Achieving a competitive advantage through risk management
An Alstom case study

Below is a list of Business Case Studies case studies organised alphabetically by company. To view more companies, please choose a letter from the list below.

Page 2: The challenge

Alstom 4 Image 2Linking London with the West Midlands, North West England and Scotland, the WCML has traditionally been Britain’s busiest business route. In spite of this pivotal role to Britain’s transport infrastructure, it has suffered from under-investment for more than 20 years.

In 1966, electrification of the route between London and Liverpool/Manchester created Britain’s first high speed railway. Eight years later, electrification through to Glasgow was completed, reducing time for the 650km journey to five hours. Although plans existed to upgrade the route, the WCML stagnated, while other main lines in Britain continued to develop during the 1980s. Privatisation of British Rail was seen as an opportunity to turn the WCML into a modern high speed railway.

The vision is to make the West Coast Main Line the UK’s premier railway line. When the upgrading is completed, tilting trains will travel at 140 miles per hour. Birmingham will be just an hour and a quarter from London; Manchester one and three quarter hours; and Glasgow under four hours. New technology will enable trains to offer increased standards of safety, service and comfort and the upgraded lines will carry double the present number of high speed trains.

Upgrading railways incurs enormous capital costs and has, for more than 50 years been financed through the public purse. Modernisation of Railtrack’s WCML is the largest rail project in Britain today. Upgrading the track and signalling for higher speed and more capacity will cost £2.1 billion, with a new fleet of 225 km/h high speed tilting trains for the route costing £500 million.

This massive upgrade is dependent on the ability of the partnership between ALSTOM, Railtrack and the train operator, Virgin West Coast, to develop a completely different approach to financing a project from the private sector. ALSTOM’s role is critical in this partnership. In addition to supplying the radio signalling equipment and tilting trains, ALSTOM companies will also be responsible for other infrastructure upgrades and a range of maintenance tasks.

Privatisation

Privatisation of the rail industry provided a fresh opportunity to turn the West Coast Main Line into a modern, high speed railway, driven by market based consumer needs and requirements. By May 1997, all 25 train operating companies were privatised and supported by rolling stock companies and Railtrack. Although privatisation was essentially a political strategy, it created opportunities for new-build investment with the assurance of funding that governments had previously not been able to provide.

The key change in this new market structure was that, for the first time, the companies operating the trains were not directly involved with how trains were designed and built. This meant that when considering the requirements for new vehicles, the train operating companies would want to provide a performance specification and not, as British Rail had done a technical specification. For the first time, ALSTOM was able to:

  • design its own trains
  • get involved in after-market opportunities to support its rolling stock.

As a result of privatisation and within a short period of time, more than £3 billion of new rolling stock is being procured with investment also taking place by Railtrack in the new railway infrastructure.

Alstom | Achieving a competitive advantage through risk management
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