Saving Hillside Workshops

Hillside is to be sold. While it is heartening to observe the optimism at the news emanating from parties connected to, and associated with, the long-standing South Dunedin heavy engineering business, only time will tell whether there is any realistic basis for it; and whether, several months hence, the 123 or so remaining skilled staff will still have employment, and Dunedin a potentially key operation in its cluster of remaining engineering companies.

Those of a more pessimistic, or cynical, bent might be inclined to the view that this day of reckoning was always likely once the Government neglected to support the workshops in their bid for major tenders: the $500 million contract to build trains for Auckland, for example; or, more realistically, for the manufacture of at least some of the 500 flatbed wagons for its parent, the state-owned enterprise KiwiRail.

Even a contract for 100-200 of those wagons may have given the workshops breathing space to diversify and seek further contracts in aligned sectors. Ironically, it would have made the prospect of a transfer to private ownership a much more attractive proposition for prospective new owners.

That did not happen.

In June last year, a tranche of 44 redundancies, made inevitable by lack of work, reduced Hillside's capacity. While there were some orders in the pipeline, the future looked bleak.

There was talk at the time of the bidding for other, non-rail related engineering work, perhaps in collaboration with Dunedin's other manufacturing businesses, but evidently that has not been notably fruitful to date.

On Thursday, with only six months' worth of orders on the books, KiwiRail called for expressions of interest in the purchase of the workshops. The business will be advertised as a going concern from early May, with a final decision sought by August.

Hillside was established in Dunedin in 1875. It grew to become a key component of the country's rail industry, at its peak employing up to 1000 workers building rolling stock. In some respects, the remarkable news is that it has survived this long, rather than that it is now for sale. The industrial trajectory of New Zealand during the past three decades has moved steadily away from manufacturing and engineering; and various governments since the late 1980s have seen rail split up or sold off to overseas interests and watched as its assets and infrastructure were steadily eroded.

In Dunedin, this has been mirrored by the exodus of industry including, most notably, Fisher and Paykel, gone like many other manufacturing enterprises to parts foreign. Most of Hillside's competition will come from Asia if and when it is bought by new owners. It will rely on any work KiwiRail can funnel its way but, as recent history has shown, unless the Government - and the company - has a change of philosophy, that is likely to be piecemeal rather than in major sustaining contracts.

While most governments do not see it as their role to support industry, they do help, where they are so inclined, to create the conditions in which it might flourish. Labour's Clare Curran and Greens co-leader Metiria Turei have a point when they allude to the lengths this particular Government is prepared to go to assist multinational industries in New Zealand: the gambling industry in Auckland, for example, or the movie industry in Wellington; and in contrasting that with its apparent obstinacy over the refusal to entertain the KiwiRail flatbed tenders.

There is no sense, however, in maintaining an obsolete and loss-making engineering venture. So it must be hoped that the optimism now being expressed by various parties with respect to the forthcoming sale is based on something other than sentiment or wishful thinking.

No-one is shouting from the rooftops for the reinvention of large-scale heavy industry in this country. But while the economic growth buzzwords of the day are "innovation" and "hi-tech", maintaining at least a boutique engineering facility with the associated skilled labour workforce, and paying its own way through a combination of private and government contracts, would seem to have a compelling logic all of its own.

 

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