$90m plan for Hillside revealed

The current view of Dunedin’s Hillside workshop, and (inset) artist impressions of what Hillside...
The current view of Dunedin’s Hillside workshop, and (inset) artist impressions of what Hillside could look like in the future ifa funding pitch is approved. PHOTO: STEPHEN JAQUIERY
A $90 million plan to turn Dunedin’s Hillside workshop into a world-class assembly plant has been revealed in a leaked government funding pitch.

But there are concerns importing parts to be assembled locally is not a good use of taxpayer money.

This week the Government reaffirmed its commitment to the South Dunedin facility as part of its 10-year rail plan.

In 2019 an initial $19.97 million investment was made in plans to expand the workshop through the Provincial Growth Fund.

But documents obtained by the Otago Daily Times show an additional $90 million is needed to turn it into a wagon assembly facility.

David Clark. Photo: ODT files
David Clark. Photo: ODT files
KiwiRail staff met State Owned Enterprises Minister Dr David Clark, also the MP for Dunedin, in December to make the pitch.

The $90 million was comprised of $55 million for the premises and assembly plant, and $35 million for operations.

KiwiRail predicted it would create an estimated 150 construction jobs, 40-50 assembly jobs, and up to $21 million in indirect and direct economic benefits.

"Green field development of a world-class production facility increases opportunities for innovation... and possibilities to manufacture or assemble a much wider array of products in the future,’’ the documents state.

KiwiRail needed to replace about 2300 wagons over the next five years. About half of those could be assembled locally, starting in July 2023, at a rate of two wagons a day.

A cost breakdown showed it would cost $219,800 per wagon if they were assembled locally, $23,000 more than if they were fully procured overseas.

That was an extra $35 million overall, based on 1520 wagons.

Parts would be supplied from Indonesia, China, Australia, the United States and Italy.

Hillside Workshops. Photo: ODT files
Hillside Workshops. Photo: ODT files

But National’s Transport spokesman Michael Woodhouse, of Dunedin, questioned whether bringing in parts to be assembled at Hillside was a good use of taxpayer money.

"Now Labour, and probably half of Dunedin, are going to say ‘that’s a fantastic idea’, but the New Zealand taxpayer is funding that,’’ he said.

He said the Government had a "romantic notion about rail and the local production of that’’, but that was not where the modern New Zealand economy was at.

"What we should be investing in is what we're good at, and what we're competitive at."

Michael Woodhouse. Photo: ODT files
Michael Woodhouse. Photo: ODT files
He believed a funding boost was likely in the Budget on May 20.

"My guess is that there is $90 million in Budget 2021 for Hillside, and that Dr Clark will celebrate that, and I think before we get the Champagne out we should have a very close look.’’

Dr Clark did not address details in the documents yesterday, or whether the Budget bid was likely to succeed.

But he did launch an attack on Mr Woodhouse, saying he had "built a career on selling out local interests’’.

"It is a shame he doesn’t see the value in growing and up-skilling our Kiwi workforce,’’ he said in a three-line statement.

“This Government is committed to New Zealand industry and utilising the talent we have at places like Hillside.

“It’s especially important as we recover from the impact that Covid-19 had on the economy.”

Rail and Maritime Transport Union Otago branch secretary Dave Kearns said the union fully backed the Government’s plans for Hillside.

But there was no reason wagons could not be made from scratch at the workshop, and he wanted manufacturing to return to Hillside.

He took umbrage with Mr Woodhouse’s comments around cost, saying the ongoing costs associated with "inferior’’ imported wagons were not being considered.

daisy.hudson@odt.co.nz

The pitch

$55 million
Cost of assembly premises and plant

$35 million
Cost of local assembly labour and operations

2300
Number of wagons that need replacing over five years

1520
Could be assembled locally from July 2023

 

Comments

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Hey Labour, don't waste my money buying Dunedin votes.
Dunedin is painted red so it's guaranteed anyways.
Spending $25k extra per cart to assemble them here instead of buying complete - we are drowning in money printer debt as it is.

I will believe it when I see it, if I see it...

I struggle to listen to anything that an MP who as Minster in charge of lockdown didn't understand the concept of lock down has to say!!!
And the fools who voted for him in this city.

One of the problems with understanding a situation like this is knowing that when wages (part of the "cost") are paid then about 25% of that goes straight back to Govt in tax. When the wages are spent GST is paid. Supporting industries too and their workers pay tax and spend in the community. The downstream effects go on and on. Young people learn trades, people have jobs! We import so much now instead of making it, then the people who are put out of work sit at home on the unemployment benefit. Look what happened when the locos were imported and the initial and ongoing problems. Lastly what guarantees do we have that fairly paid labour is being used to manufacture such things in China ( where they would probably be made). The current estimates of the amount of dodgy stuff that is currently be imported and purchased are very disturbing. It seems we would rather purchase and turn the other way. How long did it take NZ to rather reluctantly join the protest at the current genocide in China. perhaps we are lovers of trade rather than human rights. It is not only Moslems being persecuted, not so well know is widespread persecution of Christians as well in many countries.

Talking about fair pay in China, you are obviously a union man, no?
NZ still haven't joined the condemnation - to be more precise - the Labour Government still haven't condemned it. Reluctantly through watering down debate as to not offend the Labour Party's Chinese overlords.
NZ is against them; the governing party, Labour, I'm afraid is not.

After years of neglect, great to see a government investing in Dunedin.
Long may it continue.
Mr Woodlouse sold this city out a long time ago

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