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EARLY one December morning in 1993, workers at the Commonwealth Engineering plant in Dandenong put the finishing touches on a new tram, and saw it roll out of the factory on the back of a truck, headed for the Preston tram depot. Soon after, tram number B2132 started running on Melbourne's tracks. It still runs today.
What those workers didn't know was that this would be the last tram built in Melbourne, for Melbourne, for at least 16 years. For Geoffrey Daniels, project manager at the Dandenong plant from 1987, the demise of locally built trams has been a great shame: ''It wasn't the intent that it would be the last tram.''
At the height of production, there were 700 workers, says Daniels. Today there are 130 at the plant, which has subsequently become part of Canadian transport giant Bombardier. It is still an operating plant, but nothing like it was in Daniels' day.
Commonwealth Engineering made 132 trams of that final model. It also built 220 other trams that remain in service on Melbourne's tracks. But since 1999, the foreign-owned companies that have run Melbourne's train and tram systems have imported all of their new stock from Europe.
Last year, with overcrowding reaching crisis levels on the city's trams at rush hour, Premier John Brumby finally committed to buying 50 new trams. It was far fewer than the 200 many in the manufacturing industry had hoped for (440 by 2020 had even been floated in 2003 by the Department of Transport). But it is still an important contract.
For many in manufacturing, the tram tender is a battle between importing the stock from overseas, or building them locally and creating jobs. In the past two decades, construction of new trams and trains on Australia's eastern seaboard has gone from a thriving industry to a struggling one.
''In recent years, the NSW and Victorian governments have collectively ordered more than $3.8 billion worth of rail rolling stock to be manufactured overseas,'' says a submission from the Australasian Railway Association to a recent parliamentary inquiry into manufacturing. ''This is equivalent to total annual sales for Toyota, Holden and Ford combined. Had this $3.8 billion of government investment stayed in Australia, it could have generated tens of thousands of jobs.''
For the state's struggling manufacturing sector, 50 new trams might not be as many as it wanted, but it is at least a start to rebuilding the state's train and tram construction industry.
The looming tram tender has placed renewed focus on the Brumby Government's industry policies and its support for Victoria's biggest employer: the state's manufacturing sector. Bureau of Statistics data shows that since last May, Victoria has lost nearly 35,000 manufacturing jobs.
Manufacturing has suffered badly from the economic downturn, with big car-makers such as Ford and Holden slashing hundreds of staff while a host of other manufacturers have between them laid off workers in their thousands. The Brumby Government has a series of policies meant to assist the industry - including a much-delayed $245 million plan released last November - but key players are now warning they need to see results. The Victorian director of the Australian Industry Group, Tim Piper, says the decision over who will build Melbourne's new trams is a crucial test of the Government's commitment. If the contract is awarded locally, says Piper, Melbourne could see a rapid expansion in production.
Piper says the VLocity trains, made in Dandenong for V/Line by Bombardier, provided a good example of how rolling stock could be built locally. About 70 per cent of these trains' content was made locally, with some parts imported. The 100th VLocity carriage will roll off Bombardier's production line in December. The trains are, Piper says, high quality and have required less maintenance than expected.
States around Australia are all looking for new trains and trams and Melbourne could, Piper argues, return to being a big producer in this country, and one day a component exporter.
The Australian Industry Group and the Australian Workers Union both want the trams to be declared a project of ''strategic significance'' by the Government, which would increase the chances of more of the work being done here.
The Brumby Government's industry policy, announced last November, has come in for criticism. The policy can apply to projects with ''whole-of-life costs'' of more than $250 million and see local content rules of 40 per cent. Under this policy, the Government could wholly import 50 trams from overseas but, with repairs and servicing done locally over the expected 35-year life of the trams, it would have met the local content criteria.
The state secretary of the Australian Workers Union is Cesar Melhem. He describes the whole-of-life part of the Government's policy as ''absolute rubbish'' because it counts maintenance as local content. ''You can 100 per cent import trains and comply with that nonsense policy,'' he says.
Melhem wants the contenders for the contract to build the trams to be required to manufacture them here if they want the work.
Industry policy is nearly always controversial. The Brumby Government has shied away from broad price preferences policies, such as Labor in NSW has introduced. This has given preference to local producers - even if their bids were 20 per cent more expensive than international competitors. Free-market advocates say that this kind of policy distorts investments, props up failing industries and wastes public money.
RICHARD Allsop, a researcher at the Institute of Public Affairs and a senior transport bureaucrat in the Kennett government, says the only considerations in buying new trams for Melbourne should be price and quality. ''Where they are built shouldn't come into it,'' he says.
Forcing the trams to be built locally would ''take us back to being the inefficient, protectionist economy that we were in the 1980s''.
But Piper says the manufacturing industry in Victoria is not looking for protection - companies just want the Brumby Government to consider the benefits from manufacturing here. These include boosting payroll tax from more people employed, higher company tax paid and higher income tax. It will also see the retention of skills in the industry.
Melhem says it is time the Brumby Government ''put up or shut up'' about supporting local manufacturing, and believes the awarding of the contract will be a litmus test. Melhem, a powerful figure within Brumby's right-wing faction, says there will be a ''phenomenal'' reaction against it if the tram contract is sent offshore, as was the building of 18 new trains for Melbourne. Those trains, the first of which is now being tested in Melbourne, were manufactured in Poland and Italy. If the same happens to the trams, says Melhem, ''I'm not going to be quiet about it. I'm going to go nuts.''
Industry policy in Victoria, says Melhem, is too geared towards grants and assistance. In the past year the Rudd Government has committed billions to pump-prime the economy by pledging to build new roads, rail and schools - and the State Government has gratefully put its hand up for a share of that money. But, says Melhem, the best tonic is giving local manufacturers orders to make things.
Six companies are believed to have put in expressions of interest to build the new trams, which will cost around $5 million each to build.
One tram driver, who asked not to be named, said the locally made trams were getting very old and dated, but their specific design for Melbourne conditions had meant they were a better product. The imported trams were, he said, designed to be run on light rail systems, not stuck in traffic as is often the case in Melbourne.
''Every tram up until (1994) was built specifically for Melbourne, and (the low-floor trams operating here) were off-the-shelf designs from a European manufacturer.'' The imported trams drive well in ''off-street'' running. ''But they do not handle traffic and slow speeds at all well; they don't crawl well.''
Yarra Trams outgoing chief executive Dennis Cliche says new trams for Melbourne can't come soon enough. Of Melbourne's 495 trams, only 100 are modern, low-floor trams that can be used by people with disabilities, and have air conditioning. The rest are older than 1994, and in varying condition. Cliche believes it essential, if the city's public transport system is to be one Melburnians can be proud of, that rail manufacturing is a viable industry in Australia: ''And to do that you need an ongoing flow of work. You set up, you gear up and then the manufacturer has an ongoing flow to recover the investment.''
European governments understand this, he says, and huge orders for new rolling stock are what has enabled European manufacturers to set up huge workshops to build new trains and trams quickly - and at low prices. ''At the Alstom factory in La Rochelle in France, they are making 12 to 15 new trams a month. If the order was big enough, we could be doing that here,'' Cliche says.
While the French are building 15 a month, the Victorian Government is talking about building 50 trams at a very slow rate of just 10 a year.
''They [the French] could do our order in three months if we wanted it. That is the dilemma. If you are doing 10 a year, it's hardly worth even considering [establishing a manufacturing centre in Melbourne or Australia],'' says Cliche. ''No manufacturer is going to spend $30 million to set up a factory if it'll be idle after two years.''
Cesar Melhem agrees that the size of the order is also crucial, because 50 trams may not be enough to allow locally based manufacturers to make long-term plans. But if the trams are not built here, Melhem believes, Victoria could see the demise of all transport manufacturing, including the car industry. ''If we lose the economies of scale, work will continue to go offshore; we need to give them volume.''
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