A rail demolition job?

On May 26, 1875, the Otago Daily Times reported on the inauguration of this city's Hillside workshops. "The railway workshops at Hillside are now in working order.

Steam was turned on for the first time about a week ago . . ." the paper reported. Yesterday, just over 136 years later, KiwiRail management announced a proposal to make 41 staff out of a total Hillside workforce of 172 redundant. In between lies the story of a local engineering success which played an integral part in building and maintaining rolling stock in this country when rail was king and, even as it waned, remained a major repository of an increasingly diminished skilled engineering workforce in this country.

The announcement, while still only a proposal, is a telling blow. It is a calamitous day for the skilled workers - and their families - who seem certain to lose their jobs, and a jolt for the cluster of other smaller interdependent engineering companies in the South. How many of these workers - the shortage of which the Government and business leaders are only too quick to bemoan - will soon be packing their bags for Australia?

Who could blame them if they do?

KiwiRail, under this Government, has clearly decided to get out of the business of manufacturing engineering. Yesterday's announcement, in addition to the proposal to shed the 41 jobs, revealed longer-term directions: "Currently this business is structured to support the 'retain and refurbish' needs of our existing, aged rolling stock fleet," it said. "It now has to deliver a service more focused on preventative maintenance and repair that is delivered closer to where the rolling stock is being used" - an ominous signal that this round of redundancies is unlikely to be the last of such exercises - foreshadowing Hillside's painful slide into manufacturing irrelevance.

This should not come as a surprise. The Government has steadfastly refused to throw Hillside the lifeline it has needed to remain a domestic - and international - centre of engineering expertise. It effectively prevented it from tendering for a $500-million contract to build three-car electric multiple units and locomotives for the Auckland rail network, despite a report setting out the benefits of that work remaining in New Zealand. Independent economic consultancy Berl estimated local construction would add 770 to 1270 jobs and $232 million to $250 million to GDP.

Such forecasts are an inexact science, but the Government also cold-shouldered efforts by Hillside and Lower Hutt workshops to acquire contracts to build 300 flatbed wagons, followed by a further 200, of an eventual 4000.

The contracts for the first 500 have gone to China on the basis that the local tender was 15% higher than the offshore one and that a local build would be unable to meet the market's stipulated delivery time.

KiwiRail management also confirmed it will not get contracts to build any of the remaining 3500 wagons in the immediate future.

While Crown entities such as KiwiRail must be expected to be competitive, the base price is not the only figure against which the merits of any tender should be measured. What price the retention of a skilled workforce, a manufacturing industry and, potentially, hundreds of jobs saved and created?

The Government tends to cite political independence in its decisions on such matters, but the Labour Party has been quick to allege the Government's own procurement policies are directly responsible for the loss of jobs and the rundown of Hillside. I

t announced yesterday, that were it in power, it would change the way the government procures jobs and services "to ensure the jobs and economic development opportunities for New Zealand industry and the wider economy are not lost".

It also contrasted the Government's preparedness to subsidise agriculture - citing "the $35 million subsidy provided in the latest budget to be spent on new irrigation schemes" against its indifference to Hillside and manufacturing.

It has a point. This Government appears to have washed its hands of Hillside, and many will see in this an expedient Pontius Pilate moment. The workshop is one of Dunedin's more significant employers. This redundancy proposal smacks of politically-loaded short-termism. And if it is not that, it is even worse: the likely destruction of a once-proud and still potentially vibrant industry.


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