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
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
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
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''
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
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
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