011. In recent years, the Derby facility has exported vehicles
to Taiwan and South Africa. The latter contract, involving transfer
of technology, provided new trains for the Johannesburg airport
link that was so successful in providing essential transport during
this year's soccer World Cup.
In addition, our Rail Control Solutions factory in
Plymouth produces state of the art train control technology for
export across the globe, to markets as far afield as India, Korea
and Australia.
Bombardier Aerospace is the largest private sector
employer in Northern Ireland, making a significant contribution
to the local and national economy.
EXECUTIVE SUMMARY
1. Effective transport networks are foundational
for modern society and a key driver of economic growth.
2. Transport can also help to maintain and develop
the domestic supply sector as well as generating high-technology
exports and highly skilled jobs:
(a) Transport funding/expenditure can therefore
support government objectives to re-balance the economy away from
a reliance on financial services; and
(b) Bombardier Transportation and its supply
chain exist throughout the UK in locations in which the private
sector needs to be expanded.
3. Transport planning responsibilities should
reflect usage patterns and be geared towards sustaining regional
and national economic growth.
4. Bombardier Transportation has a wealth of
global experience in the transport sector in many countries with
varied levels of economic development. Bombardier has developed
and maintained rail systems across all tiers including high-speed
rail, standard heavy rail, metro and light rail systems. We see
how rail transport network development has been used as a policy
tool to achieve wider government objectives.
5. We put the case forward in this paper that
the Railways are uniquely placed to help achieve the Government's
goals and can do so in an environmentally sustainable manner.
We have not sought mechanically to answer each specific
question but have rather divided our comments into sections broadly
following the Committee's issues whilst reflecting our expertise
in the rail sector.
SECTION ONE:
EFFECTIVE TRANSPORT
NETWORKS ARE
FOUNDATIONAL TO
OUR SOCIETY
Bombardier Transportation contends that transport
is foundational for our society, and requires investment over
the long-term in order to provide sustained economic value to
the country. The current rail network in the UK is a legacy of
the investments made over many decades. However, development
of the network has not kept pace with changes to the economic
geography of the UK in the second half of the 20th century and
this has resulted in the problems identified by the Eddington
Report.
We contend that transport infrastructure investment
should be seen in the context of the long-term strategic development
of the UK. We believe that provision of an effective transport
network should be considered "foundational" in the same
way as public provision of core healthcare services and public
sector children's education.
Whilst predictions about future passenger and freight
growth on the railways are difficult to make over a 20 or 30-year
period, the case for investment remains solid, even if forecasts
are slightly lower or higher than estimated just a few years ago.
What is essential is ensuring that we have a transport system
that is matched with the level of long run economic development
that occurs in the UK. Consequently, the current economic downturn
must not result in less investment. Our view is reinforced by
evidence that points to stable passenger numbers despite the current
economic conditions.
According to the Office of Rail Regulation (ORR)
National Rail Trends, ordinary fare revenue increased by 3% between
2008 and 2009 despite the recession. Thus, Eddington's recommendation
that "action is needed to prevent rising transport demands
dampening the UK's long term productivity and competitiveness"
is as relevant in 2010 as it was in 2006.
The economic returns from transport investment are
high. The Committee has previously noted that, "Transport
investments could, for example, support clusters and agglomerations
(typically in urban areas or industrial locations) of economic
activity, by expanding labour market catchment areas, improving
job matching, and facilitating business to business interactions."
(Priorities for Investment in the Railways, Chapter 3,
paragraph 18).
In writing this paragraph, the Committee was rightly
commenting on the impact of transport investment on the wider
economy. But clustering and agglomeration benefits are seen on
the supply side of the equation too. Derby is the largest rail
industry cluster in the world, so the wider economic benefits
derived from transport investment assist the further development
and retention of the technical skills base the rail industry needs
and that has taken generations to build up. A leading high-tech
centre of excellence in manufacturing such as Derby must be encouraged
to succeed if the UK is to rebalance its economy towards export-led
growth delivered by a growing private sector.
A recent study ("Planes, Trains and Automobiles")
commissioned by Derby City Council (DCC) and the East Midlands
Development Agency (EMDA) considered the economic benefits to
the city and region from the aerospace, rail and automotive manufacturing
clusters in the city. It concluded that for the rail sector,
that an employment multiplier of 2.0:1 was appropriate to represent
the impact of indirect and induced employment in the local economy,
suggesting that the 8,500 rail employees in the East Midlands
region support employment of a further 8,500 people in the wider
economy of the region. Whilst this might appear a conservative
multiplier compared to some claims, it has been independently
benchmarked as part of the DCC / EMDA study and we believe therefore
presents a robust analysis of the true economic impacts of the
sector. A copy of the "Planes, Trains and Automobiles"
study report is enclosed with this submission for the information
of the Committee.
Through the supply side, transport investment benefits
the economies of regions across the country. Therefore, while
London and the SouthEast has understandably high transport investment
needs because of the scale of economic activity there, awarding
supply contracts into the domestic supply sector brings economic
benefit across the UK. Bombardier Transportation in based in
the East Midlands and South West regions, whilst our supply chain
extends throughout the UK, in areas where the private sector could
and should be expanding. The importance of maintaining the railway
manufacturing skills base in these regions of the UK cannot be
underestimated as it helps to counter the peaks and troughs of
economic cycles.
SECTION TWO:
TRANSPORT INVESTMENT
CAN GROW
THE ECONOMY
Eddington pointed out that whilst in a mature economy
such as the UK it could be possible to achieve economic growth
without significant capital investment in entirely new transport
infrastructure, the constraints upon the existing network
could impede economic development and damage the UK's international
competitiveness.
One major problem for the UK is that our current
transport networks - especially rail - reflect travel patterns
of the 1950s. A network mostly laid down in the 19th century
has quite simply not kept up with economic and social developments
since that time. This is graphically highlighted by the poor
rail connections to Heathrow and by the tortuous process of modernising
the West Coast Main Line, which has proved to be only a stopgap
solution in providing the required extra capacity.
Regional economic growth can be encouraged when transport
infrastructure development is matched to the long-run development
of the economic geography of the region. In China, where the
economic landscape has been changing dramatically over the last
two decades, transport network investments have been made which
complement the unfolding economic development. First, investments
were made in metro systems to allow large city centres to function.
Then effective connections between cities were targeted. A further
step is investment in suburban networks, as cities mature and
less dense development grows at the fringes.
Bombardier Transportation has implemented a strategy
for delivering the full hierarchy of rail-based solutions in China,
from metro to high speed and finally provincial services. Whilst
China's emerging economy cannot be said to replicate the UK as
an economic model, the approach adopted and the long-term
strategy developed has proved to be extremely successful.
Some of the current transport schemes in the UK such
as Thameslink, Crossrail, the Manchester Hub, and the extension
of the London Overground network are good examples of transport
infrastructure investment that reflects modern patterns of growth
of the economy in regional locations and demonstrates how transport
demand goes hand in hand with economic growth. These are good
examples because they deal with the constraints on capacity that
can impact on the productivity benefits that the transport network
potentially creates.
The new lines (with rolling stock supplied by Bombardier)
on Transport for London's Overground network show how the railways
can respond to changing patterns of demand and assist in generating
wider social and economic benefits. These lines have created
the possibility of orbital movements for many Londoners (thereby
freeing up capacity on other lines) and have increased the number
of people who can commute more easily to jobs in the City, thus
improving social inclusion. Moreover, initial reports indicate
that house prices in those areas that the South London line now
runs through have risen by approximately 10% since it opened.
Thameslink is a prime example of a project being
driven by constrained demand and one that will assist in regional
and economic growth, linking three major regions of the UK together
and providing the first comprehensive cross-London rail service
(similar to many continental cities). Bombardier is a shortlisted
bidder to supply new trains for the route, so the wider economic
benefits of this investment programme could stretch across the
country through our multiple manufacturing and supplier sites
in the East Midlands and nationwide supply chain but also through
the planned cascade of the current Thameslink rolling stock to
areas such as the Thames Valley and the North West.
We have referred to our experience in China, but
this is a country where there is currently little necessity for
light rail solutions in the very large Chinese conurbations.
However, these solutions are much better suited to the economic
geography of the UK. Indeed this idea is supported by the combined
ATOC, Network Rail and Rail Freight Operators Association report,
Planning Ahead 2010, which makes the case that "light
rail or tram trains could benefit regional and rural markets with
locally specific initiatives, supporting the local economy and
environment by delivering an alternative to 'heavy' rail."
(page 9, paragraph 2.26)
Nevertheless, heavy rail can deliver massive additional
capacity to our transport network in a very environmentally-friendly
way. So, the railways can assist the Government to meet its 2020
carbon reduction targets by helping to shift traffic away from
the private car and short-haul aviation. This could also help
to reduce congestion on the roads as more people and goods are
moved by rail. Whilst it is difficult for economists to quantify
exactly how much money would be saved as a result of significant
modal shift, it is clear that the costs to business of delays
would significantly reduce.
Also, the relevance of data used in analysis and
assessment of schemes could be improved: several recent transport
white papers have based their economic modelling on the price
of oil being $50 a barrel. In the last two years this has fluctuated
drastically which has had the effect of doubling transportation
costs and impacting negatively upon demand forecasts. Further,
such inaccurate figures create false impressions about affordability
and environmental performance.
In the intercity rail segment, Bombardier has also
recently proposed two cost-effective solutions to enhance capacity
and reduce the carbon footprint of existing rail operations:
- Project Thor, being developed with a number of
UK private sector partners, would see 500 existing diesel multiple
unit vehicles converted to bi-mode diesel / electric capability,
allowing them to operate as electric trains where there is already
electrification infrastructure in place, while continuing their
journey in diesel mode where the wires end. The Department for
Transport is currently working to confirm the business case, which
appears strong, and wider benefits. A paper produced by the private
sector partners describing the benefits that could be delivered
by this project is enclosed with this submission for the information
of the Committee.
- TRAXX UK is the proposed UK derivative of Bombardier's
market-leading electric locomotive which operates all over mainland
Europe. This would potentially represent an extremely cost-effective
solution when coupled to refurbished existing coaches, as an alternative
to replacement with a new intercity train.
SECTION THREE:
SUSTAINING CAPITAL
EXPENDITURE
Whilst economic conditions have changed dramatically
in recent times, it is important that a strategy for sustained
long-term investment is in place as the development of our transport
system and by implication the economy, depends upon it. Whilst
any Government has to maintain a balance between revenue and expenditure
there will inevitably be times when decisions about levels of
subsidy to users have to be taken around particular policy objectives
or priorities.
Bombardier would argue that there is a need to separate
out the issues between capital expenditure and revenue. As the
Government recognises, capital must continue to flow into the
rail network in order to sustain economic growth. However, simultaneously
decisions also have to be made about revenue support and this
has historically been dependent on public policy objectives and
economic conditions. Furthermore, neither of the two main mechanisms
for supporting rail industry revenue - an increase in fares or
an increase in subsidy - are popular choices. Yet investment
in transport infrastructure is so crucial to the future prosperity
of the UK that the question is really about how we pay for transport
schemes rather than about whether to pay for them or not.
Indeed, a microcosm of this debate can be seen in
arguments around the development of High Speed Two, which is a
national strategic decision. Many believe that a high-speed network
should be funded but not at expense of other smaller enhancement
schemes. Yet the experience of China referred to earlier is that
a growing economy must have both urban metro schemes and
high speed rail for inter-urban journeys.
HS2 does nothing to undermine the case for investment
in London - where the expected population growth is 1.3 million
by 2031 - or in other conurbations. Indeed, a high-speed network
would free up existing lines for freight and passenger movements,
thereby simultaneously delivering an increase in capacity on commuter
services, strategic freight routes and key inter-urban corridors
with national and regional economic benefits. If the Government
decides to proceed with HS2 then Bombardier has all the expertise
and technology required to assist if requested.
Bombardier welcomes the Government's consultation
into rail franchises and will be submitting evidence in due course.
SECTION FOUR:
RELENTLESSLY GROWING
DEMAND
According to the National Audit Office 2010 report
into Increasing Rail Capacity, "Network Rail's Rail Utilisation
Strategies indicate that for many routes, and for the most crowded
routes in particular, train operators had already largely exploited
the potential for running more trains on the existing network.
Further capacity enhancements would often require investment in
additional rolling stock to run longer trains, which in many cases
would require: longer platforms and/or station, junction and signalling
improvements; and depots and stabling to accommodate the new stock."
So how should the UK plan and deliver the extra capacity that
is sorely needed?
The Government has announced the abolition of the
Regional Development Agencies and with them the Regional Spatial
Strategies that were used to plan and assess particular transport
schemes. New structures will need to be established to make decisions
about proposed transport schemes, from local, small scale projects
to strategically important national investments. For rail, we
would suggest that more formal structures could be constructed
on a similar basis to the consultee bases for Network Rail's Route
Utilisation Strategies.
The Local Economic Partnership (LEP) structures are
still in their infancy and are likely to be based around geographic
regions and metropolitan areas, yet it is unclear how much power
they will actually wield, or how they will be funded and resourced.
Heavy rail for passenger or freight use could lose focus if the
LEPs concentrate exclusively on local transport schemes such as
buses and smaller light rail projects. Equally, whilst it makes
sense for some mega-schemes to be planned and delivered nationally
(such as HS2) it makes as much sense for major schemes (such as
the Northern Hub) to be planned and delivered regionally. To
enable local empowerment to be effective, frameworks will need
to be put in place to ensure cross-regional co-operation for schemes
of national importance.
For example, in London real power over transport
spending has been devolved to the locally elected Mayor and Assembly,
allowing transport to support clusters and agglomerations of regional
economic activity throughout the capital. Whilst the example
of London is often used to highlight the benefits of a regional
authority having power over transport spending, London is a unique
conurbation. Perhaps a more repeatable example is that of the
Merseytravel Integrated Transport Authority. This has achieved
significant modal shift that has resulted in less congestion in
Liverpool city centre, an increase in social mobility and an effective
transport hub for the South Liverpool and the growing airport.
As the franchisor of the local rail network, Merseytravel has
been able to offer strategic direction and leadership that has
resulted in Merseyrail Electrics consistently being one of the
country's best performing operators.
SECTION FIVE:
CONCLUSION
We have argued that effective transport networks
in general, and rail transport networks in particular, are foundational
for a modern society, and a key enabler of growth in the nation's
economy.
We have described the link between transport infrastructure
investment and economic benefits derived from the high skill domestic
supply sector that is ready to deliver these projects, contributing
to re-balancing the economy and driving exports. We recognise
the potential role of such investments as tools to achieve a wide
range of government policy objectives.
We recognise the short term challenge of funding
capital investment, but urge the government to recognise the long
term benefits that flow from transport investments, and to prioritise
investment accordingly.
We also recognise that it is not possible to adopt
a "one size fits all" approach to planning and delivering
transport projects, and propose that powers should be devolved
to regional and local bodies according to the geographic scale
of the passenger and freight flows.
Bombardier Transportation has massive global expertise
that can be mobilised to help shift the UK towards a new paradigm
where appropriate processes are used and transport planning reflects
usage across different levels. Through our global leadership
of the sector, we understand the role of the full range of rail
solutions in the public transport portfolio - from light rail
to high speed and freight. We have, within our own company, and
within our extensive UK supply chain, the expertise to deliver
transformational transport projects. We stand ready to support
the government in achieving its objectives, and would welcome
the opportunity to contribute further to policy discussion.
September 2010
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