Friedrich Smaxwil, President. German Railway Industry Association (VDB)
The railway supply sector is one of the most dynamic and innovative industries in Germany. Ranging right across the spectrum, from rolling stock builders and component suppliers through signalling, telecommunications and electrification systems to infrastructure and turnkey systems, the German railway industry is known for world-leading technology. And this applies in every area of the market, from high speed trains to automated metros, trams and the advanced IT and telemetry systems that help to create the integrated networks which are key to today’s rail industry.
The German supply sector is characterised by strong co-operation between large systems integrators and a broad base of small and medium-sized companies. Intensive consolidation in the 1990s resulted in the emergence of a few key players which supply vehicles and services to railways all over the world, up to and including complete turnkey systems. These companies are world leaders in terms of both technology and market share.
But to a great extent the industry’s success is based on the smaller suppliers, which have made our sector one of the most productive and innovative in Germany in recent years. Perhaps uniquely in the rail sector, small and medium-sized companies offer a degree of diversity not seen elsewhere: everything necessary to build and equip a railway is readily available. Today around 60% of the 'value added’ to a rail vehicle comes in the form of components and subsystems. Thanks to their steadily improving productivity, more than 100 highly specialised small and medium-sized companies are playing a critical role in improving the competitiveness of their customers.
Despite cyclic variations, the German railway industry has been able to expand its activities over the last decade, reaching an all-time record level of €10·7bn in orders received in 2007; sales volumes for the year were not far behind at €9·6bn (Fig 1). At the same time the number of employees in the sector also reached a peak of 40 900. For the first time in the history of the sector, orders and sales increased for the third year in succession. I believe that this is a clear indication that an increasing worldwide presence is helping the German industry to balance fluctuations in the domestic market and enjoy continuous growth.
130 years of experience
With more than 110 member companies, the German Association of the Railway Industry now represents around 80% of all the country’s suppliers and manufacturers, including the three systems integrators and all the important small and medium-sized firms. VDB has been representing its members in discussions with politicians, media, institutions and railway operators for more than 130 years.
VDB traces its roots back to the founding of the Association of the German Locomotive Factories in 1877, but assumed its present form in 1991 with the merger of the two associations representing the locomotive industry (VDL) and the rolling stock sector (VdW). It took its present name, Verband der Bahnindustrie in Deutschland, in October 1999. With Berlin firmly re-established as Germany’s capital, VDB voted unanimously to transfer its headquarters from Frankfurt-am-Main in December 2002.
VDB is organised through 18 professional groups and task forces, which bring together experts from the member companies to support the development of railway technology and find ways to further the mode’s environmental advantages.
One of our many roles is lobbying for greater priority for the rail mode in both German and European transport policy. With a growing concensus on environmental protection and combating climate change, as well as making better use of natural resources, the role of the railway is becoming ever more important.
We believe that an important precondition for further growth in rail traffic is the liberalisation and controlled deregulation of the European market. At the same time, we also want to see technical harmonisation across the sector. This will require strong political leadership to drive the development and introduction of Technical Specifications for Interoperability and related national standards in Germany and across Europe.
Domestic and export
The industry’s most important domestic customer is, of course, Deutsche Bahn AG. However, there are many other private and public operators in both the local and long-distance rail markets. By facilitating dialogue between industry representatives and the operators, VDB supports strong relationships between suppliers and customers on all levels. Together we can all benefit from improvements in the competitiveness of the rail sector, through technical co-operation at the pre-competitive stage and the optimisation of business processes.
The association does not only focus on outreach, but also works ?inwards towards the industry, helping to promote fair business conditions between the systems integrators and their suppliers.
In the export field, VDB helps to co-ordinate support for the small and medium-sized members in their export activities, in conjunction with the Federal Ministry of Economy. Each year we organise business trips for the member companies to one or more emerging markets. In this way the smaller manufacturers have been able to make contacts in Poland, the Czech Republic, Hungary, Romania, Croatia, Turkey, Ukraine and India over the past decade. In addition, VDB co-ordinates its members’ participation in trade fairs abroad.
The success of this policy is underlined by the fact that exports accounted for no less than 53% of turnover for the railway industry in 2007, compared with an average of 42% for the German economy as a whole.
Despite its global activities, VDB is not neglecting its domestic market, which provides a considerable contribution to ensuring technical leadership as well as securing work to fill our members’ factories. After all, many of these domestic projects provide valuable references for the international markets. Germany is a veritable 'showcase of the railway industry’.
This is reflected by the steadily increasing number of participants at the two-yearly InnoTrans trade fair in Berlin, which is perhaps the most important global show and exchange platform for the railway industry today. This year’s show has attracted exhibitors from five continents, demonstrating that railway technology has become an increasingly global business (p629).
We believe that the continuous growth of the fair is a clear expression of the increasing demand for efficient and environmentally-friendly mobility — be it freight transport by rail, high speed connections between major metropolitan areas, or regional and short-distance traffic in the booming megacities all over the world.
Towards a global market
It is clear that the railway industry must take account of societal demands for mobility and prosperity when planning future development. I believe that the railway industry already offers intelligent solutions to meet the requirements of sustainable mobility today, and is well placed to address the demands of tomorrow.
Across the world we are seeing increasing demand for freight transport by rail, as the basis for sustainable growth, with some cross-border flows increasing by more than 60% in recent years. Demand for efficient and environmentally-acceptable transport in the short-distance market is also increasing, offering encouraging prospects for more investment in metros and light rail.
It is already clear that rail is the most environmentally-compatible transport mode. But the sector needs economical high-tech products to ensure sustainable mobility, and this in turn puts pressure on the suppliers to deliver the right products and services. I believe it is no accident that the German railway industry has reached its world-leading position thanks to its strength of innovation and excellent technology.
The dynamic development of the global railway market has been triggered by strong growth in the world economy. Despite the collapse of recent trade talks, we can confidently predict that more freight, commodities and passengers will need to be transported over the next few years. In Germany alone the total volume of freight transport is predicted to double by 2050, with the rail sector benefiting from above-average growth.
We can see strong demand for more passenger rail services in urban areas: metros, light rail and regional trains, plus their related infrastructure. As an example, the Beijing metro currently extends to 142 route-km, but another 58 km is being added this year and by 2015 the network is planned to reach 561 km. In North America, the forecast growth in demand for rail freight transport is expected to require an average investment of €6bn a year in infrastructure over the next 20 years. At the same time there is increasing demand for environmentally-friendly urban rail services in the large cities, and the development of high speed inter-city routes is being actively discussed.
Based on recent experience, we believe that an essential prerequisite for further development of the rail mode is free access to rail networks. In some countries the railway markets have already been liberalised to a considerable extent, whereas other countries are in a period of transition. In the less-liberalised countries there is not the same level of established competition between modes, which suggests that rail’s market share may be at risk of falling in the future. So it is essential to strengthen cross-border passenger and freight rail traffic in Europe. The politicians and the national railway network operators need to strive for greater interoperability with courage and commitment.
Only then will people all over the world be able to enjoy the advantage of trend-setting mobility, reflecting the VDB vision: excellent and economic railway systems for more sustainable traffic on rail.
- Fig 1. Turnover and orders for the German railway supply industry.
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