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Railway Engineering - UK - February 2015

“Network Rail is currently undertaking its ‘biggest investment in rail infrastructure since the Victorian era’, which is driven by capacity requirements and the modernisation of the UK rail network. However, recent delays in engineering works have highlighted continued shortcomings by Network Rail to deliver work on time. The rail operator will now have to demonstrate that it is capable of maintaining a decent service to passengers while enhancement work is carried out. This will - in addition to the higher efficiency saving targets imposed by the ORR for CP5 - put further pressure on Network Rail and its delivery partners to deliver projects more efficiently, on-time and at lower cost.”
– Claudia Preedy - Industrial Analyst

This report addresses the following key questions concerning the UK railway engineering market:

  • How has UK rail infrastructure investment developed in the last five years?
  • What has been the financial performance of the key players in the UK rail sector’s supply industry in recent years?
  • What are the key drivers for UK railway investment?
  • What are Network Rail’s expenditure plans up to 2019?
  • What is the projected future demand for rolling stock in Great Britain?

Network Rail is currently undertaking its “biggest investment in rail infrastructure since the Victorian era”. The investment is largely driven by capacity requirements and the modernisation of the rail network through enhancement and electrification schemes. Crossrail is set to continue to be the most significant new rail infrastructure project in the UK over the next three years, while the development of the high speed rail network HS2 will have a significant impact on rail infrastructure expenditure over the next two decades.

In its procurement process for CP5, Network Rail has moved away from competitive tendering and towards frameworks and alliances. This will result in the company forming closer, longterm relationships with its contractors, but also in a number of contractors losing work as it works with fewer suppliers. Recent delays in engineering works over the Christmas period in 2014 highlighted some continued shortcomings by Network Rail in delivering work on time. The rail operator will now have to demonstrate that it is capable of maintaining a decent service to passengers while enhancement work is carried out. This will, in addition to the higher efficiency savings targets imposed by the ORR for CP5, put further pressure on Network Rail and its delivery partners to deliver projects more efficiently and and on-time.

This report analyses expenditure by the rail sector in both rolling stock and infrastructure investments. As such, the market includes the following sectors:

  • Civil engineering work
  • Track and signalling work, including new routes and new electrification
  • Rolling stock, including eligible refurbishment work
  • Stations, including retail outlet buildings
  • Other expenditure associated with the rail business

 

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Table of contents

  1. Executive Summary

      • The market
        • Crossrail dominates government funding for the railway industry
          • Figure 1: Government railway funding, 2010-14
        • Network Rail expenditure on renewal schemes up 34% to £3.7 billion in 2013/14
          • Figure 2: Rail Renewal Expenditure by Asset, 2013/14
        • Total expenditure on rail network enhancement schemes has doubled since 2009/10
          • Average age of rolling stock has increased since 2005/06
            • Network Rail granted £24.9 billion for capital spending during CP5 2014-19
              • Figure 3: Forecast capital expenditure for CP5, by type, 2014/15-2018/19
            • Crossrail will be the largest rail infrastructure project over the next few years
              • The largest rail infrastructure project over the next two decades is set to be the development of the national high speed rail network HS2
                • Figure 4: Cost of enhancement projects in England & Wales during CP5, 2014/15-2018/19
              • Market factors
                • Network Rail’s funding and delivery outputs are agreed in five-year blocks called control periods
                  • Increase in passenger journeys to drive investment in rail infrastructure and capacity
                    • Companies
                      • Network Rail planned to procure 65% of its CP5 work bank by April 2014, rising to 85% by 2015
                        • Network Rail still shows some shortcomings in delivering work on time
                          • What we think
                          • Introduction

                              • Definitions
                                • Methodology
                                  • Abbreviations
                                    • Market positioning
                                    • UK Economy

                                      • Overview
                                        • Figure 5: UK GDP quarterly development, 2003-14
                                        • Figure 6: UK GDP in economic downturns and recoveries since 1979
                                      • Inflation
                                        • Interest rates
                                          • Consumer spending
                                            • Manufacturing
                                              • Business investment
                                                • Imports
                                                  • Exports
                                                  • Market Factors

                                                    • Key points
                                                    • Rail Finance

                                                      • Key points
                                                        • Overview
                                                          • Figure 7: Government railway funding, by type, 2010-14
                                                          • Figure 8: Private investment in railways, by type, 2010-14
                                                      • Infrastructure Investment

                                                        • Key points
                                                          • Introduction
                                                            • Figure 9: Rail infrastructure in Great Britain, 201014
                                                            • Figure 10: Rail infrastructure in Great Britain, 2010-14
                                                            • Figure 11: Rail industry infrastructure activity, 2009-14
                                                            • Figure 12: Major rail infrastructure projects delivered during CP4, 2009-14
                                                          • Capital expenditure
                                                            • Figure 13: Rail infrastructure renewals, enhancements & maintenance expenditure in Great Britain, 2010-14
                                                            • Figure 14: Rail infrastructure renewals, enhancements & maintenance expenditure in Great Britain, 2010-14
                                                          • Expenditure Analysis
                                                            • Figure 15: Renewal expenditure by asset, 2010-14
                                                            • Figure 16: Private sector investment in track and signalling, 2010-14
                                                            • Figure 17: Private sector investment in stations, 2010-14
                                                            • Figure 18: Analysis of enhancement expenditure in England and Wales, by type, 2010-14
                                                            • Figure 19: Analysis of Enhancement Expenditure in Scotland, by Type, 2010-2014
                                                            • Figure 20: Analysis of enhancement expenditure on non-PR08 funded schemes by type, 2010-14
                                                        • Rolling Stock

                                                          • Key points
                                                            • Introduction
                                                                • Figure 21: Average age of rolling stock, by sector, 2010-14
                                                                • Figure 22: Average age of rolling stock, by sector, 2010-14
                                                                • Figure 23: Average Age of Rolling Stock, by Company, 2010-14
                                                                • Figure 24: Number of passenger journeys, by sector, 2010-14
                                                                • Figure 25: Share of passenger journeys, by sector, 2012/13
                                                                • Figure 26: Distance covered by freight trains, 2010-14
                                                                • Figure 27: Rolling Stock Parc, as of March 2014
                                                              • Capital expenditure
                                                                  • Figure 28: Private sector rolling stock investment in Great Britain, 2010-14
                                                                  • Figure 29: Rolling Stock Investment in Great Britain, 2010-14
                                                              • Supply Sources

                                                                • Key points
                                                                  • Production
                                                                    • Overview
                                                                        • Figure 30: UK production of locomotives, rolling stock and other equipment, 2009-13
                                                                      • Segmentation
                                                                        • Figure 31: Segmentation of the UK production of locomotives, rolling stock and other equipment, by type, 2009-13
                                                                      • Imports
                                                                        • Overview
                                                                          • Figure 32: UK imports of locomotives, rolling stock and other equipment, 2010-14
                                                                        • Segmentation
                                                                          • Figure 33: Segmentation of UK imports of locomotives, rolling stock and other equipment, by type, 2010-14
                                                                          • Figure 34: UK imports of locomotives, rolling stock and other equipment, by type, 2014
                                                                        • Exports
                                                                          • Overview
                                                                            • Figure 35: UK exports of locomotives, rolling stock and other equipment, 2010-14
                                                                          • Segmentation
                                                                            • Figure 36: Segmentation of UK exports of locomotives, rolling stock and other equipment, by type, 2010-14
                                                                        • Investment Profiles

                                                                          • Chapter summary
                                                                            • Introduction
                                                                              • Figure 37: Train Operating Companies, as of January 2015
                                                                            • Train operating companies
                                                                              • Abellio Greater Anglia
                                                                                • Figure 38: Key statistics for Abellio Greater Anglia, 2012-14
                                                                              • Arriva Trains Wales
                                                                                • Figure 39: Key statistics for Arriva Trains Wales, 2012-14
                                                                              • c2c
                                                                                • Figure 40: Key statistics for c2c, 2012-14
                                                                              • Chiltern Railways
                                                                                • Figure 41: Key statistics for Chiltern Railways, 2012-14
                                                                              • Cross Country
                                                                                • Figure 42: Key statistics for Cross Country, 2012-14
                                                                              • East Coast
                                                                                  • Figure 43: Key statistics for East Coast, 2012-14
                                                                                • East Midlands Trains
                                                                                  • Figure 44: Key Statistics for East Midlands Trains, 2012-14
                                                                                • Eurostar
                                                                                  • First Capital Connect
                                                                                      • Figure 45: Key statistics for First Capital Connect, 2012-14
                                                                                    • First Great Western
                                                                                        • Figure 46: Key statistics for First Great Western, 2012-14
                                                                                      • First Hull Trains
                                                                                        • First ScotRail
                                                                                          • Figure 47: Key statistics for First ScotRail, 2012-14
                                                                                        • First TransPennine Express
                                                                                            • Figure 48: Key Statistics for First TransPennine Express, 2012-14
                                                                                          • Grand Central
                                                                                            • Heathrow Connect
                                                                                              • Heathrow Express
                                                                                                • London Midland
                                                                                                  • Figure 49: Key statistics for London Midland, 2012-14
                                                                                                • London Overground
                                                                                                    • Figure 50: Key statistics for London Overground, 2012-14
                                                                                                  • Merseyrail
                                                                                                    • Figure 51: Key statistics for Merseyrail, 2012-14
                                                                                                  • Northern Rail
                                                                                                    • Figure 52: Key statistics for Northern Rail, 2012-14
                                                                                                  • North Yorkshire Moors Railway
                                                                                                    • Southeastern
                                                                                                        • Figure 53: Key Statistics for Southeastern, 2012-14
                                                                                                      • Southern
                                                                                                          • Figure 54: Key Statistics for Southern, 2012-14
                                                                                                        • South West Trains
                                                                                                          • Figure 55: Key Statistics for South West Trains, 2012-14
                                                                                                        • Virgin Trains
                                                                                                          • Figure 56: Key statistics for Virgin Trains, 2012-14
                                                                                                        • West Coast Railway
                                                                                                          • Freight Operators
                                                                                                            • Colas Rail
                                                                                                                • Figure 57: Key statistics for Colas Rail, 2014
                                                                                                              • Direct Rail Services
                                                                                                                  • Figure 58: Key statistics for Direct Rail Services, 2014
                                                                                                                • DB Schenker Rail
                                                                                                                  • Freightliner Group
                                                                                                                    • Figure 59: Key Statistics for Freightliner in the UK, 2014
                                                                                                                  • GB Railfreight
                                                                                                                      • Figure 60: Key statistics for GB Railfreight, 2014
                                                                                                                    • Mendip Rail
                                                                                                                      • Rolling Stock Operating Companies
                                                                                                                        • Angel Trains
                                                                                                                          • Porterbrook Leasing Company
                                                                                                                            • Eversholt Rail Group
                                                                                                                              • QW Rail Leasing
                                                                                                                                • Network Rail
                                                                                                                                  • London & Continental Railways/HS1
                                                                                                                                    • High Speed 2 Ltd
                                                                                                                                    • Supply Industry Structure

                                                                                                                                      • Chapter summary
                                                                                                                                        • Industry Development
                                                                                                                                          • Figure 61: Analysis of the changes in the structure of the railway & tramway rolling stock manufacturing industry, 2010-14
                                                                                                                                        • Structure by employment
                                                                                                                                          • Figure 62: Analysis of the employment structure of the railway & tramway rolling stock manufacturing industry, 2013-14
                                                                                                                                        • Structure by turnover
                                                                                                                                          • Figure 63: Analysis of the financial structure of the railway & tramway rolling stock manufacturing industry, 2013-14
                                                                                                                                      • Company Profiles

                                                                                                                                        • Bombardier Transportation UK

                                                                                                                                              • Figure 64: Financial analysis of Bombardier Transportation UK, 2009-13
                                                                                                                                          • AMEC Foster Wheeler (formerly AMEC)

                                                                                                                                                • Figure 65: Financial analysis of AMEC, 2009-13
                                                                                                                                            • Amey/Amey Rail

                                                                                                                                                  • Figure 66: Financial analysis of Amey UK, 2009-13
                                                                                                                                              • Amey Rail

                                                                                                                                                    • Figure 67: Financial analysis of Amey Rail, 2009-13
                                                                                                                                                • Angel Trains

                                                                                                                                                    • Figure 68: Financial analysis of Angel Trains, 2010-13
                                                                                                                                                • Balfour Beatty Group

                                                                                                                                                      • Figure 69: Financial analysis of Balfour Beatty, 2009-13
                                                                                                                                                      • Figure 70: Financial analysis of Balfour Beatty by segment, 2012-13
                                                                                                                                                  • Knorr-Bremse Group

                                                                                                                                                        • Figure 71: Financial analysis of Knorr-Bremse Rail Systems (UK), 2009-13
                                                                                                                                                    • Siemens Rail Automation Holdings

                                                                                                                                                        • Figure 72: Financial analysis of Siemens Rail Automation Holdings, 2009-13
                                                                                                                                                    • Babcock Rail

                                                                                                                                                          • Figure 73: Financial analysis of Babcock Rail, 2010-14
                                                                                                                                                      • Siemens

                                                                                                                                                            • Figure 74: Financial analysis of Siemens, 2009-13
                                                                                                                                                        • Network Rail

                                                                                                                                                              • Figure 75: Financial analysis of Network Rail, 2010-14
                                                                                                                                                          • Eversholt Rail (UK)

                                                                                                                                                              • Figure 76: Financial analysis of Eversholt Rail (UK), 2010-13
                                                                                                                                                          • Porterbrook Leasing Company

                                                                                                                                                                • Figure 77: Financial analysis of Porterbrook Leasing Company, 2009-13
                                                                                                                                                            • Hitachi Rail Europe

                                                                                                                                                                  • Figure 78: Financial analysis of Hitachi Rail Europe, 2010-14
                                                                                                                                                              • Forecast

                                                                                                                                                                • Chapter summary
                                                                                                                                                                  • Market size
                                                                                                                                                                    • ORR introduces new targets for Network Rail’s asset management for CP5
                                                                                                                                                                      • Move towards framework agreements during CP5
                                                                                                                                                                        • Major CP5 contracts awarded by Network Rail include:
                                                                                                                                                                          • Highlights of Network Rail’s investment proposals
                                                                                                                                                                            • Infrastructure
                                                                                                                                                                                • Figure 79: Rail infrastructure projects pipeline, as of December 2014
                                                                                                                                                                              • High speed rail network (HS2)
                                                                                                                                                                                • Proposed new rail lines
                                                                                                                                                                                    • Figure 80: Forecast rail maintenance expenditure for CP5, 2014/15-2018/19
                                                                                                                                                                                    • Figure 81: Forecast rail maintenance expenditure for CP5, 2013/14-2018/19
                                                                                                                                                                                    • Figure 82: Forecast rail maintenance expenditure for CP5, by Activity, 2014/15-2018/19
                                                                                                                                                                                    • Figure 83: Forecast capital expenditure for CP5, by type, 2014/15-2018/19
                                                                                                                                                                                    • Figure 84: Forecast capital expenditure for CP5, by type, 2014/15-2018/19
                                                                                                                                                                                    • Figure 85: Forecast rail renewals expenditure for CP5, by activity, 2014/15-2018/19
                                                                                                                                                                                    • Figure 86: Forecast rail track renewal activity for CP5, by activity, 2014/15-2018/19 and CP5 total
                                                                                                                                                                                    • Figure 87: Forecast rail structures renewal for CP5, by activity, 2014/15-2018/19
                                                                                                                                                                                    • Figure 88: Forecast rail electrification & plant renewal for CP5, by activity, 2014/15-2018/19
                                                                                                                                                                                    • Figure 89: Forecast building renewal for CP5, by activity, 2014/15-2018/19
                                                                                                                                                                                    • Figure 90: Cost of enhancement projects during CP5
                                                                                                                                                                                  • Rolling stock
                                                                                                                                                                                      • Figure 91: Fleet Size Requirements for Passenger Fleet under a Low Growth Forecast, 2014-43
                                                                                                                                                                                      • Figure 92: Fleet Size Requirements for Passenger Fleet under a Medium Growth Forecast, 2014-43
                                                                                                                                                                                      • Figure 93: Fleet Size Requirements for Passenger Fleet under a High Growth Forecast, 2014-43
                                                                                                                                                                                      • Figure 94: Role of electric rolling stock under the medium growth forecast, 2014-2043
                                                                                                                                                                                  • Further Sources & Contacts

                                                                                                                                                                                      • Trade exhibitions

                                                                                                                                                                                      Companies Covered

                                                                                                                                                                                      To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                      Railway Engineering - UK - February 2015

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