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Railway Engineering - UK - March 2016

“The government is not expected to get heavily involved in the procurement of future rolling stock for the existing railway, as has been the case with recent major orders for IEP, Thameslink and Crossrail. The stated government policy is for train operators and financiers to lead the planning and delivery of rolling stock, unless special circumstances apply. The government’s view is that effective competition for franchises is the best way to secure value for money in the supply of rolling stock, which is to be achieved by private sector procurement.”
– Claudia Preedy - B2B analyst

This report answers the following key questions:

  • 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 for Control Period Five?
  • What is the projected future demand for rolling stock in Great Britain?

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Table of contents

  1. Executive Summary

      • The market
        • Growth in government funding for the railway industry driven by Crossrail
          • Figure 1: Government railway funding, 2011-15
        • Network Rail spending on renewal schemes in 2014/15 higher than the allowance set by rail regulator
          • Figure 2: Rail renewal expenditure by asset, 2014/15
        • Total expenditure on rail network enhancement schemes more than doubled since 2009/10
          • Network Rail encounters major difficulties in delivering enhancement schemes in 2014/15, prompting a review and re-plan of the programme
            • Average age of rolling stock rises to 20 years in 2014/15
              • Crossrail will remain 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 3: Cost of enhancement projects 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
                        • What we think
                        • Key Insights

                            • Network Rail encountered major difficulties in delivering enhancement schemes in 2014/15 - the first year of CP5 - prompting a review and re-plan of the programme. What are the key proposals on how the rail upgrade programme can be put on a realistic and deliverable footing?
                              • With the government having recently been more heavily involved in the procurement of major rolling stock orders, is this trend expected to continue?
                                • How is the UK passenger rolling stock fleet expected to develop?
                                • Introduction

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

                                            • Overview
                                              • Figure 4: UK GDP quarterly development, 2003-15
                                              • Figure 5: UK GDP in economic downturns and recoveries since 1979
                                            • Inflation
                                              • Interest rates
                                                • Consumer spending
                                                  • Manufacturing
                                                    • Figure 6: UK output by industry, 2008-15
                                                  • Business investment
                                                    • Figure 7: UK GFCF 2003-15
                                                  • Imports
                                                    • Exports
                                                    • Market Factors

                                                      • Key points
                                                        • Rail network funding and regulation
                                                          • Sir Peter Hendy’s re-plan for Network Rail’s enhancement programme 2014-19
                                                            • Drivers of investment in rail industry
                                                              • Railways Act 2005
                                                                • High Speed Two (HS2) and proposed major schemes
                                                                • Rail Finance

                                                                  • Key points
                                                                    • Overview
                                                                      • Figure 8: Government railway funding, by type, 2011-15
                                                                      • Figure 9: Private investment in railways, by type, 2011-15
                                                                  • Infrastructure Investment

                                                                    • Key points
                                                                      • Introduction
                                                                        • Figure 10: Rail infrastructure in Great Britain, 201115
                                                                        • Figure 11: Rail infrastructure in Great Britain, 2011-15
                                                                        • Figure 12: Rail industry infrastructure activity, 2009-14
                                                                        • Figure 13: Major rail infrastructure projects delivered during CP4, 2009-14
                                                                      • Capital expenditure
                                                                        • Figure 14: Rail infrastructure renewals, enhancements & maintenance expenditure in Great Britain, 2010-15
                                                                        • Figure 15: Rail infrastructure renewals, enhancements & maintenance expenditure in Great Britain, 2011-15
                                                                      • Expenditure analysis
                                                                        • Figure 16: Renewal expenditure by asset, 2014-15
                                                                        • Figure 17: Private sector investment in track and signalling, 2011-15
                                                                        • Figure 18: Private sector investment in stations, 2010-14
                                                                        • Figure 19: Analysis of enhancement expenditure in England and Wales, by type, 2010-14
                                                                        • Figure 20: Analysis of enhancement expenditure on non-PR08 funded schemes by type, 2010-14
                                                                        • Figure 21: Analysis of enhancement expenditure in Scotland, by type, 2010-2014
                                                                        • Figure 22: Analysis of enhancement expenditure in Great Britain, by type, 2015
                                                                    • Rolling Stock

                                                                      • Key points
                                                                        • Introduction
                                                                            • Figure 23: Average age of rolling stock, by sector, 2011-15
                                                                            • Figure 24: Average age of rolling stock, by sector, 2011-15
                                                                            • Figure 25: Average Age of Rolling Stock, by Company, 2011-15
                                                                            • Figure 26: Number of passenger journeys, by sector, 2011-15
                                                                            • Figure 27: Share of passenger journeys, by sector, 2014/15
                                                                            • Figure 28: Distance covered by freight trains, 2011-15
                                                                            • Figure 29: Rolling Stock Parc, as of March 2015
                                                                          • Capital expenditure
                                                                              • Figure 30: Private sector rolling stock investment in Great Britain, 2011-15
                                                                              • Figure 31: Private Sector Rolling Stock Investment in Great Britain, 2011-15
                                                                          • Supply Sources

                                                                            • Key points
                                                                              • Production
                                                                                • Overview
                                                                                  • Hitachi and Bombardier Transportation only major train manufacturers with UK plants
                                                                                      • Figure 32: UK production of locomotives, rolling stock and other equipment, 2010-14
                                                                                    • Segmentation
                                                                                      • Figure 33: Segmentation of the UK production of locomotives, rolling stock and other equipment, by type, 2010-14
                                                                                    • Imports
                                                                                      • Overview
                                                                                        • Figure 34: UK imports of locomotives, rolling stock and other equipment, 2011-15
                                                                                      • Segmentation
                                                                                        • Figure 35: Segmentation of UK imports of locomotives, rolling stock and other equipment, by type, 2011-15
                                                                                        • Figure 36: UK imports of locomotives, rolling stock and other equipment, by type, 2014
                                                                                      • Exports
                                                                                        • Overview
                                                                                          • Figure 37: UK exports of locomotives, rolling stock and other equipment, 2011-15
                                                                                        • Segmentation
                                                                                          • Figure 38: Segmentation of UK exports of locomotives, rolling stock and other equipment, by type, 2011-15
                                                                                      • Investment Profiles

                                                                                        • Chapter summary
                                                                                          • Introduction
                                                                                            • Figure 39: Train Operating Companies, as of February 2016
                                                                                          • Train operating companies
                                                                                            • Abellio Greater Anglia
                                                                                                • Figure 40: Key statistics for Abellio Greater Anglia, 2013-15
                                                                                              • Arriva Trains Wales
                                                                                                • Figure 41: Key statistics for Arriva Trains Wales, 2013-15
                                                                                              • c2c
                                                                                                • Figure 42: Key statistics for c2c, 2013-15
                                                                                              • Chiltern Railways
                                                                                                • Figure 43: Key statistics for Chiltern Railways, 2013-15
                                                                                              • Cross Country
                                                                                                • Figure 44: Key statistics for Cross Country, 2013-15
                                                                                              • Virgin Trains East Coast (formerly East Coast)
                                                                                                  • Figure 45: Key statistics for Virgin Trains East Coast, 2013-15
                                                                                                • East Midlands Trains
                                                                                                    • Figure 46: Key Statistics for East Midlands Trains, 2013-15
                                                                                                  • Eurostar
                                                                                                    • Govia Thameslink Railway (formerly First Capital Connect)
                                                                                                        • Figure 47: Key statistics for Govia Thameslink Railways, 2013-15
                                                                                                      • First Great Western
                                                                                                          • Figure 48: Key statistics for First Great Western, 2013-15
                                                                                                        • First Hull Trains
                                                                                                          • Abellio ScotRail (formerly First ScotRail)
                                                                                                            • Figure 49: Key statistics for Abellio ScotRail, 2013-15
                                                                                                          • First TransPennine Express
                                                                                                              • Figure 50: Key Statistics for First TransPennine Express, 2013-15
                                                                                                            • Grand Central
                                                                                                              • Heathrow Connect
                                                                                                                • Heathrow Express
                                                                                                                  • London Midland
                                                                                                                    • Figure 51: Key statistics for London Midland, 2013-15
                                                                                                                  • London Overground
                                                                                                                      • Figure 52: Key statistics for London Overground, 2013-15
                                                                                                                    • Merseyrail
                                                                                                                        • Figure 53: Key statistics for Merseyrail, 2013-15
                                                                                                                      • Northern Rail
                                                                                                                          • Figure 54: Key statistics for Northern Rail, 2013-15
                                                                                                                        • North Yorkshire Moors Railway
                                                                                                                          • Southeastern
                                                                                                                              • Figure 55: Key Statistics for Southeastern, 2013-15
                                                                                                                            • Southern
                                                                                                                                • Figure 56: Key Statistics for Southern, 2012-14
                                                                                                                              • South West Trains
                                                                                                                                • Figure 57: Key Statistics for South West Trains, 2013-15
                                                                                                                              • Virgin Trains West Coast
                                                                                                                                • Figure 58: Key statistics for Virgin Trains West Coast, 2013-15
                                                                                                                              • West Coast Railway
                                                                                                                                • Freight operators
                                                                                                                                  • Colas Rail
                                                                                                                                      • Figure 59: Key statistics for Colas Rail, 2015
                                                                                                                                    • Direct Rail Services
                                                                                                                                        • Figure 60: Key statistics for Direct Rail Services, 2015
                                                                                                                                      • DB Schenker Rail
                                                                                                                                        • Freightliner Group
                                                                                                                                          • Figure 61: Key Statistics for Freightliner in the UK, 2015
                                                                                                                                        • GB Railfreight
                                                                                                                                            • Figure 62: Key statistics for GB Railfreight, 2015
                                                                                                                                          • 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
                                                                                                                                                                • Hitachi to start production at new UK manufacturing plant in 2016, joining Bombardier as the country’s only rolling stock manufacturers
                                                                                                                                                                  • Figure 63: Analysis of the changes in the structure of the railway & tramway rolling stock manufacturing industry, 2011-15
                                                                                                                                                                • Structure by employment
                                                                                                                                                                  • Figure 64: Analysis of the employment structure of the railway & tramway rolling stock manufacturing industry, 2014-15
                                                                                                                                                                • Structure by turnover
                                                                                                                                                                  • Figure 65: Analysis of the financial structure of the railway & tramway rolling stock manufacturing industry, 2014-15
                                                                                                                                                              • Company Profiles

                                                                                                                                                                • Bombardier Transportation UK

                                                                                                                                                                      • Figure 66: Financial analysis of Bombardier Transportation UK, 2010-14
                                                                                                                                                                    • Company strategy and outlook
                                                                                                                                                                    • AMEC Foster Wheeler

                                                                                                                                                                          • Figure 67: Financial analysis of AMEC Foster Wheeler, 2010-14
                                                                                                                                                                        • Company outlook
                                                                                                                                                                        • Amey/Amey Rail

                                                                                                                                                                              • Figure 68: Financial analysis of Amey UK, 2010-14
                                                                                                                                                                            • Company strategy and outlook
                                                                                                                                                                              • Amey Rail
                                                                                                                                                                                  • Figure 69: Financial analysis of Amey Rail, 2010-14
                                                                                                                                                                              • Angel Trains

                                                                                                                                                                                    • Figure 70: Financial analysis of Angel Trains, 2010-14
                                                                                                                                                                                  • Company strategy & outlook
                                                                                                                                                                                  • Balfour Beatty Group

                                                                                                                                                                                      • Recent rail sector developments
                                                                                                                                                                                        • Figure 71: Financial analysis of Balfour Beatty, 2010-14
                                                                                                                                                                                        • Figure 72: Turnover analysis of Balfour Beatty by segment, 2013-14
                                                                                                                                                                                    • Knorr-Bremse Group

                                                                                                                                                                                          • Figure 73: Financial analysis of Knorr-Bremse Rail Systems (UK), 2010-14
                                                                                                                                                                                      • Siemens Rail Automation Holdings

                                                                                                                                                                                          • Figure 74: Financial analysis of Siemens Rail Automation Holdings, 2011-15
                                                                                                                                                                                        • Company strategy & review
                                                                                                                                                                                        • Babcock Rail

                                                                                                                                                                                              • Figure 75: Financial analysis of Babcock Rail, 2011-15
                                                                                                                                                                                            • Company review & outlook
                                                                                                                                                                                            • Network Rail

                                                                                                                                                                                                  • Figure 76: Financial analysis of Network Rail, 2011-15
                                                                                                                                                                                                • Company review & outlook
                                                                                                                                                                                                • Eversholt Rail (UK)

                                                                                                                                                                                                      • Figure 77: Financial analysis of Eversholt Rail (UK), 2010-14
                                                                                                                                                                                                  • Porterbrook Leasing Company

                                                                                                                                                                                                        • Figure 78: Financial analysis of Porterbrook Leasing Company, 2010-14
                                                                                                                                                                                                    • Hitachi Rail Europe

                                                                                                                                                                                                          • Figure 79: Financial analysis of Hitachi Rail Europe, 2011-15
                                                                                                                                                                                                        • Company strategy
                                                                                                                                                                                                        • Forecast

                                                                                                                                                                                                          • Chapter summary
                                                                                                                                                                                                            • Market size
                                                                                                                                                                                                              • ORR’s original funding settlement for CP5
                                                                                                                                                                                                                • ORR introduces new targets for Network Rail’s asset management for CP5
                                                                                                                                                                                                                  • Move towards framework agreements during CP5
                                                                                                                                                                                                                    • Highlights of Network Rail’s investment proposals
                                                                                                                                                                                                                      • Sir Peter Hendy’s Review and re-plan for CP5 enhancement programme
                                                                                                                                                                                                                        • Funding for CP5 enhancement schemes to be enhanced by £2.5 billion
                                                                                                                                                                                                                          • Infrastructure
                                                                                                                                                                                                                              • Figure 80: Rail infrastructure projects pipeline, as of July 2015
                                                                                                                                                                                                                            • High speed rail network (HS2)
                                                                                                                                                                                                                              • Other proposed new rail lines
                                                                                                                                                                                                                                • Maintenance expenditure in CP5
                                                                                                                                                                                                                                  • Figure 81: Forecast rail maintenance expenditure for CP5, 2014/15-2018/19
                                                                                                                                                                                                                                  • Figure 82: Forecast rail maintenance expenditure for CP5, 2014/15-2018/19
                                                                                                                                                                                                                                  • Figure 83: Forecast rail maintenance expenditure for CP5, by Activity, 2014/15-2018/19
                                                                                                                                                                                                                                • Capital expenditure in CP5
                                                                                                                                                                                                                                  • Figure 84: Forecast capital expenditure for CP5, by type, 2014/15-2018/19
                                                                                                                                                                                                                                • Renewals expenditure in CP5
                                                                                                                                                                                                                                  • Figure 85: Forecast rail renewals expenditure for CP5, by activity, 2014/15-2018/19
                                                                                                                                                                                                                                  • Figure 86: Forecast rail renewals expenditure for CP5, 2014/15-2018/19
                                                                                                                                                                                                                                  • Figure 87: Forecast rail track renewal activity for CP5, by activity, 2014/15-2018/19 and CP5 total
                                                                                                                                                                                                                                  • Figure 88: Forecast rail structures renewal for CP5, by activity, 2014/15-2018/19
                                                                                                                                                                                                                                  • Figure 89: Forecast rail electrification & plant renewal for CP5, by activity, 2014/15-2018/19
                                                                                                                                                                                                                                  • Figure 90: Forecast building renewal for CP5, by activity, 2014/15-2018/19
                                                                                                                                                                                                                                • Enhancements expenditure in CP5
                                                                                                                                                                                                                                    • Figure 91: Cost of enhancement projects during CP5
                                                                                                                                                                                                                                  • Crossrail
                                                                                                                                                                                                                                    • Thameslink Programme
                                                                                                                                                                                                                                      • Electrification schemes
                                                                                                                                                                                                                                        • Other committed schemes
                                                                                                                                                                                                                                          • Other named schemes and CP4 rollover schemes
                                                                                                                                                                                                                                            • HLOS capacity metric schemes
                                                                                                                                                                                                                                              • Edinburgh to Glasgow Improvements Programme (EGIP)
                                                                                                                                                                                                                                                • Borders
                                                                                                                                                                                                                                                  • Other Scottish projects
                                                                                                                                                                                                                                                    • Rolling Stock
                                                                                                                                                                                                                                                      • Long Term Passenger Rolling Stock Strategy
                                                                                                                                                                                                                                                          • Figure 92: Fleet Size Requirements for Passenger Fleet under a Low Growth Forecast, 2014-44
                                                                                                                                                                                                                                                          • Figure 93: Fleet Size Requirements for Passenger Fleet under a Medium Growth Forecast, 2019-44
                                                                                                                                                                                                                                                          • Figure 94: Fleet Size Requirements for Passenger Fleet under a High Growth Forecast, 2019-44
                                                                                                                                                                                                                                                          • Figure 95: Role of electric rolling stock under the medium growth forecast, 2019-2044
                                                                                                                                                                                                                                                      • Further Sources and Contacts

                                                                                                                                                                                                                                                        • Trade associations & regulatory bodies
                                                                                                                                                                                                                                                          • Trade magazines
                                                                                                                                                                                                                                                            • Trade exhibitions

                                                                                                                                                                                                                                                            Companies Covered

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

                                                                                                                                                                                                                                                            Railway Engineering - UK - March 2016

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