KiwiRail's Chinese supplier misses Australian targets

The Chinese company awarded a KiwiRail contract has come up short in an Australian deal.

Late last year KiwiRail announced that it had let a contract to build 300 flat top railway carriages to China CNR Corporation (CNR), which put in a bid 25% cheaper than the New Zealand rail operator's own Hillside Workshops.

However, at the release of its half-year results in Australia earlier this year, Downer EDI said that a contract it had with Changchun Railway Vehicles, a subsidiary of CNR, to provide it with carriages for Sydney's commuter network, had not worked out as expected.

Although Changchun did a good job creating the outer parts of the train carriages, interiors, such as seats and vestibules, needed major changes and improvements after the carriages arrived in Australia, Downer officials said.

Ross Spicer, a rail executive appointed to oversee production, said most of the carriages had damaged interiors.

As a result, much more work had to be done on the trains in Australia than had been anticipated.

Over the life of the project, Downer estimated it would need an extra 770,000 hours of labour in Australia than it had previously planned for.

Catherine Beard, executive director of ManufacturingNZ, part of BusinessNZ, was not surprised.

She had plenty of anecdotal evidence of contracts being let to overseas companies based on price that needed work redone once the product reached New Zealand.

“Some New Zealand manufacturers tell me they have had considerable business maintaining an overseas supplied solution that has proved to be either poor quality or not fit for purpose where a tender was allocated on price alone.

“New Zealand manufacturers don’t want to be the fix-it-up guys, they want to get a decent slice of the action to help them build businesses of scale.”


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Not a surprise really "you get what you pay for"

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I agree with Ms Beard, any tradesman would prefer to develop rather than fix. However in this environment surely even fix-up is better than no up. Over many years whenever there has been a stream of work the Unions enter and make the company pay more than it can afford, hence our non competitiveness. Unions have killed more business in NZ in the last 20 years and any downturn in financial markets.

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Re Unions as a disincentive.

Perhaps there are other considerations as well. For example - exchange rate manipulation, size of job runs, working conditions, distance from market, and availability of capital are some that affect pricing.

A further example is the collapse of the motor vehicle assembly industry and it's associated NZ manufacturing jobs.

This was a direct result of tarrif removal.

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Union membership has significantly declined in the past 20 years so I suspect its more likely the free market has killed business in NZ the any union activity.

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Please be more accurate in your description of railway rolling stock. Carriages are for people and wagons are for freight.

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It is the poor governance and the down treading of NZ Industry by this government who refuses to protect NZ Industry yet is happy to trade with highly protected partners who would'nt possibly dream of having an open market philosophy.
Its just Kowtowing to the DRAGON.

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Too true! I can't say I am a fan of unions or protectionism, but NZ has it all wrong in the manufacturing space.
The government should be issuing work to NZ firms, at least to some level, provided it isn't taken advantage off.

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Too true! I can't say I am a fan of unions or protectionism, but NZ has it all wrong in the manufacturing space.
The government should be issuing work to NZ firms, at least to some level, provided it isn't taken advantage off.

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Jonkey needs brownie points from the chinese gvt ; Just look at a GEELY car,all flash and no finish.

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Read "Poorly Made in China" by Paul Midler.

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When has stuff made in China lasted? They make it to fail, so they have more business downstream.

The correct approach is to buy once buy right, even if it costs more.

Buying from China core assets is sticking plaster mentality. You want something that lasts and produced by someone who cant run away and hide.

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