Downer EDI pulls out of Queensland Rail tender

[colinw]

http://statements.cabinet.qld.gov.au/MMS/StatementDisplaySingle.aspx?id=73904

Tourism, Manufacturing and Small Business
The Honourable Jan Jarratt

Thursday, March 10, 2011

Manufacturer leaves Queensland Rail tender process

Train building firm Downer-EDi has announced it will pull out of a global tender process to build 200 three-car sets for Queensland Rail, Minister for Tourism, Manufacturing and Small Business Jan Jarratt announced today.

Ms Jarratt said Downer-EDi officials this morning informed workers at their Maryborough facility that they would no longer bid for the right to provide Queensland Rail with the trains.

"This news is both devastating and disappointing,'' Ms Jarratt said.

"Downer-EDi has long provided manufacturing capacity for rolling stock in Queensland.

"This company received the backing of the State with the award of the $189M tilt train contract to ensure they could maintain their workforce and retain a strong position in order to compete for the Queensland Rail rolling stock contract.

"The State Government backed this company.

"Unfortunately they have decided not to back their own workforce – and to back out.''

Ms Jarratt said on 27 October 2010 the State Government announced it would invest $189 million to buy another Tilt Train and upgrade the existing two tilt trains.

On that date, it was announced the work would be carried out at Maryborough's Downer-EDi facility providing support for 800 direct and indirect jobs in the Wide Bay region.

Awarding the $189 million contract to Maryborough's Downer-EDi facility meant 500 direct jobs at the workshops plus an additional 300 jobs in the region.

Queensland Rail's procurement for the new generation passenger cars is subject to the Government's Local Industry Policy. This policy provides for a full, fair and reasonable opportunity for competitive local industry to tender for work.

The Government has ensured Queensland Rail has developed a detailed local industry participation plan for this tender. It includes provision for a weighting specifically allocated to the assessment of local content in the bids received to make it a formal part of the evaluation criteria.

[colinw]

Fraser Coast Chronicle: Downer EDI pulls out of $3.2b tender

10th March 2011

HUNDREDS of jobs could be lost in Maryborough after Downer EDi pulled out of a $3.2 billion tender for a 200 train contract.

Workers were sent an email advising them of the withdrawal last night.

The company cited "onerous terms and conditions" to the tender, which made it financially unviable.

AMWU State Secretary Andrew Dettmer will travel to Maryborough tomorrow and has demanded to meet with Downer EDi senior management immediately.

He said 1000 jobs — more than half of those in Maryborough Queensland — were under threat from the company's decision.

"The union has spent the last year working with this company to ensure this train manufacturing contract has the best chance possible of going to its Maryborough factory," Mr Dettmer said.

"Now, they've stunned us all by announcing in an email they're pulling out of the race and citing onerous terms and conditions attached to the tender process."

It is believed the tender process would have cost Downer EDi about $10 million if it continued in its joint venture with Bombardier.

A Bombardier spokesperson has been contacted for comment on whether Bombardier will continue with the tender process alone.

[colinw]

Brisbane Times: Hundreds of Queensland jobs at risk after company pulls out of QR tender

March 10, 2011 - 11:23AM

More than 1000 Australian jobs - most of them in Queensland - will be threatened by the decision of a local train manufacturer to pull out of a Queensland Rail tender to build new train sets, a union says.

The Queensland government announced in October last year it would invest $189 million to buy another Tilt Train and upgrade its existing two.

The work was to be carried out at Maryborough's Downer EDI facility, supporting 800 direct and indirect jobs in that region.
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It was also meant to support the company so that it could compete for a future lucrative QR contract, Manufacturing Minister Jan Jarratt said today.

"The news that Downer EDI have today decided to pull out of a global tender to provide Queensland Rail with 200 three-car sets is both devastating and disappointing," Ms Jarratt told State Parliament.

She said Downer EDI had long provided manufacturing capacity for rolling stock in Queensland.

"This company received the backing of the state with the award of the $189 million Tilt Train contract to ensure they could maintain their workforce and retain a strong position in order to compete for the Queensland Rail rolling stock contract.

"... unfortunately they have decided not to back their own workforce and to back out."

Australian Manufacturing Workers Union state secretary Andrew Dettmer said 1000 jobs - the vast majority in Queensland - were now under threat.

"The union has spent the last year working with this company to ensure this train manufacturing contract has the best chance possible of going to its Maryborough factory," Mr Dettmer said in a statement.

"Now, they've stunned us all by announcing in an email they're pulling out of the race and citing onerous terms and conditions attached to the tender process," he said.

Mr Dettmer said none of the other companies tendering, most of them international, had pulled out and so apparently had no issues with the contract conditions.

He said he believed the decision was actually about appeasing shareholders after a stock market write-down.

Mr Dettmer will travel to Maryborough on Friday where he hopes to meet with senior management.

[colinw]

The Courier-Mail: Downer EDI pulls out of Queensland Rail contract putting more than 1000 jobs at risk

March 10, 2011 11:09AM

MORE than 1000 jobs are at risk in Queensland after Downer EDI pulled out of a tender to build 200 three-car passenger trains for Queensland Rail.

The company said the terms and conditions relating to the bid and the conditions of the contract were too onerous and the risks borne by the contractor were too great to proceed with the bid and incur tender costs of more than $10 million.

The company could not say what the job impact would be at its Maryborough base because it may win other contracts. However, it confirmed there would be a job impact.

The Australian Manufacturing Workers Union said none of the other companies tendering had pulled out so the conditions of the contract were still considered by them to be workable.

"We're now calling on the State Government to bring the remaining tenderers together to see if any provisions for local jobs can be built into their tenders,'' AMWU secretary Andrew Dettmer said.

"We think Downer EDI's decision has a lot to do with trying to curry favour with the stock market and appease shareholders rather than the terms of the contract.''

[ozbob]

Very disappointing ...  so many things these days is just about short term share holder profit.  Problems down south may have contributed.

This means no doubt that will we get imported units ...  and all the potential problems that brings with it ... compatibility and maintenance.  But who ever is in Government will see the cheaper price no doubt as the means justifying the outcome.

[#Metro]

A cheaper price might mean we might be able to get more trains for the same price--- however, seeing the problems they are having down in Melbourne (a Siemens train overshot the end of the line and smashed into Bendigo Bank, and another train, not sure which manufacturer, derailed) I hope that they choose wisely.

[Derwan]

This is very sad indeed.

[ButFli]

One might say that this is a real... downer.

[BrizCommuter]

A cheaper price might mean we might be able to get more trains for the same price--- however, seeing the problems they are having down in Melbourne (a Siemens train overshot the end of the line and smashed into Bendigo Bank, and another train, not sure which manufacturer, derailed) I hope that they choose wisely.

You are implying that the Melbourne crash was due to the train manufacturing.

Few accidents and derailments are caused by train manufacturing issues.

[mufreight]

It is understood that the overshoot in Melbourne was due to a brake failure with suggestions that the failure was an electronic failure and from the record of these built on the cheap imports this is not the first failure of this kind.
Local builds have proven far more reliable and robust in service than any of the imports, keep jobs and jobskills in this country, important considerations when awarding tenders.

[Dean Quick]

Well said mufreight!!!

[BrizCommuter]

It is understood that the overshoot in Melbourne was due to a brake failure with suggestions that the failure was an electronic failure and from the record of these built on the cheap imports this is not the first failure of this kind.
Local builds have proven far more reliable and robust in service than any of the imports, keep jobs and jobskills in this country, important considerations when awarding tenders.

Is that "understood" from the comments page of the Herald Sun website?

[Gazza]

Why is there this attitude that imported = bad?

Networks overseas, which are better than ours, are able to run just fine with non Australian trains.

[Fares_Fair]

It's not that it is 'bad' per se, it's just bad for our economy.

The flow on effects from the employment in the region would outweigh the cost savings of a cheaper tender price IMHO.
Short term gain for long term loss (of jobs) in this particular case.

It's a hard one, but that would be my point of view.


Regards,
Fares_Fair.

[Gazza]

^The economic factors are one thing, but there were insinuations that trains made overseas are garbage, which is a sh%t argument because if they are running networks where trains get a real workout, being turned around in the space of a couple of minutes between runs, and breathing down each others necks as close as 90 seconds behind each other, all with famed punctuality, how could they achieve this consistently if the trains were unreliable?

[ButFli]

It's the same thinly veiled racist attitude that attributes every incident involving Qantas to offshore maintenance. Never mind that the alternative airlines that are spruked as being better or safer are based in Asia and presumably maintain their aircraft in Asia. It seems Asians are only considered to be bad at manufacturing and maintaining heavy machinery when it will be operated by Australians in Australia.

Curiously there was a similar attitude when the Japanese started manufacturing cars and electronics. It was all bad quality that wasn't built to last, apparently. Funny how now Japanese electronics are considered the best and Asian cars are the most popular.

[HappyTrainGuy]

It's kind of sad to see that considering that they have made all of our current suburban rollingstock and the CTT. Not all is lost though for locals as they still have the Tilt Train, diesel/electric loco and maintenance contracts.

[mufreight]

It is understood that the overshoot in Melbourne was due to a brake failure with suggestions that the failure was an electronic failure and from the record of these built on the cheap imports this is not the first failure of this kind.
Local builds have proven far more reliable and robust in service than any of the imports, keep jobs and jobskills in this country, important considerations when awarding tenders.

Is that "understood" from the comments page of the Herald Sun website?

No Melbourne train driver, seems that some trains are being operated at restricted speeds due to faults not specified

[somebody]

It's the same thinly veiled racist attitude that attributes every incident involving Qantas to offshore maintenance.

I wouldn't say racist in this case.  It's an indisputable fact in the aviation industry that outsourced maintenance is cheaper, at least for the major ('C' and 'D') checks.  What's at issue is: do the outsourced people do as good a job?  Clearly some airlines think not as they prefer to do it in house.  Others think that they do near enough a job that it justifies the cost savings, or an as good or better job, and thus those airlines use the outsourced maintenance organisations.

[#Metro]

What is the purpose of having an open tender process if you are going to tilt the field and award the contract to the local firm anyway?

[colinw]

What I want to know is why Downer EDi thinks it either cannot win a fair and open tender, or that bidding is too risky?

Question: were any of the previous QR trains, or the Perth units, open tender?

I've been thinking about this, and it seems to me like a clumsy attempt by Downer-EDi to circumvent the open tendering process and bludgeon the Government into awarding a sole supplier contract on the back of union outrage.

I have nothing against local content rules, and supporting local suppliers, but there has to be fair and open bidding & public scrutiny of the criteria.  Back room deals and closed shops are no longer acceptable.

If Downer-EDi can't hack it, them I'm sure United-Goninan in Townsville or Newcastle will have a go, otherwise we might end up with some nice Korean units (like the Wellington Matangi trains), or Japanese, or whatever ...

[#Metro]

The irony in all of this is the metal that's going into these overseas trains is probably mined in Australia, as is the coal that powers the electricity plants over there.

Imagine what would happen if these overseas countries turned around and said- "Oh, we don't buy coal or iron ore from Australia because it's 'Australian'"

[somebody]

I just hope the trains we get from overseas are better and/or cheaper than the ones which would have been built in Maryborough.  I'm all for jobs in regional centres, if it can be achieved, so this is a shame.

It's certainly not the Sydney or Melbourne experience that the imported trains are better.  Sydney at least has insisted on trains made to their standards, rather than international ones, which has caused a lot of problems.

[colinw]

It will be interesting to see if Bombardier decides to go it alone.

The 3 shortlisted consortiums for the 200 train order were:

- Downer-EDi and Bombardier
- UGL Rail and Rotem (UGL Rail is the former Goninan engineering)
- Mitsubishi and CAF

Source: here

Downer, in a joint venture with the Canadian firm Bombardier, has been shortlisted for the 200-train contract, with UGL-Rotem and Mitsubishi-CAF.

[ozbob]

It will be interesting to see if Bombardier decides to go it alone.

The 3 shortlisted consortiums for the 200 train order were:

- Downer-EDi and Bombardier
- UGL Rail and Rotem (UGL Rail is the former Goninan engineering)
- Mitsubishi and CAF

Source: here

Downer, in a joint venture with the Canadian firm Bombardier, has been shortlisted for the 200-train contract, with UGL-Rotem and Mitsubishi-CAF.

I understand Bombardier are still in ..

[colinw]

Which leaves us still with 3 very credible contenders.  CAF's Metro rollingstock (used extensively in Spain and elsewhere) has a very good record, and their light rail vehicles have made serious inroads into the American market (e.g. Sacramento)

EDi's loss will be someone else's gain.  Time to move on I think ...

[ButFli]

It's the same thinly veiled racist attitude that attributes every incident involving Qantas to offshore maintenance.

I wouldn't say racist in this case.  It's an indisputable fact in the aviation industry that outsourced maintenance is cheaper, at least for the major ('C' and 'D') checks.  What's at issue is: do the outsourced people do as good a job?  Clearly some airlines think not as they prefer to do it in house.  Others think that they do near enough a job that it justifies the cost savings, or an as good or better job, and thus those airlines use the outsourced maintenance organisations.

But it isn't "outsourcing" that people are bleeting about - it's "offshoring". "Aussie" workers do better work etc etc. Plenty of maintenance is outsourced to Australian companies operating in Australia and no one gives a sh%t. Apparently that maintenance is perfectly good because it is done by "Aussies". It follows that "foreign" workers must be bad. Wanting to protect "Aussie jobs" is fine, but doing it on the basis that foreign workers are inferior is racist or xenophobic.

[somebody]

Plenty of maintenance is outsourced to Australian companies operating in Australia and no one gives a sh%t.

Is this true for Qantas though?  I didn't know that there are any outsourced Boeing/Airbus maintenance organisations in Australia.  Labour would be too expensive, as is ferry costs of getting the planes to Australia.

[ozbob]

From the Fraser Coast Chronicle click here!

Rail giant abandons tender

Rail giant abandons tender

11th March 2011

DOWNER EDI has refused to guarantee the future of its Maryborough operations after it pulled out of a tender process that could have netted $3.2 billion and created hundreds of jobs.

Instead, Downer EDi's 400 Maryborough staff face an uncertain future after workers were sent an email advising them the company was withdrawing from the race for a 200-train contract for Queensland Rail.

In the mass mail-out to staff, the company cited onerous terms and conditions to the tender, which made it financially unviable.

It would have cost Downer EDi about $10 million if it continued in its joint venture with Bombardier, with no guarantee of a contract at the end.

AMWU state secretary Andrew Dettmer said 1000 jobs — more than 400 of those in Maryborough — were now threatened.

"None of the other companies tendering, the majority of them internationally based, have pulled out, so we have to assume they think the conditions of the contract are still workable," he said.

AMWU organiser Brad Hansen, a former employee of Downer EDi, said the company could not tell him how long work would be available at Maryborough.

"They're saying they've got other contracts that they are trying to bring forward (to prevent job losses before work starts on the Tilt Train project) — but it still doesn't balance out the lost potential for job creation," Mr Hansen said.

They spoke of limiting redundancies, not creating jobs, he said.

The Chronicle asked the company how long it could guarantee its existing jobs, but the company responded with a two-sentence statement: "Downer is continuing to make significant investments in Maryborough and to develop our plans for a sustainable business into the future. The market is competitive and there are challenges ahead, but Maryborough is the key element in our rail strategy for Queensland and we have the capability and skills to pursue opportunities for both passenger trains and freight locomotives."

The union hopes to meet Downer EDI senior management today in Maryborough.

Member for Maryborough Chris Foley, who has lobbied for contracts in support of Downer EDi, said he was devastated by the news and described Downer's decision as "baffling".

Queensland Rail chief executive Paul Scurrah said while it was disappointing Downer Rail had withdrawn from the bidding, he had been advised Bombardier was still taking part.

[#Metro]

The flipside of this is: Can this company do it? 200 trains!
What happens if a company bites off more than it can chew?

[Golliwog]

None of the articles have given a timeframe for the delivery of these 200 trains. I would think it would be a fairly long term project. Does QR even have the stabling space available for these trains yet? CRR talks about using the Clapham yards, but are these ready yet?

[Stillwater]

Downer EDI must have considered that the high aussie dollar would have affected their bottom line, compared with costs overseas.  Calling tenders for work is the way governments get value for our taxpayer dollar.  Whatever company wins the contract, however, QR officials need to ensure that the issue of costs associated with ongoing repairs and maintenance is covered off.  In other words, while a lower unit cost is good, the benefits might be lost in higher maintenance costs through dealing with an overseas supplier.

[mufreight]

If Downer has pulled out it means that they will not be constructing the new trains either here or overseas.
Another Waratah disaster on the horizon here unless the federal government steps in and insits that the rollingstock be built here in this country to keep the jobs, skills and money in this country.

[somebody]

Another Waratah disaster on the horizon here unless the federal government steps in and insits that the rollingstock be built here in this country to keep the jobs, skills and money in this country.

Don't think they would have jusdiction.

[Gazza]

Another Waratah disaster on the horizon here unless the federal government steps in and insits that the rollingstock be built here in this country to keep the jobs, skills and money in this country.

Sorry, but that attitude is a thing of the past. Global trade is here to stay, and it's a two way street.

Australia's wealth depends on us exporting minerals etc, but at the same we have to accept other countries exporting to us.

Re the "Warratah disaster", cant that be partially put down to the NSW government being sh%t at major undertakings

[somebody]

Re the "Warratah disaster", cant that be partially put down to the NSW government being sh%t at major undertakings

Indeed it can, but also note that Melbourne has had similar issues with its imported trains.  If we are going to insist on it being done "our" way, then we may as well do it ourselves.  If you are talking about using "off the shelf" components, then that could be quite a different thing.
The Chinese thought it was farcical that NSW insisted on stainless steel for bodies, I think it was.

[Gazza]

But even with Melbournes situation, It's still putting all imported products into the same category.
I could buy an imported car...A BMW or a Daewoo. Are they the same?

The trains aren't crap because they are imported, they are crap because they are a crap model of train.

X'Traps only have coil suspension for instance, and there is basic stuff you notice at the passenger level, like the doors between saloons being these sort of spring loaded glass doors you have to prise apart and immediatley snap shut behind you (Instead of being the nice electropneumatic doors our IMUs/SMUs have). And weren't there complaints that the computer system didn't even have a proper clock for drivers to keep to timetable with. (I'm sure someone can  dig up the article for those interested.)

If we are going to insist on it being done "our" way, then we may as well do it ourselves.  If you are talking about using "off the shelf" components, then that could be quite a different thing.

Indeed, half the problem probably comes from how the specification was written.

[Stillwater]

It all boils down to the specifications that are common to all material sent to likely tenderers.  Under the tender arrangements, all tenderers are sent the same specifications and are asked to quote against them.  If there are subsequent changes, a new set of specifications is sent out to all, so the final evaluation process involves a comparison of like with like.  The design is only as good as the specifications.  Ideally, these should not leave room for interpretation on the part of the tenderer.

[mufreight]

Another Waratah disaster on the horizon here unless the federal government steps in and insits that the rollingstock be built here in this country to keep the jobs, skills and money in this country.

Don't think they would have jusdiction.

Since it is mostly Federal money they are in a strong position and there is also the fact that import permits are the province of the Federal Government, the political situation being what it is at present the Feds might well use that leverage.
That both WA and SA and VLine have decided to continue to have rollingstock built in this country tells a story in itself in terms of the quality and reliability if the local product.

[ozbob]

From the Fraser Coast Chronicle click here!

Union wants truth from Downer EDi

Union wants truth from Downer EDi

12th March 2011

UNION officials are demanding Downer EDi admit the real reason it pulled out of a $3.2 billion tender, and what the future holds for its Maryborough operations.

Leaders express dismay at Downer EDi debacle.

UNION officials are demanding Downer EDi come clean on the real reason it pulled out of a $3.2 billion tender and what the future holds for its Maryborough operations.

After a "polite but firm" meeting with Downer EDi officials in Maryborough yesterday, AMWU state secretary Andrew Dettmer said the company had left several questions unanswered.

"They're saying they are not leaving Maryborough and we're going to hold them to that," Mr Dettmer said.

"They are trying to sidestep the issue that they're pulling out of the tender by saying they have other ongoing work, but we don't have a clear picture of what that work will be."

He said the union had battled the State Government to make its tender process easier for Downer EDi and other local businesses, so it was a shock that the company's board had withdrawn from the tender process citing unworkable terms.

While it is not clear how many people were employed to put the tender together, the cost of hiring engineers, designers and legal advice had blown out to $10 million as the process dragged on for 18 months.