Berl: Build AuckTrains Here


Economics consultancy BERL, this morning set out an economic case for using local rail workshops to build Auckland’s new electric trains - rather than overseas plants, saying it makes business sense, not only from a national perspective, but also from a commercial (Kiwirail) perspective.

Arguing that the cost of producing the units (EMUs) in New Zealand is very much in line with international trends, the Business and Economic Research Ltd report puts forward a number of economic benefits including:

  • Developing and maintaining skills in New Zealand
  • The opportunity to capture part of a $15 billion rolling stock industry
  • Opportunities for innovation and technology spill-overs to other industries
  • Ongoing maintenance contracts with associated jobs and contribution to GDP
  • Reduced exchange rate risk or risk-minimisation costs
  • Crown revenue and trade balance benefits.

The report was commissioned by the Rail and Maritime Transport Union and Dunedin City Council to estimate the likely economic benefit of New Zealand building new rolling stock for the Auckland rail network at Dunedin or Woburn (Wellington) or split between both.

It’s a report I completely  agree with - and hope the government, and KiwiRail consider  seriously.

The Government has announced a budget of up to $500 million for the purchase of the rolling stock for Auckland, with a proposed delivery schedule to begin in the first quarter of 2013. Kiwirail is buying 38 three-car Electric Multiple Units (114 cars), and 13 electric locomotives.

The production timeline calls for delivery of all rolling stock within 45 months but the report interestingly notes “some stakeholders believe a 69-month timeline would be more realistic in terms of capacity constraints.”

Market information indicated that EMUs purchased from European and North American sources with three to five cars would cost $8 million to $9 million a set.

The report believes that three-car EMUs produced locally would cost $7.1 million a set (including costs to upgrade plant in advance of manufacturing).

“This indicates that unless there are significant differences in quality, operating costs or expected life, the commercial decision would be to buy locally, even without considering the broader economic impact.”

The report puts the figure of producing the new rolling stock here at $375 million.

This includes the cost of:

  • 38 three-car EMUs
  • 13 locomotives at $8 million each
  • around $8.5 million in constructing a test-track, dedicated EMU assembly workshop, and semi-automated welding stations.

“Around 31 percent, or $115 million, of this figure will almost certainly be captured by overseas providers. The key question is whether or not it makes sense, from a business case point of view, for New Zealand to do as much as it can of the production here i.e. the other $260 million.”

Berl’s research suggests that overseas manufacturers would need to produce the rolling stock at between 29% and 62% less than the price of manufacture in New Zealand to offset the benefits to New Zealand GDP of producing the trains here.

It warns against sacrificing quality for price. The report doubts that at these prices, the rolling stock is “unlikely to be sourced from quality western suppliers. ”

It says that the idea that we could get the trains built cheaper elsewhere may be true, but almost all rolling stock purchases being made elsewhere are sticking with companies that have established quality and safety records.

“It may be possible for Asian sources to supply at prices close to these.  However, the quality and expected life could be less than those from Europe and North America, and we suspect from New Zealand.  It is possible also that total operating costs could thus be higher.

“The idea that we could get the trains built cheaper elsewhere may be true, but almost all rolling stock purchases being made elsewhere are sticking with companies that have established quality and safety records.”

Wellington's new trains aren't being built here but in South Korea

Besides arguing the economic comparisons of the cost of building the units here, the reports spends considerable time arguing longer-term benefits.

It would provide an opportunity to keep skilled workers here, further develop their skills, and possibly even to attract skilled workers from overseas to build up the knowledge base in New Zealand.
As an example, should much of the project be completed in Dunedin, it may be able to draw on the skills of workers affected by the reduction in Fisher and Paykel operations there.

And as more governments wake up to the potential of commuter rail, the report points out how much potential business is out there if we build up the business:

So with this morning’s Berl report in hand, the Rail and Maritime Transport Union this afternoon launches a “NZ work for NZ workers” campaign. The launch includes officials from the RMTU, Council of Trade Unions, Hutt City Cr Ray Wallace and Hutt Valley Chamber of Commerce Chief Executive David Kiddey.

A petition is being launched and public meetings will be held in Lower Hutt and South Dunedin in coming weeks.

Rail and Maritime Transport Union General Secretary Wayne Butson said the expertise and equipment needed to build these new trains exists in New Zealand rail workshops. NZ rail workers are skilled, experienced, and want to do this work.

“Now we know the economic case backs us up.

From both a job creation point of view, and in wider benefits to the New Zealand economy, there is a strong case to build these trains at the Lower Hutt and Dunedin rail workshops.” “Everyone’s agreed on the need to create and retain jobs for NZ workers. Now here’s a very direct way we can.

Our campaign is calling on the government to back Kiwi workers, and make sure our trains are built at home,” Wayne Butson said.




  1. joust says:

    Wouldn’t that be great if they could in fact be built here with good quality. An excellent way to invest in Kiwirail.

  2. Scott says:

    Every possible step must be taken to reduce breakdowns, we cannot afford to have a situation like wellington where major delays are part of rail travel. I would like to see the inclusion of a little backup diesel engine for lighting, and capable of moving the train at 3 - 5 kmph, this should be able to get it to a location of a safe passenger transfer with the next train. In addition the electrified rail network requires a higher reliability of electricity than we have in Auckland. I think a (for example a 20- 50 MW (perhaps move the one from huntly…) pecker plant should be installed central to the rail system to act as a backup in grid failures. Operations of the turbine should be given over to a power company under normal conditions where it could be operated profitability like other pecker plants. Redundancy is key here. The network must be reliable.

  3. joust says:

    OK @scott, all valid points thats probably the subject of another post, the point here is about the trains themselves, and where they will be built. Not so much about electrification of the lines.

  4. ingolfson says:

    On a gut level, I oppose building the trains here. I’d like a tenderer who has actually built EMU’s before. Too crucial a contract.

  5. Matt L says:

    I just want the best quality trains we can get, I think a good compromise would be to build the electric loco’s that will be used to haul the SA trains locally, even better would be putting the engine into the driving cab and putting one at each end, that way we have a form of EMU and it looks like part of the fleet rather than having an electric freight loco.
    Scott – The power supply should be stable, there are two exits of the grid at Penrose and at Southdown. The Southdown connection is to the power station there owned by Mighty River Power and is meant to be enough to power the network on its own

  6. Jeremy Harris says:

    I’m suprised the economic value is so high… If we can do it and do it well and the numbers are correct why not…

  7. Donald Neal says:

    “almost all rolling stock purchases being made elsewhere are sticking with companies that have established quality and safety records”

    I have a sneaking suspicion that nobody has built any passenger rolling stock in New Zealand since the reign of George VI. There just isn’t much in common between steel skins over wooden frames and the way passenger stock is built nowadays. And that’s before we get to traction motors and the control systems that go into high current/high voltage electrics.

    It may make a lot of sense to buy passenger stock as shells and have the interiors built in New Zealand. But if someone’s going to accept higher costs, longer delays and compromised safety as the price of job creation, it shouldn’t be users of public transport.

    Or put it another way. Why are we hearing this about trains and not about cars? Because car buyers are more important than train passengers?

  8. craig says:

    what planet are these buffoons on……………

    We wouldn’t even think about bypassing the likes of boeing or airbus to build planes here so why are we thinking abouit building trains/locomotives here…………………………..
    get real and get back to the real world, why not just order additional units from Korea and the Matangi builders, using the same specs and finishes etc , just need to change he supply to 25kv ac to suit the auckland supply.


  9. Luke says:

    “I have a sneaking suspicion that nobody has built any passenger rolling stock in New Zealand since the reign of George VI.”

    Hillside in Dunedin are currently building brand new passenger cars for the Tranz-Alpine and Tranz-Coastal passenger trains.
    These would be the ones shown in the tv news clips.
    The SA/SD cars used all over Auckland are fairly close to new builds, there wasnt much left of the old frame once they finished stripping them down and cutting out rust.

  10. anthony says:

    well, as long as we don’t get the lemon, it’ll be okay.

  11. Aramis says:

    If it is ok for Hillside to build luxury passenger carriages for a world class Tourist train (tranz alpine),which includes toilets leather seats and all the trimmings surely they should be given the chance to build commuter trains for auckland.
    The SA cars they have have already built for auckland are world class and of a higher standard than some of those I have used while in the uk.

  12. Rick Groves says:

    Just another reason to lobby your bullsh*ting MP andpoint out how pathetic the Government realy is.


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