Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
5. Creating the Industry Structure
provider, and demonstrate high value in terms of staff morale, it is often best to
retain and improve them.
5.6.2 Railway materials and manufacturing enterprises
Historical reasons abound for railways annexing materials supply and manufacturing.
Industrial development and international economic competitiveness
drove railway construction in nearly all countries. Typically, these railways
adopted national or imperial-based technical and engineering standards. National
(or imperial) supply industries were often protected by import restrictions,
tariffs, and local purchasing policies, and larger countries manufactured their
own locomotives, rolling stock, signaling systems, and other infrastructure components.
65
Many early railway manufacturing and materials companies were privately
owned and independent from the core railway. But the mutual dependence of
‘large buyer/large seller’ led some railways to develop their own manufacturing
capability. Moreover, in China, Great Britain, India, and the Russian Federation,
railway nationalization and integration led to co-locating ministerial or departmental
structures with responsibility for both railway system and manufacture of
capital assets.
When supply chains were less efficient or competitive, some railways sought to control
their own supply of strategic materials. As a result, it was not uncommon for
railways to own mines for high-quality steaming coal for locomotives, quarries for
ballast, and forests for wooden sleepers. Later, some railways even built their power
stations to avoid dependence on monopoly suppliers, or to ensure power in areas of
low availability or reliability.
Supporters of integrating railways with manufacturing and materials supply
pointed to the benefits of controlling specifications and prices, and the manufacturing
units enjoyed secure and predictable demand levels. In planned economies,
political support was attracted to the theoretically higher savings from the
‘efficiency’ of joint planning of supply and demand for enterprise outputs.
Today, most countries have dismantled these structures in all industries, not just
railways, because experience has proven that the exclusive relationships of coowned
public industries reduced incentives for efficiency and innovation for
both. In the railway transport industry it produced technologically outmoded locomotives,
rolling stock, and other equipment. In railway manufacturing industries,
it undermined their potential to be internationally competitive.
Today, the railway supply industry is diverse, global, and competitive. Nearly all
capital equipment and materials for railway infrastructure or operations can be
procured competitively using domestic or international tendering. Technical abil-
65 The most striking impacts of such policies survive in Europe in a patchwork of subsystems
that include four main track gauges, eight main signalling systems (and twelve
others), six main electrification systems and sundry other differences in loading gauge,
pantograph headroom, maximum axle-loads, direction of running, safety systems and
others.
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