Rail Industry Focus

10.06.15

Rail supply group's call to arms at Railtex

Source: RTM Jun/Jul 15

Terence Watson, co-chair of the Rail Supply Group, talks about the development of an industrial strategy for rail, and two programmes for suppliers are launched at Railtex. David Stevenson reports.

If the domestic supply industry fails to reshape itself, in 10 or 15 years the UK market will peak and decline, warned Terence Watson, co-chair of the Rail Supply Group (RSG), speaking at Railtex 2015.

During his keynote speech he called it a “great moment” to be in the rail industry, but said we must ensure we “make the most of it”.

The supply chain and train operators employ 212,000 people – that’s about 70,000 more than the UK automotive industry (141,000). The sector contributes almost £4bn a year to the exchequer, and moves three million people a day. In short, the rail sector in this country is experiencing a renaissance, said Watson. However, the president of Alstom UK added that there is a problem: “The supply industry is not yet set up to maximise the returns for UK plc.”

He said that while there is no comprehensive data, some estimates suggest that the UK exports as little as 10% of rail supply revenues, compared to other European countries that are doing much better: France 20% and Germany 50%.

“And our Chinese competitors are 40 times larger than the largest UK rail supplier. Come on! This is unsustainable,” he said. Watson told the Railtex audience that it is time to see the rail industry as “strategic”, just as competitor countries do.

He added that the industry needs to be joined up, but admitted one of the reasons it struggles stems from a gap in the privatisation model. “The pressure to deliver in the short-term has obscured the need for investment in the long-term,” said Watson.

To bring costs down, the whole industry has to drive investment in innovation and technology, he noted. And the market we target should be a world market, not just the UK.

“This is a flaw that the industry and government have to solve together,” said Watson, adding: “The supply chain cannot do it on its own. But we can certainly give it a firm boot and take responsibility to provide ideas, direction and voice.”

The recently established RSG, which brings together industry and the government, launched its ‘Vision’ document in January.

The ‘Vision’ pledges that by 2025, the industry will:

  • More than double export volumes;
  • Attract the very best UK talent to the rail sector;
  • Harness the energy & innovation of a greater number of SMEs;
  • Be a global leader in high-speed rail; and
  • Have a highly innovative and entrepreneurial supply chain.

“This is an ambitious vision, with a clear timetable, but one that I am confident we can deliver,” said Watson.

He added that by the end of this year, subject to ministerial agreement, RSG will present government and the market with an industrial strategy, adding that everyone in the supply sector “has a part to play”.

“Our project will not succeed with a few big firms leading from the front,” said Watson. “It requires a huge effort from everyone – and you are a crucial part of that. Every single thing in the documents we produce has got to resonate with what you say you want us to do. That is really important because what we are producing now is not a development and vision document it is an industrial strategy.”

To help drive the supply chain towards these goals, two new initiatives were launched at Railtex shortly after Watson’s speech.

Open-Doors

Firstly, the ‘Open-Doors’ scheme, launched by Roy Freeland, managing director at Perpetuum and an RSG council member, has been designed so “larger organisations can support and grow the SMEs upon which our industry depends”.

Freeland told delegates the rail industry has been very conservative, but there are massive opportunities to innovate and take leadership.

“What we are trying to do here is create the right environment to realise the potential of innovative, high growth and versatile smaller companies,” he said.

“The background to that is that 59% of UK employment and 48% of UK turnover actually comes from smaller companies. SMEs are good at introducing new technologies from other sectors and we believe there are massive opportunities to do that in the rail industry.”

The new initiative, the result of research undertaken by the RSG’s SME workstream, has been designed to help fast-track products and services from SMEs into train operating companies, OEMs, tier 1 suppliers and larger businesses across the rail industry.

The initial trial of ‘Open-Doors’ is being supported by Network Rail, South West Trains, Siemens, Carillion, HS2, Bombardier, Alstom, Knorr-Bremse and Atkins, among others.

“One of the most important things the RSG is doing is helping to get the larger companies in the industry to help the smaller ones in various ways,” said Freeland. “That is one of the backbones of the philosophy here. We will all benefit if we all work together and big companies can provide that little bit of assistance that the smaller companies need to make that successful.”

He added that the scheme is very simple to administer, but hopes it will be very effective.

“An applicant, and that is any SME, will simply send an email to the administrator,” said Freeland. “The administrator, the DfT, will send to the SME a list of all those companies that have signed up to participate in the scheme.

“The applicant then sends his proposal, which is passed on by the administrator, to the participant’s contact. In the participant company they will have nominated a senior management contact to get these proposals.

“The contact in the large company will then find someone suitable to evaluate the proposal. It might be someone in the engineering department, it might be research or even the procurement department, but someone who is capable at looking at the proposal and evaluating it will do so. The evaluator will then report back to the applicant – to the SME – and tell them what they think about the proposal and, hopefully, that there is an order number.”

However, he admitted that inevitably, on many occasions, the response will be “I’m sorry but for this reason or that it isn’t suitable for us”. But the reasoning behind it will be there, said Freeland. The administrator will also be there to make sure this is all done in a timely fashion.

“The RSG Council believes that SMEs have a vital part to play in making the UK rail supply chain more competitive,” said Freeland. “It is in the interests of the whole rail industry to encourage SMEs to invest in developing innovative products and services. To help encourage this we need to provide SMEs with the easiest possible access to potential customers.”

Mentoring

In addition to the Open-Doors initiative, another RSG partner, Rail Alliance, launched the first rail sector-wide mentoring programme specifically aimed at SMEs who demonstrate a commitment and ability to meet ‘top tier’ requirements. These companies will be invited by Rail Alliance to register with the scheme and submit a structured set of details which will be evaluated via a scorecard system – measuring how “fit for rail” the organisation is.

SMEs most closely matching the needs of the top tier will be offered specific workshops and support to ensure they meet the relevant requirements – they will then be paired with appropriate mentors from the top tier group.

Mentoring will be delivered via the top tier company, which will provide the SME with a main contact, access to senior management and will host onsite meetings to help the new entrant to become competitive within the supply chain.

Colin Flack, CEO of Rail Alliance, who acts as RSG secretariat, said any mentoring scheme is going to “crash and burn spectacularly, if we just try to drop a very flat offer that is the same for everyone!” He added: “This is by no means a one-size-fits-all industry and we are very conscious of that in what we are trying to do.”

He added that the Rail Alliance is adopting the Stanford Research Institute NABC (Need, Approach, Benefit, Competition) approach in the programme and there needs to be a commitment to this from the SMEs.

“The N stands for Need, so it is important that the SMEs try to engage fundamentally and understand what the needs of the customer are. We are trying to achieve that by pushing out, but there is an element there of engaging and understanding.

“The A stands for Approach that you as companies are going to take to engage. What is it that you are going to get from it? The B is the Benefits that the supply chain customers are going to get from you.  And, finally, the C part is understanding who your competitors are. Obviously, it is important that you understand who you are competing with because from that, at an early stage, you can work out whether it is a piece of business worth getting in to or not.”

The first group of companies to be assessed for the scheme will be limited to 500, so Rail Alliance advised that early registration is highly recommended.

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