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Rail plant hire rocked by framework deal awards

PLANT - Network Rail's decision to appoint single suppliers causes dismay among hire firms across the UK

NETWORK Rail has embarked on an efficiency drive that is set to change the face of the rail plant hire sector.

The reorganisation will hit hard firms that rely on the network manager for a substantial part of their work.

Cuts to the supply chain, slashing the current regional supply network to a handful of operators, started last week with the appointment of just two firms to provide small plant and tools for rail maintenance, instead of a regional network of seven.

The decision by Network Rail to award three-year framework contracts to Amec and HSS to provide small plant and tools - with Amec hiring and maintaining rail-specific equipment and HSS the non-rail specific equipment - is expected to deliver savings of 30 per cent to the railtrack operator.

Amec's deal is worth in the region of £10 million in the first year, while HSS's is worth around £3 million.The savings will come from a combination of volume buying, better utilisation and standardisation.

HSS's deal is the largest contract the hirer has won and is broken down into 18 separate subcontracts for five rail regions.

Chief executive Paul Nolan said: 'This success is not simply about hiring tools, it underlines our service value.'

There was surprise at the decision to award to single suppliers. One hirer said: 'HSS has no history with rail, and Amec, despite being a big outfit, is one of the smaller regional players in rail plant.'

Regional hirers who have had contracts terminated were resigned to looking for new work.Richard Donald, managing director of Torrent Trackside, said: 'We are disappointed not to get a shot at regional work, as Network Rail originally indicated that it would keep a regional structure. But we have many other business opportunities with private rail and its contractors.We will also now be able to broaden our horizons.'

Another key source of savings, according to Network Rail, will be more competitive pricing, which has provoked strong reactions from the rail sector.

One hirer fumed: 'Our business isn't like construction.Overrunning is not tolerated and our people have to work to that.The fear is that Network Rail is aggressively driving down margins and everything but price will go out of the window.'

Hirers of larger operated plant now fear that they will see a similar slashing of suppliers when their contracts are awarded in the autumn.

One rail expert said: 'These are companies who have invested a lot in plant and people, good people who are committed to the rail industry. It could be very difficult for some of them.'