Interviews

A booming supply chain

Jeremy Candfield, Director General of the Railway Industry Association (RIA), speaks to RTM about the economic situation for rail businesses.

Recent surveys by major business groups have suggested that UK manufacturing is bouncing back after a tricky couple of years – although official data on manufacturing output and exporting does not yet reflect this.

But for the rail sector, at least, these are good times, with better prospects ahead.

Jeremy Candfield is Director General of the Railway Industry Association (RIA), which represents UK-based suppliers to the industry.

Ahead of the industry gathering in Birmingham for Infrarail 2012 to showcase their leading products and services, Candfield gave us his view of the current state of the supplier companies.

‘People feel optimistic’

He said: “At the moment, things are looking – for most sectors – really quite good. We’re carrying out one of our regular business surveys, which isn’t completed yet, but what it’s showing at the moment is a significantly higher level of confidence than we were seeing even a year ago.

“That’s really very encouraging. We’re seeing quite a lot of projects in design, and very major and well-known ones now going into implementation. That’s obviously causing people to feel optimistic about the near and medium-term, then for the longer term, we’re clearly looking towards High Speed 2.

“The confidence is not exclusively attributable to those big projects though. It is also true that Network Rail’s enhancement spend is at a level much higher now than it was at the start of CP4.

“There’s a lot more going on than the major projects alone: London Underground is spending at a high level on the renewal of its assets, and of course Network Rail has a major renewals programme going as well.”

Co-operation and competition

In the areas of franchise competition and rolling stock procurement, foreignbased companies are having an increasing – and, in some quarters, controversial – impact on UK businesses. Subsidiaries of foreign state-owned railways are having increasing success in being shortlisted to run franchises, and winning them – most recently on the Greater Anglia route, now run by Abellio, a subsidiary of stateowned Nederlandse Spoorwegen (Dutch Railways).

More controversially, Siemens beat Bombardier to the Thameslink rolling stock contract, and Hitachi Rail Europe won the Intercity Express Programme deal – although it, unlike Siemens, plans to assemble its trains in the UK. Obviously, none of these companies can be as classified as ‘UK’ or ‘foreign’ as easily as some would have it: Siemens was established in the UK 169 years ago and employs nearly 13,000 people here, including around 650 people in rolling stock maintenance, and will make use of the UK supply chain in delivering Thameslink rolling stock, while Bombardier is ultimately a Canadian company and would have been likely to import many components of its trains had it won the Thameslink contract, for example.

Candfield highlighted the extent to which there was a real story around co-operation, not just competition, in parts of the supply chain.

He said: “On the infrastructure side of things, there’s quite a degree of joint working that goes on between UK companies and overseas companies, but I wouldn’t say I’ve seen any marked trends making that more common or less common than it has been for quite awhile.

“We have to remember that we’re operating in an open market here: one of the most open of the substantial rail markets worldwide. So as well as foreign companies coming here, we have a lot of UK companies who are very visibly exporting. That’s going on all the time. Finally, a lot of the companies we’re dealing with, both UK companies and overseas companies, are actually multinationals, meaning it’s sometimes a little difficult to tell!”

Industry engagement

Candfield suggested that RIA membership has been rising recently, and explained: “We provide companies with a lot of what we call ‘direct services’ – information supply, and things of that nature – but perhaps what really makes us stand out for new members is the opportunities we offer for engagement with the industry, and with the rest of the supply industry. That involves networking in numerous meetings and also promoting dialogue between them and the major client organisations: Network Rail, London Underground, TOCs and so on.

“We do a great deal of that, and companies plainly find it helpful, because it’s now often cited as an important reason for companies joining RIA. Take that alongside the areas of work that are ongoing on the technical front here – there’s a huge emphasis on trying to break down some of the barriers to innovation in particular, work on standards, plus exports promotion is a major part of RIA’s portfolio – and we are quite encouraged by the growth in RIA membership.”

A big positive for Candfield, he said, is the changing culture at Network Rail, and its race to be more open, more welcoming, and to involve industry expertise at earlier stages.

He said: “Without doubt Network Rail has embraced early contractor involvement in a whole series of projects, some of them really quite important. It’s obviously much too early to see the outcome of that, but if you look at their developing contracting strategy, they quite properly identify a series of different forms of contractual relationship between themselves and suppliers. It wouldn’t be appropriate to think of early contractor involvement as being appropriate in all circumstances, but they identify a range of options, which is right, and they are making serious strides towards greater involvement of contractors at an early stage.

“They are adjusting their own resource pool to fit that challenge, which is exactly what they should be doing.”

NSARE

Candfield and RIA were early backers of the establishment of NSARE, and he serves as its deputy chairman. As explained on pages 38-41, NSARE is flourishing at the moment.

Candfield explained the background behind the decision to support the organisation in its early days, saying: “We could see the prospects of very substantial shortages of skilled people arising, partly for demographic reasons, and partly because of the volume of activity coming on-stream or prospectively coming on-stream. We thought it was really important to do whatever we could, and whatever the industry collectively could, to encourage an outcome in which there would be a pool of skilled labour available, and at a volume appropriate, to service this volume of work.

“Plus, it has to be said, in relation to existing employees, there have been concerns about the volume of training being undertaken, the quality of training, the importance of accreditation – and the desirability of having transferable skills between different employers.

“So there are a whole series of reasons, but fundamentally, they boil down to ensuring that the industry has got the right people available to do the job at the right time.”

Readers can meet RIA at stand M01 at Infrarail 2012.

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