The Crossrail project this week launched its invitation to tender for rolling stock. Antony Oliver talks to train manufacturer Bombardier Transportation’s new UK chairman Sir Neville Simms about how he intends to bring his infrastructure knowledge to bear on this major transport engineering business.
For Derby-based train maker Bombardier, missing out on the £1.5bn Thameslink rolling stock contract to its German rival Siemens last summer was a major commercial and emotional blow.
Coming a few months after Hitachi snatched the £4.5bn Intercity Express contract to supply new trains for the Great Western and East Coast railway lines from under its nose, it left some serious question marks over the 6,000 jobs in its Derby manufacturing base and prompted a political storm over government’s perceived failure to protect British business.
But for Bombardier’s new chairman Sir Neville Simms, it is time to wipe the slate clean. Certainly, he says the firm must learn from the bitter experiences of the last year but it must also move on and move forward to the next opportunities - not least on projects such as Crossrail which issued its long awaited rolling stock invitation to tender this week.
Biggest train maker
“Bombardier is the biggest train maker in the world - 33% of the trains in the UK are made by us and 40% are serviced by us,” explains Simms.
“We are moving on from having walked into a brick wall twice,” he adds. “We can’t change the past and we are not going to win those two contracts but we do have a huge business here and a great works at Derby. We want to capitalise on that and compete because there is a lot to do.”
Simms’ track record in the construction industry is immense and will without question boost the firm’s profile with clients. Having started as a structural engineer at Arup in 1966, he joined contracting giant Tarmac in 1970 and quickly found his place in the cut throat 1970s and 80s contracting world, rising through the ranks to serve as chief executive from 1988 to 1999 and then running Carillion, into which the firm morphed, until 2005.
For the last decade he has also chaired global power generation firm International Power - he has now stepped back to deputy chairman - and held a string of other non-executive roles including chairing the BRE Trust since 2005.
“Bombardier is the biggest train maker in the world - 33% of the trains in the UK are made by us and 40% are serviced by us”
Sir Neville Simms
His experience and view of construction, financing and procurement was really shaped during the vast Channel Tunnel project, not least while co-chairman of Anglo-French contracting consortium Transmanche Link. This led to his appointment as government advisor, first on the Private Finance Panel from 1993 to 1997 and then on the Sustainable Procurement Task Force from 2005 to 2007.
Yet after nearly half a century in the industry, this is Simms’ first major foray into the rail sector. It clearly excites him and his life-long passion for engineering and infrastructure challenges.
He points out that while Bombardier Transportation in the UK is perhaps known simply as a train manufacturer, is in fact an advanced train engineering design and maintenance business and a centre of excellence that services clients all around the world. Being involved with such cutting edge technology and use of high tech materials, he says, appeals to the engineer deep inside him.
“The Bombardier brand has always struck me as very strong and I really believe trains are the way to get cars off the road and to have a sustainable future,” he says, stressing that after just a month in the job he is still getting to know the rail sector. “I know that [the rail industry] is a growth business. You only have to look at the National Infrastructure Plan to see that. The government is committed to public investment in rail - High Speed 2 demonstrates this. The government really does get it as far as rail investment is concerned.”
Of course while Derby may be the home of Bombardier Transportation in the UK, the firm is multinational and Canadian by origin. Started by Joseph-Armand Bombardier in 1937 to build and sell his newly invented snowmobile to the snowbound inhabitants of Quebec in Canada, the firm has grown into a $4.6bn (£2.9bn) annual revenue global train and aircraft manufacturer and maintainer.
Simms took over as non-executive chairman of Bombardier Transportation in the UK in January. He replaces longstanding chairman and chief country representative Colin Walton, who stepped down this month, and is supported by Paul Roberts who has stepped up to the executive role of chief county representative.
Over the last nine months, Bombardier has been looking carefully at its UK investments and has, he explains, concluded that there is a healthy future for rail in the UK and one in which the firm can be competitive. While it was unsuccessful on two major projects last year, the conclusion is that it has been - and will continue to be - very successful on many other projects.
“I think the nation has had a very good deal out of PFI. PFI isn’t going away”
Sir Neville Simms
“The repositioning of Bombardier after some of their more recent bids was important. Bombardier decided to support the works in Derby and they wanted somebody on board to ensure that those works are full,” he explains.
“We design the trains here, we manufacture them here and we maintain them - it is about helping the local economy to grow.”
The visit to the works by Prince Charles last week underlines the perceived national importance of this manufacturing resource to the UK’s overall future prosperity.
Central on Simms’ radar is getting in shape to bid for the lucrative and high profile contract for Crossrail’s rolling stock. Simms role is very much about ensuring that the firm moves forward, rebuilds relationships with clients and government and critically, explains how its design, manufacturing and maintenance services can add value to the infrastructure.
“When the ITT comes out, we shall find out just how Crossrail wants to measure this value,” he says. “There are many things to consider before you make a decision about what is the best value for money and what is the most sustainable solution for the UK. When we see the ITT we will make a very serious attempt to win that contract in an international competition.”
Throughout his career, Simms has always been a committed advocate of the private finance initiate (PFI) in all its guises.
As a founder member of the government’s Private Finance Panel in 1993 he was at the heart of the shifting public procurement policy to try to embed the private sector within public projects to help deliver greater overall lifecycle value.
The fact that PFI is today seen as such a dirty word politically clearly irritates Simms and belies what he describes as its ability to “force the link between design construction and maintenance”. However, the use of private finance in infrastructure in the future remains inescapable, he says.
“PFI is grossly misunderstood in the UK,” he says. “Anybody that compares today’s costs with anything, doesn’t know what they are comparing it to. In the past the capital cost was about all that we could ever really work out. Nobody had any idea what it cost to run things in this country. Now they do and they worry about it.”
But PFI, he points out, is also about long term risk transfer. Historically the risk of, say, construction or of maintaining residual value in infrastructure, was taken by the public sector and when the costs rose the public sector picked up the bill. Under PFI that risk is managed.
He concedes that the massive and sudden availability of PFI funding may have encouraged the public sector into thinking PFI was a “buy now pay later scheme” in which they could buy assets that they either couldn’t afford or didn’t really need - overall the results stand for themselves.
“Our infrastructure is phenomenally better and as an advocate I think that the nation has had a very good deal out of PFI,” he explains, pointing to the quality and the residual value in our national infrastructure. “PFI isn’t going away. If we do get High Speed 2 or a new airport in the Thames [for example] a lot of it will have to be funded privately.”
That said, the key for Simms is that, regardless of how it is delivered, investment continues to flow into the rail sector so as to allow the vital push towards encouraging people out of their cars and towards a more sustainable and more economically prosperous future to continue.
“We all have a role to convince government to invest in infrastructure and to make the link between infrastructure and economic growth,” he says. “But I think that this government already gets it.”