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Old August 18th, 2011, 07:13 PM   #921
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The problem with this line of reasoning (what about the cost of lost jobs by sending the order abroad) is that, applied in practice, they can trigger a commercial war in which everybody loses.

For instance, what if Germans, furious that their companies can't manufacture and export to UK but have to manufacture in UK, start retaliating by imposing barriers on London City's banks and consultancy firms doing business in Germany? And then have the French join the brawl.

The net end result of those commercial wars are higher costs and diminished markets for everyone. Sure, on the very short term there might be some advantages, but in the long run, everybody loses.

Moreover, German wages are not slave-worth Chinese or Vietnamese wages. Nor are, AFAIK, German workers explored to dire poverty to make cheap products. It is just a matter German manufacturing is more competitive in general than British, whilst British banking - for instance - is in general more competitive than German.

Corruption should be investigated, though. It is another issue.

As for better credit rating, that is company's merit. You can't punish a company because it gets cheaper money on the market (gov't money is another issue, again).
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Old August 18th, 2011, 07:39 PM   #922
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Perhaps. I feel that protecting a domestic (and arguably strategic) industry is sufficient of an objective justification.

I doubt it would raise any eyebrows here if the ball were on the other foot.
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Old August 19th, 2011, 12:15 AM   #923
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Class 379 delivered and running ahead of schedule. Just shows how good Bombardier are at building trains. So why do the Government seem determined to give the next big order to Siemens in Germany and put 1400 skilled British workers out of a job? I am not one of them, so I have no vested interest, but I do care about building our trains in our country, like the French, Germans, Italians, Spanish, etc etc do in theirs, in spite of the ridiculous European rules which were brought in for everyone to ignore except us! Come on Bombardier, love your Electrostars!
No, they don't. At least not completely. There are lots of trams and trainsets running on german tracks which haven't been built in Germany. So, the UK is far from being to only one who buys abroad.
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Old August 19th, 2011, 04:21 PM   #924
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I've been very impressed with the Class 379!
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Old August 19th, 2011, 08:14 PM   #925
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Many small rural rail lines see resurgence in popularity

There has been a surge in the number of people using many small, rural rail lines, with passenger numbers on some routes almost doubling in the last few years, according to figures published by the Association of Train operating Companies (ATOC).

The rise in popularity of branch and Community Rail Partnership lines – smaller lines that branch off the mainline rail network into rural towns and villages – reflects the impact of the ‘staycation’ trend over recent years as people have increasingly chosen to holiday in the UK.

Many of the fastest-growing branch lines connect to seaside resorts and towns, and show spikes during the summer months.

However, train companies also report that growing numbers of local residents are opting to use trains that run on branch lines to get to and from work or simply to get out and about. Local and rural rail journeys now total around 40million a year.

Community Rail Partnerships, which comprise operators, the voluntary sector and local authorities in an area, have also had considerable success in promoting smaller community lines, providing better rail services and helping rural regeneration.

From April 2007 to April 2011, passenger journeys from:

- Truro to Falmouth branch line rose by 91% (by 22% in the last year)

- Bristol to Severn Beach branch lines rose by 90% (by 19% in the last year)

- Derby to Matlock branch line rose by 86% (by 20% in the last year)

...
http://www.rail.co/2011/08/19/many-s...in-popularity/
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Old August 20th, 2011, 06:26 PM   #926
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West Coast railway swells UK state coffers

The government has received a record payment from a long-distance rail operator, with Virgin Trains paying £110m for running the London to Glasgow service last year.

The West Coast railway line, which carries 28m passengers a year between London and Glasgow, is now the most profitable long-distance franchise in Britain after Virgin turned a £40m subsidy received from the government last year into a £110m payment on March 31.

Virgin said income in previous years had been affected by substantial disruption to the West Coast line, which caused cancellations to weekend services while £9bn of new track and equipment was being installed. Passenger numbers have also more than doubled over the past six years as more frequent and punctual trains resulted in Virgin stealing market share from airlines.

The turnround at West Coast reverses a prolonged period during which Virgin was subsidised to run the service. The Department for Transport is obliged to cover a proportion of train operators’ losses if their revenues are below target, and Virgin, which runs the railway line in a 50-50 joint venture with Stagecoach, had received subsidies totalling £1.4bn over the 14-year life of the franchise so far. The group said most of this was paid directly to Network Rail in track access charges.

Analysts said the West Coast payment compared favourably with earnings from the traditionally more profitable commuter services. South West Trains, which runs between Waterloo station in London and the stockbroker belt, earned the government about 150m in the year to 31 March, while First Great Western, which carries passengers between London Paddington and the West Country, Wales and Oxford, paid £106m to the government over a similar period.

Douglas McNeill, analyst at Charles Stanley Securities, said: “The Department for Transport traditionally views London commuter franchises as its biggest and most reliable revenue streams. But having endured the troubled years of the track upgrade, West Coast is now beginning to contribute cash on a comparable scale.”

The payment will raise the stakes in what looks to be an intense bidding war for the West Coast franchise. A shortlist of four bidders is contesting the contract, which is set to be relet in January 2013. Abellio, the Dutch-owned operator, SNCF, the French state rail company, and FirstGroup are all competing with Virgin, which is keen to retain the franchise it has run with Stagecoach since the line was first privatised in 1997.

The payment to the transport department will bolster government attempts to shift the burden of paying for Britain’s congested railway service from the taxpayer to passengers. Government support for the industry has dropped sharply over the past five years, falling from £6.31bn in 2006-07 to £3.96bn in 2010-11, according to figures from the Office for Rail Regulation. But the government is keen to raise that further and on Tuesday announced that rail fares would rise by an average of 8 per cent in January.

Virgin said passenger revenues rose 11 per cent to £753m in the year to March 31, while pre-tax profit rose to £39.9m. A £32.5m dividend will be paid to shareholders, of which Virgin’s share is 51 per cent.
http://www.ft.com/intl/cms/s/0/9ebe5...#axzz1VaDF5cdq
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Old August 21st, 2011, 10:20 PM   #927
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I do not consider corruption to be a cheap shot. I agree that all firms will sail close to the mark when they are in fierce competition - but what Siemens have done should not be ignored.
[/QUOTE]

Are you suggesting that the bid was won on the basis of this ?

Supporting British industry could be difficult if you take corruption into account for government contracts, after all BAE, British Airways and Virgin have all been convicted for price fixing and operating slush funds. Surely to not have competition would allow a situation where the sole supplier would charge excessively for an inferior product ?
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Old August 22nd, 2011, 12:33 PM   #928
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I do not consider corruption to be a cheap shot. I agree that all firms will sail close to the mark when they are in fierce competition - but what Siemens have done should not be ignored.


Are you suggesting that the bid was won on the basis of this ?

Supporting British industry could be difficult if you take corruption into account for government contracts, after all BAE, British Airways and Virgin have all been convicted for price fixing and operating slush funds. Surely to not have competition would allow a situation where the sole supplier would charge excessively for an inferior product ?
No.

I agree - i do not have an issue with Siemens per se - but there are a number of objective reasons why they should not have won the bid. That it also is to the detriment of UK industry makes it seem all the more ridiculous!

Last edited by Dobbo; August 23rd, 2011 at 12:24 PM.
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Old August 22nd, 2011, 04:44 PM   #929
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No.

I agree - i do not have an issue with Siemens per se - but there are a number of objective reasons why they should not have won the bid. That it also is to the detriment of UK industry makes it seem al the more ridiculous!
I doubt that the Government would have made the decicion that they have come to if those objective reasons were actually objective and obvious
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Old August 23rd, 2011, 12:35 PM   #930
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I doubt that the Government would have made the decicion that they have come to if those objective reasons were actually objective and obvious
Such as - I am not sure what you are getting at?

Remember that the choice was made on a no-names basis (i.e. "Bid A or Bid B" as opposed to "Bombardier or Siemens") and it was based on accounding for factors laid down in the tendering process.

The point is that factors which are relevant, objective and of fundamental importance to a bidding teams ability to deliver the product and (more importantly) to "UK Plc" were not accounted for during this process.

At best that is a flawed process and i am not sure why the Government are digging their heels in when they have a route out... I suspect that they have already written off the East Midlands in the next General Election!!
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Old August 23rd, 2011, 01:34 PM   #931
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Such as - I am not sure what you are getting at?

Remember that the choice was made on a no-names basis (i.e. "Bid A or Bid B" as opposed to "Bombardier or Siemens") and it was based on accounding for factors laid down in the tendering process.

The point is that factors which are relevant, objective and of fundamental importance to a bidding teams ability to deliver the product and (more importantly) to "UK Plc" were not accounted for during this process.

At best that is a flawed process and i am not sure why the Government are digging their heels in when they have a route out... I suspect that they have already written off the East Midlands in the next General Election!!
A no-names basis is probably the best way for the tender to have been carried out, for if it were decided on the principles of "UK PLC" consumers would likely have been presented with an option that costs more and may even be of lower quality (theoretically). It's quite basic economics that shows protectionism (in this case "UK PLC" ideal) simply makes things more expensive for the consumer. (I could even rope up my old notes from Economic classes to illustrate.)

If Bombardier, in an anonymous bidding process, could not win the bid through the merits of its own, then why should it win based simply off the ropey idea that it is in some way helping the ideal of UK PLC? That kind of behaviour has no economic sense behind it, and more often than not is to the detriment of the economy as a whole.
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Old August 23rd, 2011, 02:56 PM   #932
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I agree that there is no divine right for the UK to retain this manufacturing ability, but there are rational justifications. For example, whilst the rolling stock may (or may not - we do not know for sure) be more expensive from Bombardier, the cost to the UK would be higher due to lost tax revenue and increased benefit/jobseeker payments. I am sure we are all familiar with those arguments.
I am familiar with the argument. Enough to know that it is wrong...
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Old August 23rd, 2011, 05:16 PM   #933
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A no-names basis is probably the best way for the tender to have been carried out, for if it were decided on the principles of "UK PLC" consumers would likely have been presented with an option that costs more and may even be of lower quality (theoretically). It's quite basic economics that shows protectionism (in this case "UK PLC" ideal) simply makes things more expensive for the consumer. (I could even rope up my old notes from Economic classes to illustrate.)

If Bombardier, in an anonymous bidding process, could not win the bid through the merits of its own, then why should it win based simply off the ropey idea that it is in some way helping the ideal of UK PLC? That kind of behaviour has no economic sense behind it, and more often than not is to the detriment of the economy as a whole.
I agree a no-names basis is the correct way to tender. I also think that the tender process should account for all relevant factors - which this one has not done.

For avoidance of doubt - I beleive that socio-economic factors shold be included, in addition to technical and financial ones.

If Siemens proposal is still stronger, then so be it.

Economic theory is all well and good on paper, but it sounds less appealing when it detrimentally affects people's lives. This is an imperfect market after all!
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Old August 23rd, 2011, 09:14 PM   #934
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For avoidance of doubt - I beleive that socio-economic factors shold be included, in addition to technical and financial ones.
One thing is to include conditions like lack of slave labor in Chinese exports, or environmental compliance. Other thing is to argue that money should stay in UK, not Germany, as conditions of manufacturing in Germany certainly are decent for UK standards.

That might be tempting ("contract money will generate jobs and taxes here, not here"), but it would trigger a commercial war. Imagine if, in retaliation, Germany shuns out a levy on London City banks doing business in Germany because "we want to keep our money in German-based banks to generate wages and taxes in Germany".

In an integrated economy like that of EU, the net result of a broader market is that, as a whole, EU gains by having services and goods purchased/delivered/manufactures at the most efficient locations each.
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Old August 24th, 2011, 07:57 AM   #935
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Economic theory is all well and good on paper, but it sounds less appealing when it detrimentally affects people's lives. This is an imperfect market after all!
... And buying a more expensive train only because it's made in the UK is one sure way of affecting people's lives in a negative way.

On the surface it appears that buying something in the UK in stead of in Germany will preserve some jobs in the UK. In reality it doesn't. Oh, it will preserve some jobs in some industries, but at the expense of jobs in other industries.

What is always forgotten is something that is a simple economic truth. Something that is not theory: imports are paid with exports. When the UK imports more from Germany, Germany imports more from the UK. And those imports are made by people too...
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Old August 24th, 2011, 11:51 AM   #936
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... And buying a more expensive train only because it's made in the UK is one sure way of affecting people's lives in a negative way.

On the surface it appears that buying something in the UK in stead of in Germany will preserve some jobs in the UK. In reality it doesn't. Oh, it will preserve some jobs in some industries, but at the expense of jobs in other industries.

What is always forgotten is something that is a simple economic truth. Something that is not theory: imports are paid with exports. When the UK imports more from Germany, Germany imports more from the UK. And those imports are made by people too...
Trade deficit and trade surplus.

Economic theory is a decent basis for making decisions - but it is just that. Theory.
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Old August 24th, 2011, 12:26 PM   #937
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Why should Bombardier Derby solely rely on the UK market while Siemens in Germany is successful exporting everywhere? It's up to Bombardier Derby to improve its competitiveness, and not UK passengers and taxpayers to put up with expensive and outdated trains. I'm not saying Bombardier trains are expensive and outdated, but there are far more proactive ways to respond to the award decision, on the part of the company and the unions, than throwing the toy out of the pram at the government. Protectionism is not the answer.
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Old August 24th, 2011, 01:11 PM   #938
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@ NCT

I think the point is that, accounting for lost tax revenue and increased benefit payments, the Siemens trains are actually more expensive to the UK taxpayer.

This was not accounted for in the tendering process.
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Old August 24th, 2011, 01:17 PM   #939
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@ NCT

I think the point is that, accounting for lost tax revenue and increased benefit payments, the Siemens trains are actually more expensive to the UK taxpayer.

This was not accounted for in the tendering process.
Dobbo, you insist in this poing, forgetting that a rail stock tender is not an isolated process that could be "localized" without consequences! You always need to think "what if" they accounted for "lost tax revenues" from UK firms doing business abroad because, surely, the German wouldn't be keen to accept economic discrimination and would retaliate against British firms.

As for benefits payments, that is a wicked and very far-leftist logic, one that sees public contracts as, primarily, ends to employ people and not means to achieve or complete some project deemed in public interest.
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Old August 24th, 2011, 02:11 PM   #940
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Trade deficit and trade surplus.
Which in the end always balance out.
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