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Keltbray: Lack of UK rail work prompted Canada deal

A lack of clarity over future rail work in the UK forced Keltbray to move into the Canadian market, the company’s infrastructure boss has told Construction News.

Keltbray managing director for infrastructure and rail Phill Price told CN the company began looking overseas last year, as it became unclear where Network Rail’s future opportunities would be.

Mr Price said: “There is not really any clarity going into CP6 and beyond.

“There are some projects going ahead, such as the TransPennine route upgrade, but beyond that there isn’t any visibility of major schemes.”

Keltbray has signed a 50:50 joint venture deal with Canadian construction giant Aecon to carry out rail electrification work across Canada’s network.

Commenting on the deal, Mr Price said the end of Keltbray’s contracts on the Great Western Electrification Programme and Crossrail also prompted Keltbray to look overseas.

“We were in a position, frankly, where we either downsized, which we didn’t want to do, or looked at where else in the world there was greater clarity of government’s commitment to spend,” he said.

Over the next 10 years Canada has pledged to invest CAD$11bn (£6.1bn) in its rail network, with electrification forming a significant chunk of that spend.

Network Rail has pledged to spend £47bn on the rail network in CP6; however, £37bn of this will go on renewals and operations and maintenance.

A total of £10.1bn will be used to fund enhancement projects left over from CP5.

Mr Price said that, despite entering Canada, the UK rail market remained its primary focus, adding that its Canadian venture would allow it to retain staff and plant for when rail projects ramp up again in the UK.

He said: “It is very difficult when you have these peaks and dips like in the UK rail market.

“As a direct labour company with massive investment and huge fixed costs, it becomes really challenging to manage that, hence why we had to look further afield.”

Keltbray currently has a team of 10 in its Toronto base but hopes to add more UK staff as the JV wins contracts.

The company will adopt a “one for one” approach in terms of recruitment, which will mean for every Keltbray staff member brought over from the UK, a local Canadian worker will be trained.

Aecon is one of the four biggest contractors in the Canadian rail market and aims to take 20 per cent of the $11bn pipeline.

Keltbray’s move comes after a number of UK construction firms have faced issues in the Canadian market in recent years.

Last month, Laing O’Rourke revealed it would never work in Canada again after taking a multi-million-pound hit on the Centre hospitalier de l’Université de Montréal. 

Carillion was also hit by losses in its Canadian business before it collapsed in January.

When asked if these examples concerned Keltbray, Mr Price said: “Absolutely it concerns us.

“There is plenty evidence of companies that have had problems in these markets, companies bigger than us, and that worries us.

“We’ve taken the route of a major player in Canada and they understand the market, therefore they are able to help us and guide us around things like trade union issues and local legislation.”

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