Alstom enter talks with Siemens over rail merger

[LNW-GW Joint]

The future of signalling and train control is ERTMS/ETCS, the whole point of which is that it is a European/global standard supported by all the majors.
NR has a live test facility on the GN network where ETCS products from several manufacturers (including Hitachi) can be approved for use.
The upcoming ETCS planned for the ECML, and HS2 when it comes, can have compatible trains and signalling from any of them.
If the UK is trapped into monopoly suppliers it is the result of BR/RT/NR's technical and procurement policy over decades.
If there is any money in it, I imagine the merged Siemens/Alstom will continue to support both legacy systems over their life cycle.
While NR's views are a factor, I doubt if the EU merger decision will be based on a UK view, especially after Brexit.

 

[AlexNL]

The future of signalling and train control is ERTMS/ETCS

It's not just about signalling/train control, interlocking plays a big role as well. There are only a few vendors in that area and the market has consolidated in the past already. Invensys Rail was sold to Siemens in 2013.

 

[Belperpete]

The upcoming ETCS planned for the ECML, and HS2 when it comes, can have compatible trains and signalling from any of them. If the UK is trapped into monopoly suppliers it is the result of BR/RT/NR's technical and procurement policy over decades. If there is any money in it, I imagine the merged Siemens/Alstom will continue to support both legacy systems over their life cycle. While NR's views are a factor, I doubt if the EU merger decision will be based on a UK view, especially after Brexit.

Too true.

ETCS consists of two parts: the train-borne kit and the trackside. The train-borne kit has to be compatible with the train it is mounted in, so ideally is provided by the same people as supply the train, when they supply it (which is why most train-building companies have acquired a signalling capability, if only so that they can supply "the complete package"). The ETCS trackside kit has to be compatible with the interlocking that it has to interface with. In practice, for ETCS level 2, the integration between interlocking and ETCS Radio Block Control goes quite deep, so it is likely that the ETCS RBC and the interlocking will come from the same supplier.

The problem is that there are very few suppliers of UK-spec signal interlocking and control equipment - Siemens and Alstom dominate that specific market, so merging them together would create a near-monopoly supplier to NR.
(One of the reasons BR used to buy electric traction equipment from both GEC-Alstom and Brush for e.g. fitting into EMUs built by BREL, was to keep both of them in the market and hence avoid ending up in a monopoly supplier situation).

Likewise BR had the "allocated contracts" system for signalling, to try and avoid ending up in a monopoly situation. I understand the Southern fought tooth and nail against GEC being allocated the London Victoria resignalling, as they wanted all three Brighton-line contracts to go to the same supplier (so they had the same system on the whole line), but the allocated contracts system meant that it was GEC's turn for a big contract.

While there are other overseas suppliers that can provide ETCS-compatible interlockings, they would need to be tailored to UK requirements. Unfortunately, recent history shows that this is not a simple matter (Ebilock, Ansaldo, etc.).

 

[HH]

More detail here

Alstom and Siemens backtrack and submit new concessions for rail merger ahead of European Commission vote
Alstom and Siemens have offered new concessions to try to satisfy antitrust demands from the European Commission over their plans to merge and create a European rail champion, forcing Margrethe Vestager to reassess the merger at the last minute.

The EU’s top competition official seemed poised to veto the Franco-German merger last week after telling reporters she would likely reject the rail companies’ antitrust concessions – although she did say she was still open to a new proposal.

Siemens and Alstom also appeared to be ready to walk away from the deal following Vestager’s comments, with a source close to the deal claiming no further concessions would be offered as it risked offsetting the reasons for pursuing the merger in the first place.

But Alstom has today released a statement stating that it and Siemens had decided to further modify the remedies in a bid to answer all of the EU Commission’s concerns.

It specified that the industrial and economic value of the deal, and the percentage of its sales offered in concessions, would remain unchanged.

It also added that there was “still no certainty that the content of this package will be sufficient to alleviate the concerns of the commission.”

The EU Commission will now review the modified remedies ahead of a decision expected by 18 February.

The rail merger would create the world’s second largest rail company with a combined revenue of around €15bn, but the EU’s primary concern is the new company would dominate to the extent it would kill off competition in the market of rolling stock and signalling.

The French and German governments both fully support the merger, and officials have been frantically lobbying support over recent weeks. Vestager said last week it was “very, very late in the process” but that the phone was still open to amendments.

The EU Commission has repeatedly stated its objections to the European merger, and in December the rail companies submitted a remedy package consisting of signalling activities and rolling stock, as well as one of their high-speed rail technologies, representing around 4% of sales.

Five national competition regulators from Germany, Spain, Britain, Netherlands and Belgium have all warned against the merger and echoed the EU’s stance that concessions so far fall short.

 

[LNW-GW Joint]

from the RTM article:
in December the rail companies submitted a remedy package consisting of signalling activities and rolling stock, as well as one of their high-speed rail technologies, representing around 4% of sales.

I wonder what that could be - the Pendolino business perhaps?
They surely will not sell TGV or ICE technology.

 

[AlexNL]

The Financial Times is reporting that the EU's antitrust commissioner is not impressed by the latest concessions made by Siemens and Alstom, and she intends to recommend a veto.

 

[Mikey C]

Interesting politically if something that the French and German governments want is blocked by the EU

 

[jfollows]

The Times today, Thursday 31 January, likewise reports that it's likely that this merger will be blocked.

Alstom-Siemans rail merger to be blocked

Business Staff


January 31 2019, 12:01am, The Times

Bruno Le Maire, the French finance minister, has called for a reform of the European Union competition rules as the planned rail merger between Alstom and Germany’s Siemens looks set to be blocked by Brussels.

Alstom, the French group, and its German counterpart, suggested their plans to form a trainmaking group were on the point of collapse last week because of “insurmountable demands” by the European Commission. The merger would create the world’s second largest rail company.

“EU regulation is not always perfect and there are plenty of good reasons to improve it,” Mr Le Maire, 49, said. “I strongly believe we have to change the rules of competition in the EU.”

The commission will announce its decision by February 18, with indications the merger will be rejected.

 

[68000]

Too true.

ETCS consists of two parts: the train-borne kit and the trackside. The train-borne kit has to be compatible with the train it is mounted in, so ideally is provided by the same people as supply the train, when they supply it (which is why most train-building companies have acquired a signalling capability, if only so that they can supply "the complete package"). The ETCS trackside kit has to be compatible with the interlocking that it has to interface with. In practice, for ETCS level 2, the integration between interlocking and ETCS Radio Block Control goes quite deep, so it is likely that the ETCS RBC and the interlocking will come from the same supplier.

The whole point of European interoperability is that different suppliers produce systems to the same specification therefore it is not inherent that the train equipment and the infrastructure equipment is from the same supplier. It might make things easier in the integration although the aim of the TSIs is to have a common specification across all suppliers

 

[LNW-GW Joint]

The whole point of European interoperability is that different suppliers produce systems to the same specification therefore it is not inherent that the train equipment and the infrastructure equipment is from the same supplier. It might make things easier in the integration although the aim of the TSIs is to have a common specification across all suppliers

Would I be right in saying that the Paddington-Heathrow ETCS is from Alstom for the track, and Bombardier for the trains (Aventra and 387)?
The ECML ETCS, when it comes, will have on-board kit from several manufacturers, whichever on-track system is adopted.
Isn't it what the GN test track was for, to test all the combinations for compatibility?

 

[swt_passenger]

Would I be right in saying that the Paddington-Heathrow ETCS is from Alstom for the track, and Bombardier for the trains (Aventra and 387)?

In a recent discussion about GWR 387s being modified for HEx, there is a link to an announcement that Siemens are providing the onboard hardware. Siemens also provide the onboard equipment for Class 345 ATO (Trainguard?) in the Crossrail core - presumably there won't be another separate system for running under ETCS as well?

 

[hwl]

In a recent discussion about GWR 387s being modified for HEx, there is a link to an announcement that Siemens are providing the onboard hardware. Siemens also provide the onboard equipment for Class 345 ATO (Trainguard?) in the Crossrail core - presumably there won't be another separate system for running under ETCS as well?

Oh yes there is...
The Core signalling system Siemens TrainguardMT which uses a module (STM) that is tacked on to the ETCS systems in the same way as TPWS/AWS also has a module (supplied by MorsSmit) and then there is the TCMS.

ETCS is the main system and everything interacts with that (as will all new rolling stock from now on). Siemens have never done a TrainguardMT installation that has to interact with ETCS before...

 

[hwl]

Isn't it what the GN test track was for, to test all the combinations for compatibility?

Apart from GW-ATP in tunnels

 

[Belperpete]

The whole point of European interoperability is that different suppliers produce systems to the same specification

The equipment is NOT all produced to the same specification. You can't replace one manufacturer's piece of kit like-for-like with another's, like you can with say SSI TFMs. The ETCS specifications only mean that one manufacturer's train-borne kit should work with any other manufacturer's trackside kit. But the point I was making is that just as the train-borne kit has to be compatible with the train it is mounted on, so the trackside RBC has to be compatible with the interlocking that it is connected to. So, NR will be limited to an ETCS-RBC supplier that has a UK-tailored interlocking. Which won't be many if Alstom and Siemens merge.

 

[AlexNL]

As expected, the EU has decided not to allow the merger to continue.

https://www.bloomberg.com/news/arti...m-deal-derailed-by-eu-on-competition-concerns

 

[HH]

As expected, the EU has decided not to allow the merger to continue.

https://www.bloomberg.com/news/arti...m-deal-derailed-by-eu-on-competition-concerns

Despite political pressure from the French & German governments.

Hang on, I thought the EU was under the political jackboot of the French & German Governments, no?

Or was that more fake stuff from the Brexit camp to excuse their jingoism?

 

[LNW-GW Joint]

Plenty of cheering from Bombardier and Hitachi I expect, as well as Network Rail.
In other news, I see DB has ordered new inter-city trains from Talgo.
https://www.railwaygazette.com/news...db-orders-talgo-230-inter-city-trainsets.html

Deutsche Bahn has selected Talgo to supply a new generation of push-pull trainsets to operate long-distance inter-city and international services, the national operator announced on February 5.
Following an international tender, DB Fernverkehr has awarded Talgo a framework contract for up to 100 trainsets, placing a firm order for an initial build of 23 sets valued at €550m. Formed of an electric locomotive, driving trailer and an unspecified number of intermediate coaches, the trainsets will be designed to operate at a maximum speed of 230 km/h

That's proof if any were needed that the rolling stock market is indeed competitive across Europe, and not just a shoe-in for the local manufacturers.

 

[AlexNL]

Plenty of cheering from Bombardier

Bombardier are indeed happy about this. Their response is here: https://www.bombardier.com/en/media...ropean-commission-decision.bombardiercom.html

 

[Mikey C]

Good new for Alstom facility at Widnes and the Siemens factory in Goole I guess

 

[43096]

Good new for Alstom facility at Widnes and the Siemens factory in Goole I guess

Or potentially bad news for both. There is no way the UK can viably sustain train assembly factories for all of Alstom, Bombardier, CAF, Hitachi and Siemens. The current new trains boom will, inevitably, be followed by bust.

 

[LNW-GW Joint]

Good new for Alstom facility at Widnes and the Siemens factory in Goole I guess

If Alstom were happy to sell the Pendolino business, and Siemens were prepared to license Velaro technology, it gives you some idea of the priorities of the two companies.
I guess it means there will definitely be separate bids for HS2 rolling stock now.
Despite the EU merger rejection, the industry is still in need of consolidation.
The only issue is who moves next?

 

[TRAX]

Bombardier are indeed happy about this. Their response is here: https://www.bombardier.com/en/media...ropean-commission-decision.bombardiercom.html

Certainly a bit of hypocrisy here. The first merger intention was Siemens-Bombardier, don’t tell me they weren’t up for it back then.
Could they first try making reliable new trains before commenting this sort of stuff ?

 

[hwl]

Certainly a bit of hypocrisy here. The first merger intention was Siemens-Bombardier, don’t tell me they weren’t up for it back then.
Could they first try making reliable new trains before commenting this sort of stuff ?

As I (and others) have said before Siemens and Alstom weren't prepared to concede enough on the signalling side (see the commissioners comments specifically on signalling today) which is where the future profits is seen as being best. Rolling stock isn't seen as high margin going forward. The Bombardier - Siemens merger would have generated far fewer signalling issues than S-A wouldn't have. The B-S talk and then those braking down and then S-A talks happening got Bombardier started on cost reductions as it gave then some good political excuses to make some hard choices (cuts closures and consolidation in Germany and Switzerland) that would other wise have been difficult and they put off.

 

[Mikey C]

Or potentially bad news for both. There is no way the UK can viably sustain train assembly factories for all of Alstom, Bombardier, CAF, Hitachi and Siemens. The current new trains boom will, inevitably, be followed by bust.

But then Widnes at the moment is a maintenance plant (and has sufficient work for years) while Goole will have years of work assembling London Tube trains if Siemens wins the follow on orders.

 

[43096]

But then Widnes at the moment is a maintenance plant (and has sufficient work for years) while Goole will have years of work assembling London Tube trains if Siemens wins the follow on orders.

Widnes has the Pendolino paint programme currently part complete, then Class 175 overhauls. Then what? It’s not like Alstom has a stellar reputation (anything but, in reality) and hasn’t won a competitive tender for new trains in this country since it became Alstom (i.e. last competitive contract wins were as GEC-Alsthom).

 

[Sad Sprinter]

That alone should have been enough for Siemens to walk away. Never, ever, ever, engage in joint ventures with the French - they will just use it for their own ends rather than the good of the partnership overall. Just look what happened with GEC when it went into a JV with Alsthom.

As for Belfort, why keep it open? A sane decision would transfer what remains of TGV power car production either elsewhere in France or to München. Watch the JV decide to close München Allach instead and either ditch Vectron in favour of Prima or shift production to Belfort.

As far as I know, GEC managment were pretty terrible and were all too happy to sell of almost every part of their business. Still was a stupid thing to do.

 

[43096]

As far as I know, GEC managment were pretty terrible and were all too happy to sell of almost every part of their business. Still was a stupid thing to do.

Don’t get me started on GEC’s business decisions in the 1990s. To say they were bad is a massive understatement!

 

[Adlington]

deleted

 

[Andy25]

Widnes has the Pendolino paint programme currently part complete, then Class 175 overhauls. Then what? It’s not like Alstom has a stellar reputation (anything but, in reality) and hasn’t won a competitive tender for new trains in this country since it became Alstom (i.e. last competitive contract wins were as GEC-Alsthom).

Our last big contract was Pendolino, but we've also sold trams in to Dublin and Nottingham. Hope is to get hydrogen trains by the end of the year and for 2021 Pendolino refresh which would take us to 2023. Then hopefully some new build on either SouthEastern or HS2.

4 year firm(ish) pipeline is pretty good for a maintenance site, and the new rolling stock would be a bonus that would guarantee work for a decade plus the overhaul work off it for 35 years.

 

[Andy25]

Reuters website reporting Alstom and Bombardier shares up after the announcement. Seem to suddenly think Alstom and Bombardier could merge and would have less competition concerns than with Siemens.