French train maker Alstom has given its strongest indication yet that it might quit its manufacturing plant in Ballarat, perhaps as early as mid-2015, costing about 70 local jobs.
The company, which makes Melbourne's current train model, the X'Trapolis, has no work booked at its Ballarat plant after June, having been cut last month from the competitive tender to design and build 25 "next-generation" Metro trains.
Alstom's global president, Henri Poupart-Lafarge, told Fairfax Media it was doubtful the Ballarat plant would remain in operation if the company was no longer making trains for Victoria.
"It's true that if Alstom was excluded from this contract, then it's an issue for our Ballarat factory and, very frankly, it's a threat to the future of Ballarat," Mr Poupart-Lafarge said.
Alstom bought the Ballarat factory in 1999 to set up a manufacturing base in Victoria, which has a policy requiring a minimum 30 per cent local content for trains.
Speaking at the InnoTrans international transport industry trade fare in Berlin, Mr Poupart-Lafarge said Alstom had made a decision to set up a base in Ballarat so it could satisfy that policy, but it was competing against overseas rivals without a local base. The X'Trapolis trains are part-manufactured in Poland, where labour costs are two-thirds lower, Alstom says.
"If the winners are a company which has not localised in Australia, then we say, OK, we should stop making the effort of localising in Australia, because there is no localisation premium," Mr Poupart-Lafarge said.
Fairfax Media revealed last month the two remaining bidders to design and make Melbourne's next-generation trains are Chinese government-owned China North Rail and South Korean manufacturer Hyundai Rotem.
China North Rail has subcontracted Bombardier, which owns a factory in Dandenong, to satisfy local content laws in its bid, and Hyundai Rotem has similarly subcontracted Downer, which has a train maintenance workshop in Newport.
The original target date of September 30 to sign contracts has not been met. Fairfax Media believes a new target date of October 30 has been set, just five days before the Napthine government enters caretaker mode.
A spokesman for the Department of Transport, Planning and Local Infrastructure declined to comment, arguing the date of contractual closure was commercially sensitive information.
The absence of local manufacturers competing to build the 25 trains prompted the Australian Industry Group to lobby the Napthine government not to turn its back on local manufacturing.
"Very importantly, this is the first tranche in a new generation of trains, so it is vital that Australian companies are given every opportunity," the group's Victorian director Tim Piper said.
The government should ensure the tender supported the local supply chain in the train industry, Mr Piper said.
A spokesman for the Department of Transport insisted the minimum 30 per cent local content mark would be met by the successful bidder, and new jobs would be created in Victoria.
"The project will be delivered," he said. "We are working with RTC to secure the best outcomes."
RTC, or the Rail Transformation Consortium, is upgrading the Dandenong line under a public-private partnership that includes the 25 new trains, four level crossing removals and new signalling. The consortium will receive up to $5.2 billion in availability payments between 2019 and 2034 for operating the upgraded line.
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