ARA: the importance of local manufacturing

Industry Associations

The Next Generation Tram project will support jobs in manufacturing, the supply chain and the construction of a new depot and maintenance facility.

Australian manufacturing focus creates new opportunity

The confirmation of the largest investment in Australian-made trams highlights the significant potential to grow the rail manufacturing sector as record investment in new infrastructure continues.

The Victorian Government’s awarding of the $1.85 billion contract as part of the Next Generation Tram project will see 100 new and accessible trams built to support the nation’s most iconic tram network.

It will support 1900 jobs in manufacturing, the supply chain and the construction of a new depot and maintenance facility, further building on the significant manufacturing capability that exists within Victoria.

The investment in new rolling stock is not the only one in the state, with the Victorian Government also committing $986 million to build 25 new X’Trapolis 2.0 trains as part of its 2021-22 State budget.

The trend towards local manufacturing goes well beyond Victoria, with new manufacturing projects underway or planned across the country.

The Queensland Government confirmed its $7.1 billion Queensland Train Manufacturing Program last year, which will see 65 new passenger trains built in Maryborough.

A new rail facility will also be developed on the Gold Coast, while locations for stabling yards are being considered.

A preferred applicant for the program is expected to be confirmed later this year, with the project set to support the growth of the rail network as the Cross River Rail project is completed and Queensland prepares for the 2032 Olympics.

Across the country, the first railcar to be built at the new Bellevue Railcar Manufacturing and Assembly Facility in WA started undergoing testing in March, representing a return of rail manufacturing to the state. The facility will deliver 246 new C-Series railcars as part of the METRONET project, and six new Australind railcars over the next decade.

In NSW, the State Government has confirmed Parramatta Light Rail Stage 2 will include a local manufacturing requirement as part of its business case.

The range of commitments to develop rolling stock here in Australia highlights a significant opportunity for industry and government to build on the nation’s existing capability and create long term opportunities for the people who work within the rail manufacturing and supply sector.

AUSTRALIA’S MANUFACTURING CAPABILITY

Australia’s rail manufacturing capability is already significant.

Our rail manufacturing and supply industry generates $2.4 billion a year and employs more than 4000 people across the country.

Rail manufacturing businesses are located across the country, with higher representation in Victorian and New South Wales.

Importantly, it is a strong supporter of small and medium enterprises, with about a third of the rail supply chain consisting of businesses with 20 employees or less.

The sector has also been a key driver for regional jobs, particularly in locations such as Newcastle, Dandenong, Maryborough and Lake

Macquarie, and this looks set to continue with the funding announcements confirmed in the last year.

The Queensland Train Manufacturing Program is expected to support up to 800 construction and manufacturing jobs in Maryborough, while the X’Trapolis 2.0 project in Victoria will create 150 jobs in Ballarat.

These examples all highlight the strong opportunities for jobs creation and economic development as the sector grows, providing a significant opportunity for regional communities.

The sector also spends a bigger proportion on other businesses in the supply chain compared to other industries, delivering wider economic benefit to the communities it serves.

For example, the sector spends more than $300 million a year on metal manufacturing, as well as scientific, technical and professional services.

The benefits of further building our rail manufacturing capability are therefore far reaching and offer a significant boost to the wider economy.

MAKING THE MOST OF THE POST-PANDEMIC OPPORTUNITY

The impact of COVID-19 on international supply chains highlighted the importance of a strong local manufacturing capability.

During the early months of the pandemic, rail manufacturers and suppliers told the ARA that constraints on international shipments was one of the biggest impacts felt by the sector.

However, even in those first few months of the pandemic, the sector recognised the significant opportunity for local manufacturing and supply this presented, with three quarters of rail businesses surveyed by the ARA saying they were considering changes to their supply chain to seek more suppliers within Australia or their home state.

Now, more than two years into the pandemic, the supply chain has proven its resilience in the face of disruption.

Businesses have continued to operate in challenging circumstances, innovated to deliver new technologies and data analytics and introduced more flexible work arrangements to support the attraction and retention of skilled people.

Essential maintenance has continued throughout the pandemic, drawing on the local skills and talent available to keep Australia’s essential rail services operating.

The experience has highlighted the importance of ensuring local capability to develop and maintain rolling stock and rail components and provides a new opportunity to expand our focus on Australian manufacturing to support our economic recovery.

THE IMPORTANCE OF STRONG NATIONAL FOCUS

While the rail manufacturing announcements of the last year are welcomed by industry, it is important local content is considered at a national level.

The ARA has long advocated for a national approach to rail manufacturing to allow it to gain the scale it needs to innovate and grow.

Nationally consistent procurement processes would streamline procurement for the rail industry and encourage greater industry engagement during the early phases of a project’s planning.

In addition, a national approach to local content policies would allow rail manufacturers to maximise the use of their facilities, and the skills and capabilities of their people, across more projects in more locations.

This national focus is essential to further enhance the productivity and efficiency of the sector, and foster a strong focus on innovation to support the future of the rail industry.

By adopting the concept of local content at the national level, all jurisdictions could benefit from the experience and expertise gained on key projects across the country, delivering improved outcomes for both industry and government.

The ARA is engaging with industry and government on this issue as part of the implementation of its Rail Supply Chain Blueprint, and is reviewing local content policies across jurisdictions to identify opportunities for greater consistency.

DRIVING IMPROVED OUTCOMES FOR THE RAIL NETWORK

What is most exciting about the range of manufacturing projects being delivered across the country is the opportunity to create a modern rail fleet that meets our future needs.

The development of rolling stock that leverages new technologies to improve sustainability outcomes is an essential part of that, and it is good to see this being a key consideration of the projects underway at the moment.

Projects such as the Next Generation Tram Project are also improving the accessibility of the network, introducing new features such as lower floor heights to make it easier for all to access the services they need.

Greater consideration of the use of automation, data analytics and more will also be vital to drive the most efficient outcomes possible during the manufacturing, operations and maintenance phases.

These considerations aim to ensure new rolling stock delivers improved outcomes across the asset lifecycle and ensure the smooth operation of the wider rail network for years to come.

Many of these projects have also featured significant consultation with industry, government, the wider supply chain and the community in their early stages.

Strong consultation with key stakeholders will help maximise the benefits these projects deliver, and it has been good to see both industry and government proactively engage in these discussions.

ENHANCING THE CUSTOMER EXPERIENCE

Ultimately, the new rolling stock to be delivered as part of these projects will enhance the customer experience for rail users, providing new features that improve the comfort of their journey and make accessing the network as easy as possible.

This is vitally important as the industry prepares to welcome more people back to the network, while we move on from COVID-19 restrictions and work to ensure the customer experience is a great one as they make their return to rail.

Fostering a strong manufacturing capability that understands the local context and the needs of both rail operators and their customers can only support improved outcomes over the long term.

WA Transport Minister Rita Saffioti (left) and WA Premier Mark McGowan inspect the interior of the first railcar to be built in the state.