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Rail's gang of four 'face kit and labour shortages'

PLANT - Network Rail's new maintenance framework contracts provoke sector warnings

RAIL plant hirers have warned that Network Rail's decision to award maintenance framework contracts to just four road-rail plant hirers is in danger of leaving the infrastructure operator exposed to equipment and labour shortages.

Network Rail announced last week that it had awarded its latest round of contracts to Balfour Beatty; Hydrex, BCL and L&W.

Ardmore subsidiary BCL is the biggest winner, with 10 territories that are estimated to bring it £6 million a year for the three-year contract. Balfour's three territories is set to net it £2 million a year, while Hydrex's three in Scotland and the Thames Valley will deliver a similar sum. In the south, Worthing-based L&W Contractors was a surprise winner with an annual deal worth an estimated £2.5 million.

With the maintenance work accounting for around a fifth of road-rail hirers' workload, hirers said that the decision to slash the number of hirers working for Network Rail from 38 to four did not yet spell crisis for the high-cost sector.

But there were stern warnings that the client's determination to cut costs by up to 30 per cent had created contract terms that would lead ultimately to shortages of both drivers and equipment.

One hirer said: 'With Olympics work now looming, operators are going to exit the rail sector in droves. Operators' wages in construction are fast catching up with rail but the new contracts make no provision for pay rises.

'It should be about driving down time lost through possessions, not cutting into margins.' Network Rail's clause capping the amount of rehires done by each hirer would lead to trouble providing enough machines during pinch points, the hirer warned.

He said: 'Putting a 30 per cent limit on rehires is going to leave some hirers simply unable to meet the demands for machines.

If you add in all the cost penalties, it could make some of these businesses skint.' Another hirer cautioned that logistical constraints would inevitably stretch resources. He said: 'It is no accident that the rail plant industry evolved as a collection of businesses that were strong in a particular region. It is going to be hard to meet the demands for a midnight call-out if a depot is more than 100 miles away.' He added: 'If this is what Network Rail is doing to hirers, we fear that the costslashing will be mirrored by the contractors pricing work for renewals.'