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Hitachi Shares Hit By Doubts Over Uk Train Deal

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http://business.timesonline.co.uk/tol/business/industry_sectors/engineering/article7145278.ece

Shares in Hitachi plummeted earlier today amid fears that the possible cancellation of £7.5 billion worth of train orders by the British government could trigger similar capitulation by other countries.

The 6.5 per cent plunge in Hitachi’s stock followed signs that the Japanese engineering conglomerate may become an early and deliberately high-profile foreign victim of the UK government’s new spending cuts – part of the “pain” promised over the weekend by David Cameron.

The worry now is that other governments may follow suit, said analysts in Tokyo. Over the weekend, a meeting of G20 finance ministers reflected significant changes in the political mood: Greece’s sovereign debt crisis prompted the group to endorse fiscal consolidation where it had previously backed the continuation of government stimulus.

Hitachi, in common with rival French and German bidders for major rail contracts, may now find a number of potentially lucrative projects in the United States, Latin America and Europe coming under sudden “reappraisal” as the political focus shifts towards spending cuts.

For the time being, Hitachi has not lost its status of preferred bidder for the British contract, although the company is not commenting on the possibility of an order cancellation until the Audit Commission delivers its impending “value for money” reassessment of the deal. A spokesman for the Japanese company admitted that it was “open to adjustment as the situation changes” - a sign that it would consider renegotiating the price of the bid.

£7.5bn we don't need to spend and we don't have the money.

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You can see the western mood switching from stimulus - the wise choice.

To cutbacks; we have to sacrifice for the alleged excesses of the last decade - the great depression choice.

Of course the main stimulus we did was bailing out bankers, which didn't help mainstreet much.

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The BIG one is rates, at what point does the World turn round & DEMAND 4/5/6/7 + % rates off us?

I also think the £ will slip going into the winter & oil climb......£1.50 a litre.

Mike

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You can see the western mood switching from stimulus - the wise choice.

To cutbacks; we have to sacrifice for the alleged excesses of the last decade - the great depression choice.

Of course the main stimulus we did was bailing out bankers, which didn't help mainstreet much.

"Alleged excesses" - check out the levels of personal, government and corporate debt, there is no "alleged" here at all.

Very little stimulus and investment lots of bailout and bubble propping but nothing of any long term worth to the economy and the population - quite the reverse.

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Seven billion for 1,300 carriages?

That's £5.4 million for each carriage!!!

How in the name of pigfückerisation can a metal box containing 50 seats or so and sitting on some wheels cost that much?

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Seven billion for 1,300 carriages?

That's £5.4 million for each carriage!!!

How in the name of pigfückerisation can a metal box containing 50 seats or so and sitting on some wheels cost that much?

A million for each carriage, the rest, just milking it.

Didn't we used to make all our own rolling stock and even export it, or am I thinking of some other non service

sector miracle economy?

Edited by Olebrum

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The BIG one is rates, at what point does the World turn round & DEMAND 4/5/6/7 + % rates off us?

I also think the £ will slip going into the winter & oil climb......£1.50 a litre.

Mike

Or else what?

Threaten to buy J-bonds?

Get a grip.

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Seven billion for 1,300 carriages?

That's £5.4 million for each carriage!!!

How in the name of pigfückerisation can a metal box containing 50 seats or so and sitting on some wheels cost that much?

It's product + maintenance. I guess most of the cost will be some sort of servicing contract for the next 10, 15 or 20 years?

It probably also includes up-front costs for creating/updating factories or maintenance depots in the UK etc.

I guess trains aren't built like cars, i.e. on a highly automated production line, so each carriage is more or less 'hand-built' which will increase the manufacturing costs. Setting up a fully automated production line for < 1,500 carriages is probably not cost-effective. There also seems to be less shared parts, e.g. trains in europe have different (wider or narrower, not sure) tracks to the UK - which is why Eurostar has to have its own separate track. Different safety systems (although the EU is working on harmonising them). Etc.

Making things is expensive! It's only massive automation and cheap Chinese/Asian labour that has fooled us otherwise.

But on the other hand, it is a huge amount of money!

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It's product + maintenance. I guess most of the cost will be some sort of servicing contract for the next 10, 15 or 20 years?

It probably also includes up-front costs for creating/updating factories or maintenance depots in the UK etc.

I guess trains aren't built like cars, i.e. on a highly automated production line, so each carriage is more or less 'hand-built' which will increase the manufacturing costs. Setting up a fully automated production line for < 1,500 carriages is probably not cost-effective. There also seems to be less shared parts, e.g. trains in europe have different (wider or narrower, not sure) tracks to the UK - which is why Eurostar has to have its own separate track. Different safety systems (although the EU is working on harmonising them). Etc.

Making things is expensive! It's only massive automation and cheap Chinese/Asian labour that has fooled us otherwise.

But on the other hand, it is a huge amount of money!

Come on, this is 1,500 carriages and a budget of billions. Or are billions worth peanuts now.

Even the bloody victorians set up espoke production lines for turning out steam engines at much lower production rates than this.

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It's product + maintenance. I guess most of the cost will be some sort of servicing contract for the next 10, 15 or 20 years?

It probably also includes up-front costs for creating/updating factories or maintenance depots in the UK etc.

I guess trains aren't built like cars, i.e. on a highly automated production line, so each carriage is more or less 'hand-built' which will increase the manufacturing costs. Setting up a fully automated production line for < 1,500 carriages is probably not cost-effective. There also seems to be less shared parts, e.g. trains in europe have different (wider or narrower, not sure) tracks to the UK - which is why Eurostar has to have its own separate track. Different safety systems (although the EU is working on harmonising them). Etc.

Making things is expensive! It's only massive automation and cheap Chinese/Asian labour that has fooled us otherwise.

But on the other hand, it is a huge amount of money!

France has the same track width as us. Spain is narrower. Ireland and Northern Ireland are wider. The Paris - Barcelona train has adjustable wheels which require a 15 minute stop at the border to change over.

The TGV power supply and signalling system is different to ours which is why Eurostar runs on different tracks. The power supplies south of the Thames are different from those north of the Thames, so they need different trains, and Thameslink needs trains with dual power supplies so they can run on both.

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Of course the main stimulus we did was bailing out bankers, which didn't help mainstreet much.

It didn't help Main Street? Off course it did.

My savings were all in HBOS at the time that Lehmans went bust , if i and all the other people with money on deposit had lost the lot then there wouldn't have been many people shopping down Main St.

Anybody with money in the banking system got bailed out not just the bankers.

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They used to make the trains near Derby , my grandfather used to work at the railway making them.These hitachi ones were supposed to be made in the same workshop i believe.

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Come on, this is 1,500 carriages and a budget of billions. Or are billions worth peanuts now.

Even the bloody victorians set up espoke production lines for turning out steam engines at much lower production rates than this.

It's 1,500 carriages + maintenance for 'x' years. The maintenance is the most expensive part. Say £500 Million for the initial production, then ~£500million/year for 14 years. It doesn't sound so bad put that way. Still expensive but I think people need to understand that big projects cost a lot of money. Trains are not cheap consumer goods that you can just throw away every 3 years...

When I said production lines I meant the highly automated ones with robots. They are much cheaper (e.g. fewer workers needed) than a 'manual' production line - which would be more like the Victorian system anyway (without the pittance of a wage and no health'n'safety costs). But setting them up requires more up-front design and cost which you can amortise over 10's or 100's thousands of cars but not only a few hundreds of carriages.

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It's 1,500 carriages + maintenance for 'x' years. The maintenance is the most expensive part. Say £500 Million for the initial production, then ~£500million/year for 14 years. It doesn't sound so bad put that way. Still expensive but I think people need to understand that big projects cost a lot of money. Trains are not cheap consumer goods that you can just throw away every 3 years...

When I said production lines I meant the highly automated ones with robots. They are much cheaper (e.g. fewer workers needed) than a 'manual' production line - which would be more like the Victorian system anyway (without the pittance of a wage and no health'n'safety costs). But setting them up requires more up-front design and cost which you can amortise over 10's or 100's thousands of cars but not only a few hundreds of carriages.

Going on those figures then if they need that much maintenance it doesn't say much for the design. Seriously, this is just rolling stock, jet engines with ceramic blades working at the extremes of engineering limits it is not.

Design wise basically there is little difference in the overall design than 100 years ago all the other bells and whistles added since then are largely common across all the other carriages on other that are produced for other countries. We are talking multi billions here I just don't see where the deisgn/manufacture nor maintenance figures add up.

Edited by OnlyMe

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Buying these trains surely is better for the UK consumer than sending the money to Africa for overseas aid?

You're getting a tangible asset in return for your taxes rather than chucking it down an increasingly larger black hole.

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Bigger the contracts cost the more that can be creamed off by all the politcians and mandarins inbetween - surely not? :o

Also, when a country no longer has the ability to make things - engineering - a foreign firm can charge whatever it wants.

It truly staggers me that the UK is in the situation where it spends billions on aircraft carriers, trains, whatever and basically gives the cash to a foreigner instead of building the stuff here.

Yes, spend 7.5 billion on trains but spend it on a British firm in this country hiring British people - even if it means the Govt setting up the company from stratch.

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Going on those figures then if they need that much maintenance it doesn't say much for the design. Seriously, this is just rolling stock, jet engines with ceramic blades working at the extremes of engineering limits it is not.

Design wise basically there is little difference in the overall design than 100 years ago all the other bells and whistles added since then are largely common across all the other carriages on other that are produced for other countries. We are talking multi billions here I just don't see where the deisgn/manufacture nor maintenance figures add up.

I agree with you really - I expect the excess is really fattening the profit margin of all the middlemen.

But even without that I wouldn't be surprised if it was still ~£5Bn. Maintenance will always be high because these things are being used day-in day-out almost 365 days/year. It's not like a car when if something goes pop you can take it to the garage. The maintenance needs to be done constantly to avoid it ever going pop in the first place.

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Bigger the contracts cost the more that can be creamed off by all the politcians and mandarins inbetween - surely not? :o

Also, when a country no longer has the ability to make things - engineering - a foreign firm can charge whatever it wants.

It truly staggers me that the UK is in the situation where it spends billions on aircraft carriers, trains, whatever and basically gives the cash to a foreigner instead of building the stuff here.

Yes, spend 7.5 billion on trains but spend it on a British firm in this country hiring British people - even if it means the Govt setting up the company from stratch.

Yeah, brilliant, lets set up some train builder, pump it full of billions of state aid for ever more. If we're lucky we'll get a couple of thousand low paid manufacturing jobs out of it.

Fortunately, the French, Brazillians, Italians, Germans and Japanese are already massively subsidising their train building industries. So we can make them all compete for a low fixed price and let their governments soak up the red ink if it all goes tits up.

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well we could just build them here.

We've got former facilities dotted all around the UK....york,crewe and a couple oop north that could easily be utilised.

most of the people that used to build these things are now on the dole,I think they'd probably like their jobs back.

The total spend,if you take this into account is way more than 7.5Bn......you'll recover a few extra billion in benefits payments that are no longer required.

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This is a 30 year lease.

Agility trains (a JV of Hitachi and Laing) would procure the trains, maintain them and lease them for 30 years. About 70% of he contract value is in the maintenance.

This works out to just under £2 million per carriage, wiht maintenance of about £150k per year per carriage. For state of the art high speed trains, with the latest safety specifications, it's not that awful.

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Seven billion for 1,300 carriages?

That's £5.4 million for each carriage!!!

How in the name of pigfückerisation can a metal box containing 50 seats or so and sitting on some wheels cost that much?

boris's buses cost over a million each.

the new trams are costing an arm and a leg for Manchester...

(And the work is needing more engineering .... wonder if thats a lowest bidder making it cost more than the highest bid)

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They used to make the trains near Derby , my grandfather used to work at the railway making them.These hitachi ones were supposed to be made in the same workshop i believe.

Well, I'd hope that would be the case. I think the government should scrap, but if it doesn't at the very minimum this stuff should be built in the UK. Think of the massive amount of jobs etc that this brings.

Now OK, maybe it would be more expensive to build them here. But is it really that expensive once you take into account the dole you have to pay people to be unemployed, the jobs that come to the wider ecomony as a result ?

We need to look more at the big picture rather than bottom line numbers.

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Gee I'm so glad we privatised the railways, that way it's private companies that have to invest in new trains and new high-speed rail lines instead of the taxpayer.

Oh wait, what's that you say? We privatised them but still have to pay all the investment costs?

That cannot be so? That would be national fraud?

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  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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