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.”

Colin Williscroft
Thu, 08 Sep 2011

Categories

Analysis

Featured

KiwiRail's Chinese supplier misses Australian targets