Siemens, Bombardier Said in Talks to Combine Train Units

[Mikey C]

https://www.bloomberg.com/news/articles/2017-04-11/siemens-bombardier-said-in-talks-to-combine-train-operations

Not sure what that would do for UK competition, or how they'd rationalise the Desiro and Aventra product line

Siemens AG and Bombardier Inc. are in talks to combine their train operations, people familiar with the matter said, potentially creating a business that could better compete with rising competition from China.

The proposed joint venture, which could be worth at least 10 billion euros ($10.6 billion), would merge the firms’ train-making and signaling activities, said the people, asking not to be identified because the discussions are private. A deal could come by the middle of the year, one of the people said.

No final decisions have been made and any combination would require clearance from antitrust authorities and face potential opposition from unions, they said. Representatives for Siemens and Bombardier declined to comment.

 

[Bletchleyite]

If it does happen I hope the Siemens high build quality rubs off on Bombardier rather than the other way round.

 

[CosherB]

These kind of stories are continually doing the rounds regarding industry rationalisation/consolidation ..... these two were rumoured to be in talks during 2015, which came to nothing.

Time will tell ...

 

[WatcherZero]

Reuters are carrying the story as well.

 

[DPQ]

If it does happen I hope the Siemens high build quality rubs off on Bombardier rather than the other way round.

Siemens high build quality? Really? We'll just ignore the Class 700s shall we.

 

[43096]

I can't see the competition authorities being too pleased with that given the strength each has in the European market: e.g. TRAXX and Vectron have a stranglehold on electric locomotives.

 

[LNW-GW Joint]

I don't know which of these is in the most trouble.
Bombardier has severe corporate problems because of its CRJ aircraft programme, and Siemens has big issues over corporate governance.
I'd say Bombardier is in the greater need of restructuring.

They both have multiple plants across Europe, and considerable over-capacity.
However, I don't think the UK aspects are the most urgent for rationalisation, with relatively full order books for both firms.
Germany is the place where the greatest impact will be felt, I think.

Bombardier and Siemens cooperate already on some projects.
A joint bid was the alternative to Hitachi for the IEP contract.
While the attention will be on the rolling stock aspects, the signalling technology is very important to NR, just as it was when Hitachi purchased Ansaldo STS and Siemens bought Invensys/Westinghouse Signals.

 

[NickBucks]

If this goes ahead looks horribly like the Vauxhall/ Peugeot scenario. Manufacturing will be guaranteed whilst the current Desiro / Aventura units are being manufactured but after that consolidation will be in Europe because of the difficulty / costs of shedding labour in Germany vis a vis U.K. An opportunity for Alstom perhaps ?

 

[WatcherZero]

On the contrary may see them keep one uk plant dedicated to orders (and between the two companies will have plenty of market share) for competetive advantage but with zero export prospects.

 

[LeeLivery]

Siemens high build quality? Really? We'll just ignore the Class 700s shall we.

Well they've built some of the most reliable units in Europe so, yes high quality. The 444 was crowned Britain's most reliable train at one point. Bombardier have built trains where buttons have fallen off within weeks.

 

[tomuk]

I can't see the competition authorities being too pleased with that given the strength each has in the European market: e.g. TRAXX and Vectron have a stranglehold on electric locomotives.

I agree the competition authorities will be wanting divestments. I would have thought its a good time to be Stadler or Alstom?

 

[Mikey C]

Is there actually much competition from China at the moment, or is this preemptive action?
Or just an "excuse"?

 

[Billy A]

Plenty of, outside Europe. Chinese makers pick up many if not most contracts in developing markets

CRRC are buying Skoda as a way of getting into the European market so there's bound to be continued consolidation amongst European makers by way of defence. Vossloh for example sold their Spanish plant to Stadler and their remaining shunter business in Kiel is on the market.

 

[Wivenswold]

Well they've built some of the most reliable units in Europe so, yes high quality. The 444 was crowned Britain's most reliable train at one point. Bombardier have built trains where buttons have fallen off within weeks.

I agree, though my only experience is of the Class 360s which feel very well bolted together after 14 years in which they've changed hands twice and are still pretty much as delivered apart from new fabrics.

 

[LNW-GW Joint]

Plenty of, outside Europe. Chinese makers pick up many if not most contracts in developing markets
CRRC are buying Skoda as a way of getting into the European market so there's bound to be continued consolidation amongst European makers by way of defence. Vossloh for example sold their Spanish plant to Stadler and their remaining shunter business in Kiel is on the market.

Not sure anything came of that.
They were "in talks" in November, but nothing since as far as I can see.

The Chinese are bailing out Bulgaria's bankrupt rail system though, and of course are hovering around HS2 construction.

 

[Bletchleyite]

Siemens high build quality? Really? We'll just ignore the Class 700s shall we.

They look pretty solid to me.

 

[Clip]

They look pretty solid to me.

Indeed - the interior spec of them may not be to everyones liking but they seem to be bolted together quite well.

 

[D365]

Bombardier have built trains where buttons have fallen off within weeks.

Which is ignoring the fact that these passenger controls were purchased from an external supplier, and that the Class 387s have been a huge step up in reliability.

 

[F Great Eastern]

I agree, though my only experience is of the Class 360s which feel very well bolted together after 14 years in which they've changed hands twice and are still pretty much as delivered apart from new fabrics.

That's part of the reason I'm sorry to see them go - the build quality is ridiculously good!

I've been on a lot of Siemens stock of various types throughout Europe, Metro, Suburban, High Speed etc and it's all pretty similar in that regard.

 

[Bletchleyite]

Which is ignoring the fact that these passenger controls were purchased from an external supplier

Who cares? If I buy a TV and a button falls off, chasing suppliers is not my problem. If Bombardier buy poor quality parts, it's Bombardier's fault for not managing their suppliers properly. It's only my fault if I requested that they use those parts from that supplier.

 

[D365]

Who cares? If I buy a TV and a button falls off, chasing suppliers is not my problem. If Bombardier buy poor quality parts, it's Bombardier's fault for not managing their suppliers properly. It's only my fault if I requested that they use those parts from that supplier.

However the situation has since been rectified, as evidenced by the Class 387s, which have had a near-faultless introduction to service.

 

[Olaf]

This is for Bombardier Transportation (BT), not Bombardier Inc - the former is already a joint venture with an Investment Fund from the end of 2015/early-mid 2016.

The joint venture was created to free-up funds for the parent company, and to inject capital to restructure the Transportation business. That restructuring has not been achieving it's objectives. A number of back-up options were drawn up at the time of the formation of the JV. In the event that the business could not be turned around, a sale to or merger with another major being the way out for the Investment Fund.

In terms of BT's ongoing cost reductions, the details are already known internally, but part of the renewed focus is to consolidate manufacturing on the Polish plants (due to staff cost advantages and the EU regional funding). BT will have had to review that in light of the Article 50 submission, but unless the GBP/EUR exchange rate drops and stays below about 1.10/1.05, there is little motivation to change their plans.

Siemens also have problems with, probably, lower-cost manufactures taking business away from them.

Overall; merging two businesses in difficulties is not an automatic recipe for success as they say.

 

[LeeLivery]

However the situation has since been rectified, as evidenced by the Class 387s, which have had a near-faultless introduction to service.

Whilst true and I'm not pretending Siemens are perfect, but Bombardier just don't have the good quality reputation. The Voyagers being the most unpopular InterCity train, screwing up the LUL signalling contract, not to mention the scandals including bribery; CA$1bn bailout and Metrolinx in Canada currently being in court with them as they want to rip up its CA$800million contract for new units. Just google bombardier, they have awful press, I'm baffled Bombardier are still winning contracts.

 

[CosherB]

Whilst true and I'm not pretending Siemens are perfect, but Bombardier just don't have the good quality reputation. The Voyagers being the most unpopular InterCity train, screwing up the LUL signalling contract, not to mention the scandals including bribery; CA$1bn bailout and Metrolinx in Canada currently being in court with them as they want to rip up its CA$800million contract for new units. Just google bombardier, they have awful press, I'm baffled Bombardier are still winning contracts.

Because they now make pretty decent trains in the UK? :roll:

 

[LNW-GW Joint]

Because they now make pretty decent trains in the UK? :roll:

In the larger picture, the UK production is tiny and not important to the future of the group.

 

[Bletchleyite]

Because they now make pretty decent trains in the UK? :roll:

They are certainly better than they were - the poor build quality mainly originates from Adtranz days. The Class 172 is of noticeably higher quality than the Class 170, for instance.

The Voyager, for all people dislike it, is pretty well screwed together, so that gives further credence to the idea that the quality issues don't come from that side.

 

[TH172341]

They are certainly better than they were - the poor build quality mainly originates from Adtranz days. The Class 172 is of noticeably higher quality than the Class 170, for instance.

The Voyager, for all people dislike it, is pretty well screwed together, so that gives further credence to the idea that the quality issues don't come from that side.

Very true - the materials used on the 172s are far better than what the 170 had and far less rattly! Also think the later 170s/168s from the 2004/5 period are far better than the older versions. I reckon the Aventras will be another step up.

Siemens definitely have the higher quality materals internally - the panels are tough as anything, don't seem to gather the dirt (the 170s' panels round the overhead racks are the opposite and the material can chip due to wear). Reliability wise both manufacturers' are pretty good (the Voyagers' are excellent in that respect). Siemens' do have their moments; seem to recall reading in the Production thread that an AWS button fell off recently!

 

[Mikey C]

In the larger picture, the UK production is tiny and not important to the future of the group.

I imagine UK sales are still reasonably significant, especially as we are buying shedloads of new rolling stock at the moment

 

[Bletchleyite]

Siemens definitely have the higher quality materals internally - the panels are tough as anything, don't seem to gather the dirt (the 170s' panels round the overhead racks are the opposite and the material can chip due to wear).

I do find it notable that other than the ground-in muck on the carpets and threadbare seat covers, the 350/1s basically look brand-new despite now being over 10 years old (I think). That's real quality of design and build. Electrostars and Turbostars of similar vintage are in far poorer condition, and then there are things on those that never worked properly like the interior doors.

 

[Jordeh]

Whilst true and I'm not pretending Siemens are perfect, but Bombardier just don't have the good quality reputation. The Voyagers being the most unpopular InterCity train, screwing up the LUL signalling contract, not to mention the scandals including bribery; CA$1bn bailout and Metrolinx in Canada currently being in court with them as they want to rip up its CA$800million contract for new units. Just google bombardier, they have awful press, I'm baffled Bombardier are still winning contracts.

Contracts generally do not take into account a company's reputation (I disagree regarding their reputation anyway).

Whilst enthusiasts may not like the Voyager it is in fact a good train with excellent reliability and performance.

If you want to see a genuinely bad quality train manufacturer look at AnsaldoBreda
https://en.wikipedia.org/wiki/V250_(train)
https://en.wikipedia.org/wiki/IC4

As well as the original trams they made for Birmingham & Manchester.