The lost art of train-making
THE decision by the Chancellor to open up the bidding for £11.8bn of contracts to build the HS2 railway so that China could pitch for it may not seem entirely patriotic.
However, the poor record of Network Rail in delivering projects such as the Midland Mainline (connecting London to Sheffield) and the electrification of the TransPennine route connection from Manchester to Leeds might rightly give George Osborne pause about British expertise.
The UK was once the home of great train-making. But a series of overseas takeovers in recent years has seen domestically owned and controlled train-building capacity greatly reduced.
Under the ownership of Arnold Weinstock’s GEC, Britain was a major player, building systems in Korea, America’s North East corridor and Dallas. But since Lord Simpson sold GEC’s stake in trainmaking to France’s Alstom in 1998, the nation’s capacity has been substantially reduced.
Capacity was not helped by the organised break-up and sale of Invensys to Siemens by serial chairman Sir Nigel Rudd. Despite these setbacks we should not underestimate the strength of Britain’s capability if ventures are well managed.
The £14.8bn Crossrail project linking East and West London is regarded as one of the engineering feats of our time. It will transform rail travel in the capital and bring big station improvements.
It has also been a significant boost for rail manufacturing in the UK. It has ensured the survival in this country of Canadian- owned Bombardier (which controversially lost out on the Thameslink contract) and encouraged two overseas train-makers – Germany’s Siemens and Japan’s Hitachi – to strengthen capacity in Britain.
Hitachi is investing £82m in a new manufacturing facility in Newton Aycliffe in the North East of England.
We may lack the capacity at present but HS2 is a wonderful opportunity for us to reinvigorate train- making and engineering in Britain.
Network Rail may be hopeless but our top railway engineers speak extraordinarily highly of the ability of the London Underground to deliver new investment on time and on budget. This despite the fact that building under London, with its layers of Victorian architecture, can be a perilous affair.
It little matters where the financing for HS2 comes from and there is nothing wrong with George Osborne passing the hat around in Beijing.
The truth is that if he wants a genuine march of the makers then he should be encouraging our indigenous engineers, such as Balfour Beatty, as well as our domestic manufacturers.
As we have lost train-making capacity we have also lost the supply chain, with much of it moving overseas to Germany, France and Japan.
The Railway Industry Association said earlier this year that 70pc of British suppliers of equipment and services to the train industry in this country and overseas report higher order books, which must be positive.
Given the importance of the HS2 contracts one might have expected the industry group to be chomping at the bit to have its say. But there is radio silence.
That apparent lack of energy may be why the country which invented the steam train and did such a brilliant job in Victorian times has lost its mojo and the industry has been so denuded.
Raider power
THERE is something deeply disturbing about the behaviour of little-known hedge funds such as Kerrisdale that has both shorted the stock of venture capital firm Allied Minds and issued a blistering report describing it ‘as a triumph of mind over matter’.
Certainly, Allied Minds looks to be a worthy outfit backing the intellectual property of leading universities. So it is unfortunate that, as a result of the intervention, the shares of Allied Minds have plunged 27pc since Monday.
The trouble is that the track record of some of these guerrilla investors is not without merit. Gotham City’s raid on insurance outfit Quindell was the catalyst for the exposure of the company’s weak controls and the expulsion of founder Rob Terry.
Better that the London authorities allow the free market to operate rather than detain the critics, as is the practice in China.
Terry’s return
AS FOR Rob Terry, one might have thought the entrepreneur had done enough harm given his track record with Innovation and Quindell. In spite of being under investigation by the Serious Fraud Office he has made an unwelcome appearance on the share register of AIM-listed software Imaginatik, where he has a 14pc stake.
Brokers Daniel Stewart, in which Terry has built a 9.9pc holding, were appointed in July of this year. It is starting to feel like a perfect storm for the rest of the investors.