KiwiRail chief executive Jim Quinn delivered a bitter pill to the state owned company's engineering workers yesterday, confirming KiwiRail had decided not to bid for its own contract to build carriages and engines for the Auckland rail system.
Jim Quinn made the announcement in Dunedin, after touring KiwiRail's Hillside engineering works.
The decision was condemned by the Rail and Maritime Transport Union, which said Quinn and Transport Minister Stephen Joyce who has publicly doubted KiwiRail's ability to fulfil the contract were the only two people in New Zealand who did not think the local workshops could handle the job.
Hillside workers alongside Dunedin City Council, the Otago Chamber of Commerce, local MPs and engineering firms had been vocal in campaigning for KiwiRail to keep the multi-million dollar contract in-house and build 38 three-car, electric multiple units (EMUs) and 13 electric locomotives in Dunedin and KiwiRail's Woburn workshop in Wellington.
They gave Quinn a cool reception.
''I think they were realistic, because we have always been pretty clear about what we thought would happen,'' Quinn said.
''Because we thought there was some logic (to Hillside's case) we have been taking our time to consider all the aspects of that. I've tried to be as open in our process as we can be.
''Were they disappointed? Yes they were, they would like to have heard the reverse, but I think they also understand the decision framework. I'm sure they don't agree with some elements of it because it is personal to them and they would like to have seen this opportunity channelled through here, but this opportunity is not closed.
''All we are saying is that we are not going to bid. We are absolutely going to represent our manufacturing and maintenance capabilities through the process, and that presents opportunities as we look ahead.''
Rail and Maritime Transport Union General Secretary Wayne Butson said KiwiRail's decision was a slap in the face for workers at Hillside and Woburn.
The union had commissioned a study from economic research firm BERL, which estimated a New Zealand-build could be worth $250 million to GDP and create 1300 jobs.
''Rail workers are keen to do this work, and the economic case backs them up,'' Butson said.
''This is defeatism at its worst. We are now calling on the Prime Minister to consider the national interest in this decision and take all steps possible to ensure this work is done locally.''
Quinn said it was important that he had been ''held to account'' by the Hillside workers, and that had warranted his meeting them and explaining the company's thinking.
Quinn praised the workers at both Hillside and Woburn and said KiwiRail's decision in no way reflected on the great confidence the company had in its New Zealand workshops.
However, he also said rail units of this kind had never been built in New Zealand before, and the Auckland contract was a one-off order on a tight time frame.
''Because of those dynamics we don't think we would be cost-competitive. Nor do we think we would be able to deliver on time, so therefore this is not the right path for us to follow.''
The contract will now almost certainly be won by an overseas firm.
Quinn held out some hope for KiwiRail engineers getting work from the successful bidder, and said all tenderers would be provided with information on the skills and resources KiwiRail could provide to add local content.
Dunedin Mayor Peter Chin remained hopeful there might eventually be some spin-off for Hillside workers when the contract is eventually let.
''It is inappropriate for me to be drawn into commenting on KiwiRail's position, but I will say this all is not lost,'' Chin said.
KiwiRail will call for expressions of interest in the coming days, and intended to have a contract finalised in the first half of next year.
- D Scene