German rail industry turnover up 25% in 2014
The German rail industry achieved a 25% increase in sales last year to reach a new peak of €12.5bn. The results were announced by Mr Martin Lange, president of the German Rail Industry Association, reports David Briginshaw.
TURNOVER generated by members of the German Rail Industry Association (VDB) reached a new record of €12.5bn in 2014. This was 25% higher than in 2013, and nearly 15% more than in the previous peak year of 2010 when revenue reached €10.9bn. Domestic revenue rose by 26% from €5.3bn in 2013 to €6.7bn in 2014 and exports increased by 23% from €4.7bn in 2013 to €5.8bn last year.
VDB president, Mr Martin Lange (pictured), says the 25% increase in railway equipment revenue is mainly due to a large order backlog and the fact that rolling stock manufacturers could finally bill customers for vehicles which could not be delivered due to excessive delays in obtaining operating certificates from the Federal Railway Agency (EBA). Changes to legislation and the regulatory framework in Germany have finally eliminated the backlog in the approval process.
"In Germany alone, sales of rail vehicles and their components increased last year by 44% to €4.9bn, and the revenue from international business in this segment increased by about a quarter to €4.6bn," Lange says.
However, the VDB says the strong revenue growth is overshadowed by a decline in demand. Orders for railway equipment both domestically and from abroad fell by 36% last year to €9.5bn. Demand for locomotives and passenger rolling stock, as well as their components and subsystems, dropped by 45% in 2014 to €6.4bn. Domestic orders fell by almost half to €2.9bn, while orders from abroad were down 43% at €3.5bn.
"2014 was a rather poor year for major tenders," Lange revealed. "In addition, the conditions in important railway markets such as Russia and China have changed. EU sanctions against Russia due to the Ukrainian crisis are driving Moscow into the hands of China, while China is becoming increasingly technically self-sufficient and stronger in exporting. While German train manufacturers face heightened international competition, these developments offer opportunities for medium-sized suppliers."
Infrastructure-related revenue stagnated last year with total sales of €3bn. The real problem area is domestic sales, which fell by 5% to €1.8bn, while infrastructure exports increased by 9% to €1.2bn.
Orders for infrastructure equipment last year fell by 6% to €3bn, with domestic orders also down by 6% at €1.7bn and orders from outside Germany 13% lower than in 2013 at €1.3bn.
However, Lange predicts a noticeable upturn in business this year following a planned increase in spending on the existing rail network in Germany. Infrastructure spending by DB Networks will increase by about €1bn a year to around €4bn per year between 2015 and 2019.
"This significant increase in funding is urgently needed to address the glaring backlog of investment in the modernisation of Germany’s rail infrastructure," Lange says. Looking at signalling, a third of the 3400 interlockings in Germany have an average of 80 years, while 13% are about 65 years old.
VDB also sees slow movement in the equipment of the major European rail corridors in Germany with ETCS and suggests the German government has sufficient funds to equip the Emmerich - Basle section of Corridor A linking Rotterdam and Genoa up to 2022.
"These advances are forward looking," Lange says, "but need to be implemented much faster in order to increase the competitiveness of rail services across borders. Paradoxically, high-tech Germany is not a leader in the European Union in the installation of ETCS."
The VDB is highly critical of the level of federal funding for the provision of regional rail services. The government has increased the funding by what the VDB describes as a meager 1.5% to €7.5bn, but the association is calling for the fund to be increased to €8.5bn followed by an annual increase of 2%. Otherwise the VDB warns the performance of environmentally-friendly regional rail services could suffer significantly.
While Lange applauds the European Union’s Shift2Rail research initiative, he is highly critical of the lack of support for railway research by the German government, which he says has failed to include railway projects in its research initiatives: "While electric mobility is widely promoted for road transport, scant attention is paid to rail. Railway technology is an industrial core for Germany. This is a glaring shortcoming which needs to be addressed urgently."
"This is not only necessary to set the course for national transport, but it also makes sense for international competition policy if German railway engineering manufacturers want to continue to maintain their leading position in the world market in the face of growing competition from the Far East," Lange concludes.
Source: IRJ- International Railway Journal