Challenges and opportunities: stakeholder views

The Office of National Rail Industry Coordination (ONRIC) and the National Rail Manufacturing Advocate (the advocate) met with more than 50 stakeholders across Australia to better understand the key issues affecting the Australian rail manufacturing sector. 

Stakeholders included:

• state and territory governments
• large ‘tier 1’ companies or original equipment manufacturers (OEMs)
• small and medium sized companies that participate in the rail supply chain
• unions 
• industry bodies such as the Australasian Railway Association
• researchers and universities.

In addition, ONRIC and Transport for NSW co-hosted a Future of Rail Manufacturing Workshop bringing together more than 100 rail sector specialists including manufacturers, technical services companies, researchers, unions, state and territory transport agencies and federal and state ministers. Attendees identified issues facing the sector and considered options to support sector growth. 

Stakeholders were open about the challenges and opportunities they saw, and positive about the potential future of rail manufacturing in Australia. The diversity of stakeholders provided a rich evidence base to inform the development of the strategy. Stakeholder views can be categorised into 3 broad themes: 

1. Government procurement: The absence of a national approach to rolling stock procurement acts as a brake on the efficiency and growth of Australia’s rail manufacturing sector. Local content policies, different manufacturing standards (often bespoke) and the lack of a transparent and coordinated national procurement pipeline result in higher costs, business instability, lower investment, and job insecurity.
2. Industry growth opportunities: Acknowledging the need to identify and support long term growth opportunities, stakeholders saw immediate opportunities to build on existing capability in heavy haul rail manufacturing. In particular, given the innovations underway in the transportation of resources over long distances and environmentally challenging conditions.
3.  Foundational enablers: research, innovation, and skills
   1. Research and innovation. The fragmented rail market limits opportunities for domestic scalability. This limits R&D given the capital funding required to invest in research capabilities. Small enterprises particularly struggle due to budget constraints and the time it takes to realise a return on investment.
   2. Skilled workforce: There are major challenges in recruiting and retaining skilled workers, in part reflecting an economy wide issue. Rail also has an ageing workforce. An unpredictable procurement pipeline discourages investments in skills. Workers move from project to project, or exit the sector in times of low demand, often never to return.

These themes and key issues are summarised below. Further information and background based on the insights gathered during consultations is available on the ONRIC web page.

Key issues affecting Australia's rail manufacturing sector

Stakeholder views on challenges facing the sector

1. Procurement

• Inconsistent procurement approaches within and across jurisdictions
• Manufacturers receive small orders with no long-term investment
• Manufacturers unable to produce in large volumes
• Limited pipeline visibility
• No mechanism or agreement for jurisdictions to adopt national standards for manufacturing of rail components
• Only safety issues are legislated
• Jurisdictions have their own local content policies
• No mechanism or agreement for jurisdictions to adopt a national content policy
• Duplication of existing supply chains, hindering ability to achieve scale

2. Early industry

Opportunities exist to further Australia’s advantage in heavy haul manufacture

3. Industry enablers

• Australia lags as an early adopter of new technology and requires incentives to commercialise local R&D
• IP constraints can hinder research and innovation outcomes
• Type Approval process is onerous, hindering innovative solutions compared with overseas counterparts
• The skilled labour shortage is compounded by an ageing workforce and competition from other sectors (mining, defence)
• More inclusive culture is required to attract and retain a diverse workforce
• Rail manufacturing training needs to align with traditional trade and non-trade occupations under the Australian Quality Framework (AQF)