India’s plans for railway development are creating opportunities that Canadian major Bombardier is determined to exploit. Michael Beckmann, vice-president (group strategy) for Bombardier Transportation, spoke to Pallavi Aiyar about the company’s strategic interest in the market. Edited excerpts:
How important a market for Bombardier Transportation is India at present and, going forward, how do you expect this market to grow?
The key thing to note is that Bombardier Transportation has been in India with predecessor companies for more than 30 years. So, we really feel part of the household there. The Bric (Brazil, Russia, India and China) markets are important to many companies. But, for Bombardier, India and China are the most important strategically. This fact is clearly underlined by market studies, such as the one from UNIFE, our industry association, which puts growth of the railway market in Asia at some 4.4 per cent per annum for the next six years, driven mainly by India and China. Also, compare that growth in Europe, which is predicted to remain at about one per cent per year. So, we are not wondering whether or not to go to India, but how to best leverage what we already have there and how to best participate in India’s exciting growth and opportunities.
So, how do you intend to achieve these strategic aims?
There are three pillars to what we would like to further develop in India. First is the metro/mass transit business. We have taken a major step and developed in record time a greenfield site at Savli in Gujarat. That site is building metro cars for Delhi right now and we would like to leverage that and are looking for additional orders to serve additional growing Indian cities.
Second is the locomotives market where we have been active for many years on the propulsion side. The peculiar structure of the industry with Indian Railways controlling a larger proportion of the value chain has been a characteristic of this market. But, now there is a lot of activity because the transportation of goods is a bottleneck to India’s economic development and Indian Railways are looking to de-bottleneck this. There are two major opportunities — widely referred to as “Dankuni” and “Madhepura” projects, both geared towards increasing the capacity in India to supply locomotives to support the new freight corridors. We are in the bidding process.
The third pillar is the whole rail control/signaling business. We have been involved in rail control in India for many years. One of our biggest global showcases is the traffic management centre in Mumbai, which is very complex. But we are working on more than just that. We have just inaugurated state-of-the-art signaling for a mass transit line in Delhi that was partly developed in India. On top of that, there is our so-called product business. This is manufacturing of special signaling components, like track circuits, axle counters and so on. Lastly, there is the ETCS — the European train control system. We have a product for that, for which we would love to be considered as a supplier in India.
You constructed the Savli manufacturing facility from the greenfield stage to the ready-for-manufacturing stage in less than 18 months — a record for global industry standards and the fastest project ever implemented within Bombardier. How was this achieved and what does it tell us about the changing business environment in India?
There was a strong desire to have a large part of the Delhi metro production in India and we committed to that. But the plant in Savli resulted from a two-way pull and push. The pull came from the Gujarat state government, which was very interested in having the plant located there. The state government was excellent in swiftly responding to the needs and difficulties the company faced during the set-up period.
The push came from Bombardier’s past experience in the field that we leveraged, allocating the right resources. Some 20 years ago, Bombardier implemented a first transfer of technology to India with setting up a propulsion systems manufacturing site in Vadodara, close to the new Savli site. This experience and learnings from other countries enabled us to optimise the planning of this new manufacturing plant.
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Do you have plans to utilise the advantages of India as a manufacturing base at a more global level, by exporting?
We would love to do that. Having the plant in Savli makes sense since it is our centre of expertise for stainless steel vehicles for mass transit in Asia. So, we will look for opportunities to use it as an export base.
Bombardier is also very active in China. How do you compare the Indian and Chinese markets for rail?
If you look at rail, India was off to a slower start compared to China. China is operating a high-speed rail network already and was very ambitious in the last few years. China deserves to have credit for making the choice that rail is a good thing and also effectively succeeding in building its high-speed rail network. The availability of fast transport is definitely different in India at the moment. Nobody talks about high speed in India. My personal feeling is that, in India, nobody is pushing for monument or prestige projects. The approach is more like we are trying to provide better transportation for our people. Also, Indian Railways are focused on freight, which is not glamorous but it keeps the economy going. China is also doing that but there is quite an emphasis on monuments, like the high-speed rail network for people to look at as well.
Going ahead, what do you think the global prospects for railways are? How did the economic crisis impact your industry?
In general, we are optimistic about the rail market because, if you need to transport heavy goods or lots of people, rail — as a system — is the most efficient and environmentally friendly way. In Europe, where rail has a longer history, cities would collapse without it. So, the fundamentals for rail are very positive. But, the crisis has highlighted some new issues. Our customers are often big government entities and we had first thought public infrastructure would be more immune to budget cuts than other areas. But public budgets are, in fact, under pressure in many places and a lot of rail investments are fuelled by public budgets. I think the financing of specific projects might need some changes. In the medium term, PPP (public private partnerships) might be the way forward — something about which there is a lot of talk in India.