How long before new train bubble bursts?

Derby. Doncaster. Darlington. All classic locomotive works, their names recognisable to generations of railwaymen and generations of enthusiasts.
Lest this all become about alliteration, I’ll add Ashford, Eastleigh, Crewe, Swindon and St Rollox.
Of all these names, only Derby still builds trains. Some of the others remain involved in rail, mainly by refurbishing stock.
Railway companies built and ran these works for their own needs. Private companies supplemented their output and build for export – Vulcan Foundry’s order book reads like an ode to empire. But markets home and abroad fell away and there were more factories than work. Closures were inevitable, each accompanied by great sadness as the final shift filed through the gates.
For towns such as Swindon, the railway works was the town and the town was the works. Closure hit hard.
Privatisation two decades ago brought a three-year hiatus in orders for new stock, putting more pressure on the factories that remained. Derby survived and would soon be producing large numbers of Electrostar EMUs and Turbostar DMUs as new train operators looked to replace ageing stock. The private works at Washwood Heath in Birmingham made the leap from public to private orders and would assemble Virgin’s fleet of Class 390 tilting Pendolino EMUs under Alstom’s ownership.
Despite this and other orders, Alstom closed Washwood Heath in 2005. There were plenty of orders but Alstom landed too few. Siemens did very well, taking a major order to replace Mk 1 stock running from Waterloo. However, it built these trains in Germany and this led to criticism when it won a deal to build 1,140 vehicles for Thameslink in place of Bombardier in Derby.
Bombardier had built West Coast’s and CrossCounty’s Voyager fleets in Belgium but market consolidation later saw it take over Derby from Adtranz. Having lost to Siemens on Thameslink, Bombardier and Derby won Crossrail’s 630-vehicle order.
Meanwhile, Hitachi won government’s order for 866 Intercity Express Programme vehicles. The initial trains came from Japan but Hitachi built a factory at Newton Aycliffe in Country Durham (around half way between Darlington and British Rail’s old wagon works in Shildon, which closed in the early 1980s). This factory is now assembling trains from bodyshells brought from abroad. Newton Aycliffe doesn’t have the equipment to build its own shells.
All three orders, Thameslink, Crossrail and IEP, are being built and delivered now. They form part of an overall order book that stretches to over 7,000 vehicles, a little over half the total UK fleet. These orders are split between five manufacturers: Bombardier, Siemens, Hitachi, CAF and Stadler. The latter is new to Britain while CAF joined Siemens to build Class 332 and Class 333 EMUs in 1997 and 2001 respectively.
CAF is building in Spain EMUs and DMUs for Northern, EMUs for TransPennine Express and Mk 5 coaches for TPE and Caledonian Sleeper. It announced last summer plans to build a UK factory in Newport, South Wales. It clearly expects rolling stock orders to continue, saying back then: “The plant would also enable the company to tackle new contracts awarded in the United Kingdom, a country in which the company expects to contribute to railway development in the years to come, as well as maintenance and train servicing activities. The plant is expected to be operating by mid-2018.”
Having built thousands of vehicles for Britain over the last 20 years, Siemens revealed in early March that it hoped to build a plant in Goole. Siemens littered its announcement with caveats: “This development, which could mean an investment of up to £200m, is a major step forward for Siemens’ journey in the UK. Siemens aims to start phased development of the 67 acre site later this year, if investment conditions are met, and subject to the company’s success in major future orders.”
Goole and Newport would give Britain four major factories to build trains. In addition, Alstom is establishing a refurbishment facility in Widnes. The factories come at a time when it’s never been cheaper to buy new trains. Not only is the price cheap but finance is also cheap. There’s never been a better time to build trains in Britain. Recent franchise awards have come with hefty fleet plans. Greater Anglia is replacing its whole fleet, South Western Railway will see a new inner-suburban fleet and West Midlands is looking to replace a good chunk of its regional fleet.
They key question is whether this glut of orders will continue. There’s a feeling of a bubble growing. And bubbles burst. If trains are left redundant part way through their lives, replaced by factory fresh versions, then financiers will start charging more to recoup their investments over a shorter period. Train operators will be faced with higher bills and so new stock will look less attractive.
The next few franchise competitions will show whether the trend towards new trains continues. Will the winning Southeastern bidder follow SWR by replacing its inner-suburban fleet? East Midlands need a fleet to replace its HSTs and here bi-modes look favourite given that the DfT will not fund electrification. That puts Hitachi in a strong position because it is supplying similar trains to several operators on the back of its IEP win. However, Hitachi is also struggling to fulfil its current order book with deliveries to ScotRail late and putting in peril a much wider cascade of trains.
CrossCountry’s fleet dates from 2000-2002 and is approaching its half-life making refurbishment more sensible than replacement. Great Western is introducing IEPs now, has taken on a fleet of EMUs for suburban services and cascaded early-1990’s DMUs westwards. Next on the schedule is TSGN, including Thameslink with its new fleet. Then it’s Chiltern was also has a modern fleet of DMUs followed by TPE which is yet to see the trains it now has on order. That takes the schedule out to 2021.
It seems very unlikely that major orders will come from these franchise, less for Southeastern and East Midlands in the next 18 months. Competition for orders will be fierce but as things stand today, Britain does not need four train factories.
Forget exports. Why would Siemens, CAF, Bombardier or Hitachi build trains in Britain for elsewhere when they have factories abroad that can take advantage of the European Union’s single market and trade deals. Siemens will build in Germany, Bombardier in any of several countries, Hitachi in Italy and CAF in Spain.
So here’s my prediction. Goole will not see a Siemens factory, CAF will have second thoughts while Hitachi’s facility will linger longer but fold eventually and Derby will witness several more near-death experiences.

This article first appeared in RAIL 848, published on March 14 2018. Postscript: Siemens won a London Underground order later in 2018 and plans to build the trains in Goole.