Rail contractors' plan to blow away secrecy

Exclusive by John Leitch



A group of leading rail maintenance contractors are pushing some of their competitive secrecy aside by pooling ideas, CJ has learned.

Plans are well advanced in their bid to have "an industry operating with best practice". Around half a dozen contractors - led by Tarmac and Amec, and coordinated through the National Rail Contractors' Group - have approached Railtrack with proposals aimed at saving money. They hope this will help to secure a steady workload by minimising the rail industry's need to call on Treasury support for infrastructure spending.

CJ understands that in return contractors hope to benefit from the information swap by staying ahead of newcomers competing for maintenance work.

Leading contractors recently met Railtrack bosses for dinner to discuss performance improvement. The meeting was attended by Brian Mellitt, Railtrack's main board director for production and engineering; Martin Reynolds, development director; Chris Leach, operations director; and David Meek, contract and supply director.

The moves - which are independent of Railtrack's efforts to achieve 30 per cent cost saving through benchmarking - are welcomed by Martin Reynolds: "Railtrack has responded positively. We are on the brink of getting into the detail of the process."

Reynolds' said that the contractors' plan is not a move towards a cartel, which would disadvantage other contractors wishing to bid for track maintenance work when contracts came up for renewal. He denied they would be at a disadvantage

"No. It's just the opposite," said Reynolds. "Years ago players in the UK motor industry twigged that the opposition wasn't themselves but the Japanese competition, so they grouped up and did things together.

"The UK contractors have twigged the same." They have identified the Treasury and not each other as the enemy. Their ideas would only benefit them if they could help the client retain funding and so help to provide the industry with work.

Ian Hume, MD of Amec Rail said: "It's about added value, not just cutting costs."

The contractors' worry is that so long as train operating companies (TOCs) need a Treasury subsidy to balance their books there is a risk of the Treasury switching its funding to non-rail areas. Cutting the cost of track maintenance leaves TOCs more able to balance their books from their income from passengers.

All Railtrack maintenance contracts are coming up for renewal. Tenders for the four contracts in Tranche 1 are currently being assessed, with two of the four down to just two competing bids. Wessex, the one contract in Tranche 1a, is also out to tender. Tranche 2 contracts will be out to bidding in January 1999.

Railtrack currently compares individual maintenance contractors by three methods: benchmarking; the reliability of trains running through their patch; and by a smooth-ride measurement of track. Information is shared between all contractors on a non-attributed basis.

John Young, Kier Rail's business development manager, wants Kier to get into the railway maintenance market. "Railtrack tells us it is keen to introduce new blood," he said. He hoped benchmarking data would be shared.