Hillside - End of an era

Six years ago, it seemed nothing could stop the rise and rise of the Hillside Engineering Workshops. Now, they have closed after Government-owned KiwiRail decided it could not keep them operating. Business editor Dene Mackenzie looks back at some of the highs and lows.

The Hillside Workshops were no stranger to uncertainty and fear for the future, having battled several downturns and survived - just.

But the latest hurdle was too big to overcome and yesterday hundreds of people openly mourned the closure of what was once seen as the jewel in the crown of the Dunedin manufacturing sector.

In 2004, big things were being talked about for the workshops. The group had survived a major downturn in 2000, when there were fewer than 160 workers employed

in the operation. Concern among the wider Dunedin business community was around the workshops closing.

Already at that stage, skilled Hillside workers had left for Australia, raising concerns if there was a revival in the fortunes of the workshops, staff would be hard to find to carry out new work.

But all that changed in 2003 when a financially strapped Tranz Rail was taken over by Toll. Not everybody was happy about the Australian company taking over Tranz Rail, but at least the workshops started getting work.

By late 2004, the workshops completed 33 new coal wagons worth about $33 million, which Toll was to lease to Genesis Energy. Turnover of the workshops was reported in the Otago Daily Times as increasing from $12 million to $30 million in recent years.

The then finance minister Michael Cullen and Toll NZ chief executive David Jackson were upbeat about the potential for Hillside as there were also opportunities in Australia supplying Toll's other rail and road interests. Staff numbers increased to 220, including at least 12 apprentices.

Dr Cullen, now Sir Michael, was enthusiastic about the job opportunities for the workshops, which in their heyday had up to 1200 employees.

The workshops then started negotiations to assemble locomotives to replace some of the railway operator's ageing fleet. Toll had committed about $10 million to maintaining rolling stock after taking over the company.

The peak for the company in recent times was probably 2005 when a rounded performance saw the Hillside Engineering Group named as the Otago Daily Times Business of the Year.

The group finished the year the same way as it started, winning contracts to build train sets and coal wagons for out-of-town customers.

Asked then how the year went, the group's management team used words such as fantastic, brilliant and satisfying.

In June 2005, former prime minister Helen Clark visited the workshops and congratulated staff on helping solve Auckland's congestion problems. She praised the work of the then 201 staff in refurbishing rail carriages for the Auckland Regional Transport Authorities to an ''unbelievable'' standard.

The workshops were buzzing in September that year after news of the latest contract win to build 18 rail carriages between then and the end of 2007.

The bid to win the contract was described as aggressive against engineering companies not only in New Zealand but also against international and Asian companies. Toll was able to provide a total package, with Wellington-based design engineers working with Hillside on the bid.

Unfortunately, from 2006 onwards, the future of Hillside seemed much less promising, despite the best intentions of management and staff.

In 2008, the Labour government bought back the rail business from Toll.

Finance Minister Bill English seemed to offer some hope during his first visit to the workshops in 2009.

''Hillside is an important part of KiwiRail and I want to understand the operations,'' he told the ODT.

Earlier that year, Mr English announced the Government would spend nearly $50 million through KiwiRail on building new carriages for the Tranz Scenic passenger routes. The work would be completed by KiwiRail's Hillside workshops starting in January 2010.

In an interview, Mr English said the thing that struck him during his visit was to hear how the workshops had been through 10 years of change and were now going out and competing successful with overseas suppliers.

''That represents real opportunities for Hillside,'' he said.

However, it was the loss of lucrative contracts to China that sealed the end of Hillside, in Dunedin. KiwiRail awarded an estimated $29 million manufacturing contract to a Chinese company in what was no doubt the terminal blow to the workshops.

Workers were told China CNR Corporation would build the first 300 of 3000 container flat-deck wagons KiwiRail wants to replace its ageing fleet.

Despite local support for Hillside's bid from local business people, MPs and unions, KiwiRail's board decided

KiwiRail would be ruled out of the bidding process.

Hillside was put up for sale this year after KiwiRail analysed the financial impact of the reduction in construction and refurbishment forward work orders for the business. KiwiRail's partial closure of its Hillside Engineering Workshops and the redundancy of 90 workers is the best outcome of a bad situation, chief executive Jim Quinn said. He travelled to Dunedin recently to tell Hillside's 115 staff the unwelcome news and explain to waiting media what would become of the manufacturing facility.

The foundry will be leased by global company Bradken for at least five years and KiwiRail will continue to operate Hillside's heavy lift operation while Christchurch equipment is repaired. Of the 23 Hillside foundry workers, 18 are expected to be employed by Bradken. KiwiRail will employ seven staff in the heavy lift department and give priority to ex-Hillside workers applying for the 12 positions available at its Lower Hutt site. Mr Quinn said he was disappointed Hillside in its entirety had not attracted a buyer. In the next six months, the bulk of Hillside will be tidied and locked up.

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