Train Troubles

Rail Industry Running on Empty

Bombardier Factory Berlin 2006 source Keystone
The Bombardier plant in Berlin back in 2006.
  • Why it matters

    Why it matters

    • Even though a number of railway companies are enjoying strong stock performances and there has been significant merger activity, the rail industry is more likely to jump the track because there are no more large equipment orders pending.
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  • Facts

    Facts

    • A recent survey found orders for new trains and technology collapsed by about 30 percent to €9.5 billion in 2014.
    • Almost one-third of manufacturers expect to lay off employees in the next six months because of a lack of orders.
    • There are growing indications the industry could go through one of its roughest periods in many years.
  • Audio

    Audio

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The rail industry appears to be running at full speed. The market leader Bombardier has put its transportation division on the stock market. U.S.-based Wabtec is offering €1.6 billion for its French competitor Faively, which would create a new mega-vendor with €4 billion in sales.

Nor is Germany immune to the merger mania: Heinz Hermann Thiele, owner of the world’s largest brake manufacturer, Knorr, is driving consolidation with the purchase of Vossloh, the locomotive and track builder.

These are clear signs of confidence in an industry that employs 50,000 people between Kiel in the north of Germany and Munich in the south.

Yet industry research is sending other signals, with the SCI Global Rail Index pointing downwards for the second consecutive time. According to a study shared exclusively with Handelsblatt, the reasons for this are unsatisfactory business conditions and an “increasingly critical assessment of the contract order volume.”

In Germany alone, order invoices for new trains and train technology collapsed by about one-third to €9.5 billion ($10.6 billion) in 2014.

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